ARM HOLDINGS PLC-ADR(NASDAQ:ARM) stock Fundamental Analysis

Fundamental Rating

We assign a fundamental rating of 5 out of 10 to ARM. ARM was compared to 108 industry peers in the Semiconductors & Semiconductor Equipment industry. ARM has an excellent financial health rating, but there are some minor concerns on its profitability. ARM is valued quite expensive, but it does show an excellent growth.

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1. Profitability

1.1 Basic Checks

ARM had positive earnings in the past year.

ARM had a positive operating cash flow in the past year.

1.2 Ratios

ARM's Return On Assets of 9.49% is fine compared to the rest of the industry. ARM outperforms 76.85% of its industry peers.

Looking at the Return On Equity, with a value of 12.56%, ARM is in the better half of the industry, outperforming 75.00% of the companies in the same industry.

Looking at the Return On Invested Capital, with a value of 4.54%, ARM is in the better half of the industry, outperforming 64.81% of the companies in the same industry.

ARM had an Average Return On Invested Capital over the past 3 years of 7.14%. This is below the industry average of 11.67%.

		Industry Rank	Sector Rank
ROA	9.49%
ROE	12.56%
ROIC	4.54%

ROA(3y)6.64%

ROA(5y)N/A

ROE(3y)11.4%

ROE(5y)N/A

ROIC(3y)7.14%

ROIC(5y)N/A

1.3 Margins

ARM has a Profit Margin of 21.82%. This is amongst the best in the industry. ARM outperforms 82.41% of its industry peers.

In the last couple of years the Profit Margin of ARM has declined.

Looking at the Operating Margin, with a value of 11.99%, ARM is in the better half of the industry, outperforming 67.59% of the companies in the same industry.

ARM's Operating Margin has declined in the last couple of years.

ARM has a better Gross Margin (96.37%) than 100.00% of its industry peers.

ARM's Gross Margin has been stable in the last couple of years.

		Industry Rank	Sector Rank
OM	11.99%
PM (TTM)	21.82%
GM	96.37%

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

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ROA

ROE

ROIC

Operating and Profit Margin

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2. Health

2.1 Basic Checks

With a Return on Invested Capital (ROIC) below the Cost of Capital (WACC), ARM is destroying value.

Compared to 1 year ago, ARM has more shares outstanding

The debt/assets ratio for ARM is higher compared to a year ago.

2.2 Solvency

An Altman-Z score of 47.44 indicates that ARM is not in any danger for bankruptcy at the moment.

ARM has a Altman-Z score of 47.44. This is amongst the best in the industry. ARM outperforms 96.30% of its industry peers.

ARM has no outstanding debt. Therefor its Debt/Equity and Debt/FCF ratios are 0 and belong to the best of the industry.

		Industry Rank	Sector Rank
Debt/Equity	0
Debt/FCF	0.02
Altman-Z	47.44

ROIC/WACC0.39

WACC11.73%

2.3 Liquidity

A Current Ratio of 4.96 indicates that ARM has no problem at all paying its short term obligations.

ARM has a Current ratio of 4.96. This is in the better half of the industry: ARM outperforms 75.93% of its industry peers.

A Quick Ratio of 4.96 indicates that ARM has no problem at all paying its short term obligations.

ARM's Quick ratio of 4.96 is amongst the best of the industry. ARM outperforms 85.19% of its industry peers.

		Industry Rank	Sector Rank
Current Ratio	4.96
Quick Ratio	4.96

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WACC

Debt/Equity

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Altman-Z score

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3. Growth

3.1 Past

ARM shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 31.39%, which is quite impressive.

The Earnings Per Share has been decreasing by -7.80% on average over the past years.

Looking at the last year, ARM shows a very negative growth in Revenue. The Revenue has decreased by -25.88% in the last year.

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)31.39%

EPS 3Y-7.8%

EPS 5YN/A

EPS Q2Q%34.48%

Revenue 1Y (TTM)-25.88%

Revenue growth 3Y16.84%

Revenue growth 5YN/A

Sales Q2Q%19.3%

3.2 Future

The Earnings Per Share is expected to grow by 23.82% on average over the next years. This is a very strong growth

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 Y34.54%

EPS Next 2Y30.67%

EPS Next 3Y30.37%

EPS Next 5Y23.82%

Revenue Next Year24.04%

Revenue Next 2Y24.32%

Revenue Next 3Y23.98%

Revenue Next 5Y21.17%

3.3 Evolution

The EPS growth rate is accelerating: in the next years the growth will be better than in the last years.

When comparing the Revenue growth rate of the last years to the growth rate of the upcoming years, we see that the growth is accelerating.

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4. Valuation

4.1 Price/Earnings Ratio

A Price/Earnings ratio of 99.89 indicates a quite expensive valuation of ARM.

ARM's Price/Earnings ratio is in line with the industry average.

ARM is valuated expensively when we compare the Price/Earnings ratio to 29.63, which is the current average of the S&P500 Index.

With a Price/Forward Earnings ratio of 70.15, ARM can be considered very expensive at the moment.

Compared to the rest of the industry, the Price/Forward Earnings ratio of ARM indicates a slightly more expensive valuation: ARM is more expensive than 61.11% of the companies listed in the same industry.

