ARM HOLDINGS PLC-ADR (ARM) Stock Fundamental Analysis
NASDAQ:ARM - US0420682058 - ADR
137.92 USD
+4.64 (+3.48%)
138.62 USD
+0.7 (+0.51%)
We assign a fundamental rating of 6 out of 10 to ARM. ARM was compared to 110 industry peers in the Semiconductors & Semiconductor Equipment industry. ARM scores excellent points on both the profitability and health parts. This is a solid base for a good stock. ARM shows excellent growth, but is valued quite expensive already. With these ratings, ARM could be worth investigating further for growth and quality investing!.
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.
In the past 5 years ARM has always been profitable.
Each year in the past 5 years ARM had a positive operating cash flow.
1.2 Ratios
ARM's Return On Assets of 7.44% is fine compared to the rest of the industry. ARM outperforms 75.45% of its industry peers.
Looking at the Return On Equity, with a value of 9.98%, ARM is in the better half of the industry, outperforming 71.82% of the companies in the same industry.
With a decent Return On Invested Capital value of 7.21%, ARM is doing good in the industry, outperforming 71.82% of the companies in the same industry.
Measured over the past 3 years, the Average Return On Invested Capital for ARM is below the industry average of 10.97%.
The 3 year average ROIC (6.46%) for ARM is below the current ROIC(7.21%), indicating increased profibility in the last year.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 7.44% | ||
| ROE | 9.98% | ||
| ROIC | 7.21% |
ROA(3y)6.79%
ROA(5y)N/A
ROE(3y)10.1%
ROE(5y)N/A
ROIC(3y)6.46%
ROIC(5y)N/A
1.3 Margins
ARM has a Profit Margin of 16.96%. This is in the better half of the industry: ARM outperforms 78.18% of its industry peers.
In the last couple of years the Profit Margin of ARM has remained more or less at the same level.
Looking at the Operating Margin, with a value of 18.51%, ARM is in the better half of the industry, outperforming 77.27% of the companies in the same industry.
ARM's Operating Margin has declined in the last couple of years.
The Gross Margin of ARM (97.14%) is better 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 | 18.51% | ||
| PM (TTM) | 16.96% | ||
| GM | 97.14% |
OM growth 3Y-6.24%
OM growth 5YN/A
PM growth 3Y-0.9%
PM growth 5YN/A
GM growth 3Y0.64%
GM growth 5YN/A
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.
ARM has more shares outstanding than it did 1 year ago.
ARM has a worse debt/assets ratio than last year.
2.2 Solvency
ARM has an Altman-Z score of 38.49. This indicates that ARM is financially healthy and has little risk of bankruptcy at the moment.
ARM's Altman-Z score of 38.49 is amongst the best of the industry. ARM outperforms 94.55% 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 Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0 | ||
| Debt/FCF | 0.03 | ||
| Altman-Z | 38.49 |
ROIC/WACC0.6
WACC12.12%
2.3 Liquidity
A Current Ratio of 4.99 indicates that ARM has no problem at all paying its short term obligations.
Looking at the Current ratio, with a value of 4.99, ARM is in the better half of the industry, outperforming 73.64% of the companies in the same industry.
A Quick Ratio of 4.99 indicates that ARM has no problem at all paying its short term obligations.
With an excellent Quick ratio value of 4.99, ARM belongs to the best of the industry, outperforming 84.55% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 4.99 | ||
| Quick Ratio | 4.99 |
3. Growth
3.1 Past
The Earnings Per Share has grown by an nice 12.77% over the past year.
ARM shows quite a strong growth in Earnings Per Share. Measured over the last years, the EPS has been growing by 12.27% yearly.
ARM shows quite a strong growth in Revenue. In the last year, the Revenue has grown by 17.84%.
ARM shows quite a strong growth in Revenue. Measured over the last years, the Revenue has been growing by 14.02% yearly.
EPS 1Y (TTM)12.77%
EPS 3Y12.27%
EPS 5YN/A
EPS Q2Q%-12.5%
Revenue 1Y (TTM)17.84%
Revenue growth 3Y14.02%
Revenue growth 5YN/A
Sales Q2Q%12.14%
3.2 Future
ARM is expected to show a strong growth in Earnings Per Share. In the coming years, the EPS will grow by 22.83% yearly.
Based on estimates for the next years, ARM will show a very strong growth in Revenue. The Revenue will grow by 23.75% on average per year.
EPS Next Y4.68%
EPS Next 2Y18.01%
EPS Next 3Y20.49%
EPS Next 5Y22.83%
Revenue Next Year19.44%
Revenue Next 2Y20.41%
Revenue Next 3Y19.83%
Revenue Next 5Y23.75%
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.
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.
4. Valuation
4.1 Price/Earnings Ratio
With a Price/Earnings ratio of 86.74, ARM can be considered very expensive at the moment.
The rest of the industry has a similar Price/Earnings ratio as ARM.
ARM is valuated expensively when we compare the Price/Earnings ratio to 27.24, which is the current average of the S&P500 Index.
With a Price/Forward Earnings ratio of 60.39, ARM can be considered very expensive at the moment.
ARM's Price/Forward Earnings ratio is in line with the industry average.
ARM's Price/Forward Earnings ratio indicates a rather expensive valuation when compared to the S&P500 average which is at 22.81.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 86.74 | ||
| Fwd PE | 60.39 |
4.2 Price Multiples
The rest of the industry has a similar Enterprise Value to EBITDA ratio as ARM.
ARM's Price/Free Cash Flow is on the same level as the industry average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 222.36 | ||
| EV/EBITDA | 147.72 |
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.
