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ARM HOLDINGS PLC-ADR (ARM) Stock Fundamental Analysis

NASDAQ:ARM - Nasdaq - US0420682058 - ADR

179.93  +24.73 (+15.93%)

After market: 179.76 -0.17 (-0.09%)

Fundamental Rating

5

Overall ARM gets a fundamental rating of 5 out of 10. We evaluated ARM against 109 industry peers in the Semiconductors & Semiconductor Equipment industry. While ARM has a great health rating, its profitability is only average at the moment. ARM shows excellent growth, but is valued quite expensive already.


Dividend Valuation Growth Profitability Health

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4

1. Profitability

1.1 Basic Checks

ARM had positive earnings in the past year.
In the past year ARM had a positive cash flow from operations.
ARM Yearly Net Income VS EBIT VS OCF VS FCFARM Yearly Net Income VS EBIT VS OCF VS FCFYearly Net Income VS EBIT VS OCF VS FCF 2021 2022 2023 2024 200M 400M 600M 800M 1B

1.2 Ratios

ARM has a Return On Assets of 7.93%. This is in the better half of the industry: ARM outperforms 72.22% of its industry peers.
With a decent Return On Equity value of 10.66%, ARM is doing good in the industry, outperforming 67.59% of the companies in the same industry.
Looking at the Return On Invested Capital, with a value of 4.43%, ARM is in the better half of the industry, outperforming 62.96% of the companies in the same industry.
The Average Return On Invested Capital over the past 3 years for ARM is below the industry average of 11.96%.
Industry RankSector Rank
ROA 7.93%
ROE 10.66%
ROIC 4.43%
ROA(3y)6.64%
ROA(5y)N/A
ROE(3y)11.4%
ROE(5y)N/A
ROIC(3y)7.14%
ROIC(5y)N/A
ARM Yearly ROA, ROE, ROICARM Yearly ROA, ROE, ROICYearly ROA, ROE, ROIC 2021 2022 2023 2024 5 10 15

1.3 Margins

With a decent Profit Margin value of 18.13%, ARM is doing good in the industry, outperforming 75.93% of the companies in the same industry.
In the last couple of years the Profit Margin of ARM has declined.
Looking at the Operating Margin, with a value of 11.54%, ARM is in the better half of the industry, outperforming 65.74% of the companies in the same industry.
ARM's Operating Margin has declined in the last couple of years.
ARM's Gross Margin of 95.98% is amongst the best of the industry. ARM outperforms 100.00% of its industry peers.
In the last couple of years the Gross Margin of ARM has remained more or less at the same level.
Industry RankSector Rank
OM 11.54%
PM (TTM) 18.13%
GM 95.98%
OM growth 3Y-32.83%
OM growth 5YN/A
PM growth 3Y-20.92%
PM growth 5YN/A
GM growth 3Y0.85%
GM growth 5YN/A
ARM Yearly Profit, Operating, Gross MarginsARM Yearly Profit, Operating, Gross MarginsYearly Profit, Operating, Gross Margins 2021 2022 2023 2024 20 40 60 80

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8

2. Health

2.1 Basic Checks

ARM has a Return on Invested Capital (ROIC), which is below the Cost of Capital (WACC), which means it is destroying value.
The number of shares outstanding for ARM has been increased compared to 1 year ago.
Compared to 1 year ago, ARM has a worse debt to assets ratio.
ARM Yearly Shares OutstandingARM Yearly Shares OutstandingYearly Shares Outstanding 2022 2023 2024 200M 400M 600M 800M 1B
ARM Yearly Total Debt VS Total AssetsARM Yearly Total Debt VS Total AssetsYearly Total Debt VS Total Assets 2022 2023 2024 2B 4B 6B

2.2 Solvency

ARM has an Altman-Z score of 48.66. This indicates that ARM is financially healthy and has little risk of bankruptcy at the moment.
The Altman-Z score of ARM (48.66) is better than 95.37% of its industry peers.
There is no outstanding debt for ARM. This means it has a Debt/Equity and Debt/FCF ratio of 0 and it is amongst the best of the sector and industry.
Industry RankSector Rank
Debt/Equity 0
Debt/FCF 0.01
Altman-Z 48.66
ROIC/WACC0.32
WACC13.97%
ARM Yearly LT Debt VS Equity VS FCFARM Yearly LT Debt VS Equity VS FCFYearly LT Debt VS Equity VS FCF 2021 2022 2023 2024 1B 2B 3B 4B 5B

2.3 Liquidity

ARM has a Current Ratio of 4.52. This indicates that ARM is financially healthy and has no problem in meeting its short term obligations.
The Current ratio of ARM (4.52) is better than 71.30% of its industry peers.
ARM has a Quick Ratio of 4.52. This indicates that ARM is financially healthy and has no problem in meeting its short term obligations.
ARM's Quick ratio of 4.52 is amongst the best of the industry. ARM outperforms 81.48% of its industry peers.
Industry RankSector Rank
Current Ratio 4.52
Quick Ratio 4.52
ARM Yearly Current Assets VS Current LiabilitesARM Yearly Current Assets VS Current LiabilitesYearly Current Assets VS Current Liabilites 2022 2023 2024 1B 2B 3B 4B

