In today's rapidly evolving and fiercely competitive business landscape, it is crucial for investors and industry analysts to conduct comprehensive company evaluations. In this article, we will undertake an in-depth industry comparison, assessing ARM Holdings ARM alongside its primary competitors in the Semiconductors & Semiconductor Equipment industry. By meticulously examining crucial financial indicators, market positioning, and growth potential, we aim to provide valuable insights to investors and shed light on company's performance within the industry.
ARM Holdings Background
ARM Holdings PLC architects, develops, and licenses high-performance, low-cost, and energy-efficient CPU products and related technology. Its primary product offerings are CPU products that address diverse performance, power, and cost requirements. Complementary products such as GPUs, System IP, and compute platforms are also available and enable high-performance, reliable, system-level creation for a wide range of increasingly sophisticated devices and applications.
| Company | P/E | P/B | P/S | ROE | EBITDA (in billions) | Gross Profit (in billions) | Revenue Growth |
|---|---|---|---|---|---|---|---|
| ARM Holdings PLC | 135.80 | 13 | 20.61 | 2.54% | $0.15 | $0.64 | -2.46% |
| NVIDIA Corp | 106.38 | 39.56 | 33.58 | 23.79% | $7.41 | $9.46 | 101.48% |
| Taiwan Semiconductor Manufacturing Co Ltd | 15.43 | 4.56 | 6.52 | 5.8% | $341.62 | $260.2 | -9.98% |
| Broadcom Inc | 25.36 | 15.40 | 9.72 | 14.98% | $4.91 | $6.16 | 4.87% |
| Texas Instruments Inc | 18.96 | 9 | 7.71 | 10.99% | $2.39 | $2.91 | -13.07% |
| Qualcomm Inc | 14.38 | 5.93 | 3.21 | 8.93% | $2.41 | $4.66 | -22.72% |
| Analog Devices Inc | 23.64 | 2.41 | 6.90 | 2.44% | $1.53 | $1.96 | -1.07% |
| Microchip Technology Inc | 17.96 | 6.20 | 4.92 | 9.99% | $1.12 | $1.56 | 16.55% |
| STMicroelectronics NV | 9.37 | 2.72 | 2.38 | 7.07% | $1.57 | $2.12 | 12.74% |
| ON Semiconductor Corp | 20.59 | 5.56 | 4.83 | 8.59% | $0.85 | $0.99 | 0.45% |
| GLOBALFOUNDRIES Inc | 21.13 | 3 | 4.03 | 2.31% | $0.63 | $0.53 | -7.43% |
| United Microelectronics Corp | 6.94 | 1.71 | 2.19 | 4.59% | $28.73 | $20.25 | -21.87% |
| First Solar Inc | 104.02 | 2.69 | 5.42 | 2.86% | $0.26 | $0.31 | 30.55% |
| ASE Technology Holding Co Ltd | 11.72 | 1.88 | 0.83 | 2.82% | $25.7 | $21.74 | -15.06% |
| Skyworks Solutions Inc | 15.03 | 2.65 | 3.15 | 3.37% | $0.39 | $0.46 | -13.09% |
| Lattice Semiconductor Corp | 54.11 | 18.95 | 15.34 | 9.29% | $0.06 | $0.13 | 17.79% |
| Universal Display Corp | 35.89 | 5.52 | 12.23 | 3.75% | $0.07 | $0.11 | 7.33% |
| Rambus Inc | 33.59 | 6.59 | 13.42 | 19.78% | $0.03 | $0.1 | -1.07% |
| Allegro Microsystems Inc | 25.17 | 5.80 | 5.81 | 6.11% | $0.08 | $0.16 | 27.8% |
| MACOM Technology Solutions Holdings Inc | 18.84 | 6.29 | 8.55 | 1.31% | $0.03 | $0.09 | -13.78% |
| Average | 30.45 | 7.71 | 7.93 | 7.83% | $22.09 | $17.57 | 5.29% |
When conducting a detailed analysis of ARM Holdings, the following trends become clear:
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At 135.8, the stock's Price to Earnings ratio significantly exceeds the industry average by 4.46x, suggesting a premium valuation relative to industry peers.
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It could be trading at a premium in relation to its book value, as indicated by its Price to Book ratio of 13.0 which exceeds the industry average by 1.69x.
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The Price to Sales ratio of 20.61, which is 2.6x the industry average, suggests the stock could potentially be overvalued in relation to its sales performance compared to its peers.
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The company has a lower Return on Equity (ROE) of 2.54%, which is 5.29% below the industry average. This indicates potential inefficiency in utilizing equity to generate profits, which could be attributed to various factors.
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The Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $150 Million is 0.01x below the industry average, suggesting potential lower profitability or financial challenges.
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With lower gross profit of $640 Million, which indicates 0.04x below the industry average, the company may experience lower revenue after accounting for production costs.
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The company's revenue growth of -2.46% is significantly lower compared to the industry average of 5.29%. This indicates a potential fall in the company's sales performance.
Debt To Equity Ratio
The debt-to-equity (D/E) ratio measures the financial leverage of a company by evaluating its debt relative to its equity.
Considering the debt-to-equity ratio in industry comparisons allows for a concise evaluation of a company's financial health and risk profile, aiding in informed decision-making.
By considering the Debt-to-Equity ratio, ARM Holdings can be compared to its top 4 peers, leading to the following observations:
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ARM Holdings exhibits a stronger financial position compared to its top 4 peers in the sector, as indicated by its lower debt-to-equity ratio of 0.05.
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This suggests that the company has a more favorable balance between debt and equity, which can be seen as a positive aspect for investors.
Key Takeaways
ARM Holdings has a high PE ratio, indicating that its stock price is relatively high compared to its earnings. The high PB ratio suggests that the stock is trading at a premium to its book value. The high PS ratio indicates that the stock is trading at a premium to its sales. The low ROE suggests that the company is not generating a high return on its shareholders' equity. The low EBITDA and gross profit indicate that the company's profitability is relatively low. The low revenue growth suggests that the company's sales are not growing at a significant rate.
This article was generated by Benzinga's automated content engine and reviewed by an editor.
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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