The decent profitability rating of ARM may justify a higher PE ratio.
ARM's earnings are expected to grow with 20.49% in the coming years. This may justify a more expensive valuation.
PEG (NY)18.55
PEG (5Y)N/A
EPS Next 2Y18.01%
EPS Next 3Y20.49%
5. Dividend
5.1 Amount
ARM does not give a dividend.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | N/A |
137.92
+4.64 (+3.48%)
Chartmill FA Rating
GICS SectorInformation Technology
GICS IndustryGroupSemiconductors & Semiconductor Equipment
GICS IndustrySemiconductors & Semiconductor Equipment
Earnings (Last)
Earnings (Next)
Inst Owners8.03%
Inst Owner Change4.07%
Ins Owners0.04%
Ins Owner ChangeN/A
Market Cap146.09B
Analysts72.86
Price Target154.12 (11.75%)
Short Float %12.04%
Short Ratio3.31
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)1
Avg EPS beat(2)0.99%
Min EPS beat(2)-1.76%
Max EPS beat(2)3.74%
EPS beat(4)3
Avg EPS beat(4)7.88%
Min EPS beat(4)-1.76%
Max EPS beat(4)16.01%
EPS beat(8)7
Avg EPS beat(8)14.75%
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)0
Avg Revenue beat(2)-0.78%
Min Revenue beat(2)-1.31%
Max Revenue beat(2)-0.24%
Revenue beat(4)2
Avg Revenue beat(4)1.16%
Min Revenue beat(4)-1.31%
Max Revenue beat(4)3.37%
Revenue beat(8)6
Avg Revenue beat(8)3.35%
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)10.82%
PT rev (3m)0.99%
EPS NQ rev (1m)-6.02%
EPS NQ rev (3m)-27.09%
EPS NY rev (1m)-5.18%
EPS NY rev (3m)-10.78%
Revenue NQ rev (1m)0.37%
Revenue NQ rev (3m)-8.53%
Revenue NY rev (1m)0.63%
Revenue NY rev (3m)-0.45%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 86.74 | ||
| Fwd PE | 60.39 | ||
| P/S | 35.45 | ||
| P/FCF | 222.36 | ||
| P/OCF | 143.37 | ||
| P/B | 20.85 | ||
| P/tB | 28.55 | ||
| EV/EBITDA | 147.72 |
EPS(TTM)1.59
EY1.15%
EPS(NY)2.28
Fwd EY1.66%
FCF(TTM)0.62
FCFY0.45%
OCF(TTM)0.96
OCFY0.7%
SpS3.89
BVpS6.61
TBVpS4.83
PEG (NY)18.55
PEG (5Y)N/A
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 7.44% | ||
| ROE | 9.98% | ||
| ROCE | 9.13% | ||
| ROIC | 7.21% | ||
| ROICexc | 11.06% | ||
| ROICexgc | 16.92% | ||
| OM | 18.51% | ||
| PM (TTM) | 16.96% | ||
| GM | 97.14% | ||
| FCFM | 15.94% |
ROA(3y)6.79%
ROA(5y)N/A
ROE(3y)10.1%
ROE(5y)N/A
ROIC(3y)6.46%
ROIC(5y)N/A
ROICexc(3y)10.54%
ROICexc(5y)N/A
ROICexgc(3y)19.88%
ROICexgc(5y)N/A
ROCE(3y)8.18%
ROCE(5y)N/A
ROICexcg growth 3Y-16.23%
ROICexcg growth 5YN/A
ROICexc growth 3Y-6.35%
ROICexc growth 5YN/A
OM growth 3Y-6.24%
OM growth 5YN/A
PM growth 3Y-0.9%
PM growth 5YN/A
GM growth 3Y0.64%
GM growth 5YN/A
F-Score7
Asset Turnover0.44
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0 | ||
| Debt/FCF | 0.03 | ||
| Debt/EBITDA | 0 | ||
| Cap/Depr | 181% | ||
| Cap/Sales | 8.78% | ||
| Interest Coverage | 250 | ||
| Cash Conversion | 105.82% | ||
| Profit Quality | 93.99% | ||
| Current Ratio | 4.99 | ||
| Quick Ratio | 4.99 | ||
| Altman-Z | 38.49 |
F-Score7
WACC12.12%
ROIC/WACC0.6
Cap/Depr(3y)91.19%
Cap/Depr(5y)79.24%
Cap/Sales(3y)4.62%
Cap/Sales(5y)4.95%
Profit Quality(3y)150.9%
Profit Quality(5y)159.55%
High Growth Momentum
Growth
EPS 1Y (TTM)12.77%
EPS 3Y12.27%
EPS 5YN/A
EPS Q2Q%-12.5%
EPS Next Y4.68%
EPS Next 2Y18.01%
EPS Next 3Y20.49%
EPS Next 5Y22.83%
Revenue 1Y (TTM)17.84%
Revenue growth 3Y14.02%
Revenue growth 5YN/A
Sales Q2Q%12.14%
Revenue Next Year19.44%
Revenue Next 2Y20.41%
Revenue Next 3Y19.83%
Revenue Next 5Y23.75%
EBIT growth 1Y305.85%
EBIT growth 3Y6.91%
EBIT growth 5YN/A
EBIT Next Year24.62%
EBIT Next 3Y29.09%
EBIT Next 5Y26.58%
FCF growth 1Y-13.89%
FCF growth 3Y-25.56%
FCF growth 5YN/A
OCF growth 1Y19.04%
OCF growth 3Y-4.65%
OCF growth 5YN/A