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7

3. Growth

3.1 Past

ARM shows a strong negative growth in Earnings Per Share. In the last year the EPS decreased by -43.14%.
Measured over the past years, ARM shows a decrease in Earnings Per Share. The EPS has been decreasing by -7.80% on average per year.
Looking at the last year, ARM shows a very strong growth in Revenue. The Revenue has grown by 20.68%.
Measured over the past years, ARM shows a quite strong growth in Revenue. The Revenue has been growing by 16.84% on average per year.
EPS 1Y (TTM)-43.14%
EPS 3Y-7.8%
EPS 5YN/A
EPS Q2Q%-16.67%
Revenue 1Y (TTM)20.68%
Revenue growth 3Y16.84%
Revenue growth 5YN/A
Sales Q2Q%4.71%

3.2 Future

ARM is expected to show a strong growth in Earnings Per Share. In the coming years, the EPS will grow by 23.82% yearly.
Based on estimates for the next years, ARM will show a very strong growth in Revenue. The Revenue will grow by 21.17% on average per year.
EPS Next Y30.51%
EPS Next 2Y31.19%
EPS Next 3Y31.55%
EPS Next 5Y23.82%
Revenue Next Year25.29%
Revenue Next 2Y24.84%
Revenue Next 3Y23.77%
Revenue Next 5Y21.17%

3.3 Evolution

When comparing the EPS growth rate of the last years to the growth rate of the upcoming years, we see that the growth is accelerating.
The Revenue growth rate is accelerating: in the next years the growth will be better than in the last years.
ARM Yearly Revenue VS EstimatesARM Yearly Revenue VS EstimatesYearly Revenue VS Estimates 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 5B 10B 15B
ARM Yearly EPS VS EstimatesARM Yearly EPS VS EstimatesYearly EPS VS Estimates 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 1 2 3 4 5

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2

4. Valuation

4.1 Price/Earnings Ratio

The Price/Earnings ratio is 133.28, which means the current valuation is very expensive for ARM.
ARM's Price/Earnings ratio is in line with the industry average.
ARM's Price/Earnings ratio indicates a rather expensive valuation when compared to the S&P500 average which is at 28.29.
A Price/Forward Earnings ratio of 86.46 indicates a quite expensive valuation of ARM.
60.19% of the companies in the same industry are cheaper than ARM, based on the Price/Forward Earnings ratio.
ARM is valuated expensively when we compare the Price/Forward Earnings ratio to 24.44, which is the current average of the S&P500 Index.
Industry RankSector Rank
PE 133.28
Fwd PE 86.46
ARM Price Earnings VS Forward Price EarningsARM Price Earnings VS Forward Price Earnings ChartPrice Earnings - Forward Price Earnings PE FPE 20 40 60 80 100

4.2 Price Multiples

ARM's Enterprise Value to EBITDA ratio is in line with the industry average.
ARM's Price/Free Cash Flow is on the same level as the industry average.
Industry RankSector Rank
P/FCF 359.17
EV/EBITDA 277.28
ARM Per share dataARM EPS, Sales, OCF, FCF, BookValue per sharePer Share Data Per Share 1 2 3 4 5

4.3 Compensation for Growth

The high PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates ARM does not grow enough to justify the current Price/Earnings ratio.
ARM's earnings are expected to grow with 31.55% in the coming years. This may justify a more expensive valuation.
PEG (NY)4.37
PEG (5Y)N/A
EPS Next 2Y31.19%
EPS Next 3Y31.55%

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0

5. Dividend

5.1 Amount

ARM does not give a dividend.
Industry RankSector Rank
Dividend Yield N/A

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ARM HOLDINGS PLC-ADR

NASDAQ:ARM (1/22/2025, 4:01:09 PM)

After market: 179.76 -0.17 (-0.09%)

179.93

+24.73 (+15.93%)