When comparing the Price/Forward Earnings ratio of ARM to the average of the S&P500 Index (22.68), we can say ARM is valued expensively.

		Industry Rank	Sector Rank
PE	99.89
Fwd PE	70.15

4.2 Price Multiples

ARM's Enterprise Value to EBITDA ratio is in line with the industry average.

The rest of the industry has a similar Price/Free Cash Flow ratio as ARM.

		Industry Rank	Sector Rank
P/FCF	243.17
EV/EBITDA	252.43

4.3 Compensation for Growth

The high PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates an expensive valuation of the company.

A more expensive valuation may be justified as ARM's earnings are expected to grow with 30.37% in the coming years.

PEG (NY)2.89

PEG (5Y)N/A

EPS Next 2Y30.67%

EPS Next 3Y30.37%

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5. Dividend

5.1 Amount

No dividends for ARM!.

		Industry Rank	Sector Rank
Dividend Yield	N/A

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ARM HOLDINGS PLC-ADR

NASDAQ:ARM (2/21/2025, 8:01:43 PM)

After market: 144.66 -0.18 (-0.12%)

144.84

-6.01 (-3.98%)

Chartmill FA Rating

GICS SectorInformation Technology

GICS IndustryGroupSemiconductors & Semiconductor Equipment

GICS IndustrySemiconductors & Semiconductor Equipment

Earnings (Last)02-05 2025-02-05/amc

Earnings (Next)N/A N/A

Inst Owners6.69%

Inst Owner Change4.04%

Ins OwnersN/A

Ins Owner ChangeN/A

Market Cap152.23B

Analysts73.81

Price Target163.92 (13.17%)

Short Float %11.27%

Short Ratio2.45

Dividend

		Industry Rank	Sector 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)14.77%

Min EPS beat(2)13.54%

Max EPS beat(2)16.01%

EPS beat(4)4

Avg EPS beat(4)15.35%

Min EPS beat(4)13.54%

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)3.09%

Min Revenue beat(2)2.8%

Max Revenue beat(2)3.37%

Revenue beat(4)4

Avg Revenue beat(4)3.5%

Min Revenue beat(4)2.8%

Max Revenue beat(4)4.94%

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)1.38%

PT rev (3m)8.23%

EPS NQ rev (1m)0.08%

EPS NQ rev (3m)-8.02%

EPS NY rev (1m)3.09%

EPS NY rev (3m)3.23%

Revenue NQ rev (1m)0.16%

Revenue NQ rev (3m)-5.3%

Revenue NY rev (1m)-0.99%

Revenue NY rev (3m)-0.15%

Valuation

		Industry Rank	Sector Rank
PE	99.89
Fwd PE	70.15
P/S	41.21
P/FCF	243.17
P/OCF	188.87
P/B	23.72
P/tB	32.82
EV/EBITDA	252.43

EPS(TTM)1.45

EY1%

EPS(NY)2.06

Fwd EY1.43%

FCF(TTM)0.6

FCFY0.41%

OCF(TTM)0.77

OCFY0.53%

SpS3.51

BVpS6.11

TBVpS4.41

PEG (NY)2.89

PEG (5Y)N/A

Profitability

		Industry Rank	Sector Rank
ROA	9.49%
ROE	12.56%
ROCE	5.81%
ROIC	4.54%
ROICexc	6.99%
ROICexgc	10.91%
OM	11.99%
PM (TTM)	21.82%
GM	96.37%
FCFM	16.95%

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-Score6

Asset Turnover0.43

Health

		Industry Rank	Sector Rank
Debt/Equity	0
Debt/FCF	0.02
Debt/EBITDA	0
Cap/Depr	104.65%
Cap/Sales	4.87%
Interest Coverage	250
Cash Conversion	131.06%
Profit Quality	77.67%
Current Ratio	4.96
Quick Ratio	4.96
Altman-Z	47.44

F-Score6

WACC11.73%

ROIC/WACC0.39

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)31.39%

EPS 3Y-7.8%

EPS 5YN/A

EPS Q2Q%34.48%

EPS Next Y34.54%

EPS Next 2Y30.67%

EPS Next 3Y30.37%

EPS Next 5Y23.82%

Revenue 1Y (TTM)-25.88%

Revenue growth 3Y16.84%

Revenue growth 5YN/A

Sales Q2Q%19.3%

Revenue Next Year24.04%

Revenue Next 2Y24.32%

Revenue Next 3Y23.98%

Revenue Next 5Y21.17%

EBIT growth 1Y-42.69%

EBIT growth 3Y-21.51%

EBIT growth 5YN/A

EBIT Next Year47.31%

EBIT Next 3Y36.29%

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

ARM HOLDINGS PLC-ADR (ARM) Stock Fundamental Analysis

1. Profitability

1.1 Basic Checks

1.2 Ratios

1.3 Margins

More info and screens

2. Health

2.1 Basic Checks

2.2 Solvency

2.3 Liquidity

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3. Growth

3.1 Past

3.2 Future

3.3 Evolution

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4. Valuation

4.1 Price/Earnings Ratio

4.2 Price Multiples

4.3 Compensation for Growth

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5. Dividend

5.1 Amount

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