Chartmill FA Rating
GICS SectorInformation Technology
GICS IndustryGroupSemiconductors & Semiconductor Equipment
GICS IndustrySemiconductors & Semiconductor Equipment
Earnings (Last)11-06 2024-11-06/amc
Earnings (Next)N/A N/A
Inst Owners6.33%
Inst Owner Change-0.98%
Ins OwnersN/A
Ins Owner ChangeN/A
Market Cap188.57B
Analysts73.81
Price Target150.48 (-16.37%)
Short Float %10.19%
Short Ratio2.57
Dividend
Industry RankSector Rank
Dividend Yield N/A
Yearly DividendN/A
Dividend Growth(5Y)N/A
DPN/A
Div Incr Years0
Div Non Decr Years0
Ex-DateN/A
Surprises & Revisions
EPS beat(2)2
Avg EPS beat(2)15.46%
Min EPS beat(2)14.9%
Max EPS beat(2)16.01%
EPS beat(4)4
Avg EPS beat(4)15.83%
Min EPS beat(4)14.9%
Max EPS beat(4)16.95%
EPS beat(8)N/A
Avg EPS beat(8)N/A
EPS beat(12)N/A
Avg EPS beat(12)N/A
EPS beat(16)N/A
Avg EPS beat(16)N/A
Revenue beat(2)2
Avg Revenue beat(2)3.13%
Min Revenue beat(2)2.88%
Max Revenue beat(2)3.37%
Revenue beat(4)4
Avg Revenue beat(4)4.58%
Min Revenue beat(4)2.88%
Max Revenue beat(4)7.12%
Revenue beat(8)N/A
Avg Revenue beat(8)N/A
Revenue beat(12)N/A
Avg Revenue beat(12)N/A
Revenue beat(16)N/A
Avg Revenue beat(16)N/A
PT rev (1m)0.33%
PT rev (3m)8.83%
EPS NQ rev (1m)0%
EPS NQ rev (3m)-7.52%
EPS NY rev (1m)0%
EPS NY rev (3m)-0.26%
Revenue NQ rev (1m)0%
Revenue NQ rev (3m)-1.97%
Revenue NY rev (1m)0.95%
Revenue NY rev (3m)0.5%
Valuation
Industry RankSector Rank
PE 133.28
Fwd PE 86.46
P/S 53.34
P/FCF 359.17
P/OCF 272.1
P/B 31.37
P/tB 45.04
EV/EBITDA 277.28
EPS(TTM)1.35
EY0.75%
EPS(NY)2.08
Fwd EY1.16%
FCF(TTM)0.5
FCFY0.28%
OCF(TTM)0.66
OCFY0.37%
SpS3.37
BVpS5.74
TBVpS4
PEG (NY)4.37
PEG (5Y)N/A
Profitability
Industry RankSector Rank
ROA 7.93%
ROE 10.66%
ROCE 5.68%
ROIC 4.43%
ROICexc 6.6%
ROICexgc 10.61%
OM 11.54%
PM (TTM) 18.13%
GM 95.98%
FCFM 14.85%
ROA(3y)6.64%
ROA(5y)N/A
ROE(3y)11.4%
ROE(5y)N/A
ROIC(3y)7.14%
ROIC(5y)N/A
ROICexc(3y)11.32%
ROICexc(5y)N/A
ROICexgc(3y)24.1%
ROICexgc(5y)N/A
ROCE(3y)9.15%
ROCE(5y)N/A
ROICexcg growth 3YN/A
ROICexcg growth 5YN/A
ROICexc growth 3YN/A
ROICexc growth 5YN/A
OM growth 3Y-32.83%
OM growth 5YN/A
PM growth 3Y-20.92%
PM growth 5YN/A
GM growth 3Y0.85%
GM growth 5YN/A
F-Score7
Asset Turnover0.44
Health
Industry RankSector Rank
Debt/Equity 0
Debt/FCF 0.01
Debt/EBITDA 0
Cap/Depr 100.6%
Cap/Sales 4.75%
Interest Coverage 250
Cash Conversion 120.52%
Profit Quality 81.9%
Current Ratio 4.52
Quick Ratio 4.52
Altman-Z 48.66
F-Score7
WACC13.97%
ROIC/WACC0.32
Cap/Depr(3y)61.17%
Cap/Depr(5y)N/A
Cap/Sales(3y)3.56%
Cap/Sales(5y)N/A
Profit Quality(3y)167.51%
Profit Quality(5y)N/A
High Growth Momentum
Growth
EPS 1Y (TTM)-43.14%
EPS 3Y-7.8%
EPS 5YN/A
EPS Q2Q%-16.67%
EPS Next Y30.51%
EPS Next 2Y31.19%
EPS Next 3Y31.55%
EPS Next 5Y23.82%
Revenue 1Y (TTM)20.68%
Revenue growth 3Y16.84%
Revenue growth 5YN/A
Sales Q2Q%4.71%
Revenue Next Year25.29%
Revenue Next 2Y24.84%
Revenue Next 3Y23.77%
Revenue Next 5Y21.17%
EBIT growth 1Y-82.74%
EBIT growth 3Y-21.51%
EBIT growth 5YN/A
EBIT Next Year47.38%
EBIT Next 3Y36.01%
EBIT Next 5Y33.38%
FCF growth 1Y46.59%
FCF growth 3Y-3.93%
FCF growth 5YN/A
OCF growth 1Y47.5%
OCF growth 3Y-4.03%
OCF growth 5YN/A