Benzinga - by Benzinga Insights, Benzinga Staff Writer.
In today's fast-paced and competitive business landscape, it is essential for investors and industry enthusiasts to thoroughly analyze companies before making investment decisions. In this article, we will conduct a comprehensive industry comparison, evaluating ARM Holdings (NASDAQ:ARM) against its key competitors in the Semiconductors & Semiconductor Equipment industry. By examining key financial metrics, market position, and growth prospects, we aim to provide valuable insights for investors and shed light on company's performance within the industry.
ARM Holdings Background Arm Holdings is the IP owner and developer of the ARM architecture (ARM stands for Acorn RISC Machine), which is used in 99% of the world's smartphone CPU cores, and it also has high market share in other battery-powered devices like wearables, tablets, or sensors. Arm licenses its architecture for a fee, offering different types of licenses depending on the flexibility the customer needs. Customers like Apple or Qualcomm buy architectural licenses, which allows them to modify the architecture and add or delete instructions to tailor the chips to their specific needs. Other clients directly buy off-the-shelf designs from Arm. Both off-the-shelf and architectural customers pay a royalty fee per chip shipped.
CompanyP/EP/BP/SROEEBITDA (in billions)Gross Profit (in billions)Revenue Growth| ARM Holdings PLC | 354.33 | 13.36 | 22.47 | -2.45% | $-0.12 | $0.76 | 27.94% |
| NVIDIA Corp | 63.51 | 35.75 | 26.71 | 30.42% | $10.96 | $13.4 | 205.51% |
| Taiwan Semiconductor Manufacturing Co Ltd | 18.41 | 4.80 | 7.43 | 6.46% | $392.33 | $296.64 | -10.83% |
| Broadcom Inc | 28.95 | 22.22 | 11.09 | 14.98% | $4.91 | $6.16 | 4.87% |
| Advanced Micro Devices Inc | 1125.91 | 3.64 | 9.09 | 0.54% | $1.13 | $2.75 | 4.22% |
| Qualcomm Inc | 19.62 | 6.60 | 4.02 | 7.05% | $2.06 | $4.75 | -24.26% |
| Texas Instruments Inc | 19.84 | 8.37 | 7.75 | 10.44% | $2.34 | $2.81 | -13.53% |
| Analog Devices Inc | 27.89 | 2.55 | 7.51 | 1.39% | $1.18 | $1.65 | -16.36% |
| Microchip Technology Inc | 18.20 | 6.44 | 5.13 | 9.66% | $1.1 | $1.53 | 8.74% |
| STMicroelectronics NV | 10.13 | 2.75 | 2.55 | 7.28% | $1.69 | $2.11 | 2.55% |
| ON Semiconductor Corp | 14.44 | 4.12 | 3.86 | 8.05% | $0.87 | $1.03 | -0.54% |
| GLOBALFOUNDRIES Inc | 21.63 | 2.82 | 4 | 2.34% | $0.64 | $0.53 | -10.7% |
| United Microelectronics Corp | 8.86 | 1.76 | 2.61 | 4.72% | $29.0 | $20.46 | -24.3% |
| ASE Technology Holding Co Ltd | 15.90 | 1.97 | 0.97 | 3.06% | $28.07 | $24.92 | -18.27% |
| First Solar Inc | 35.17 | 2.64 | 5.27 | 4.35% | $0.37 | $0.38 | 27.37% |
| Skyworks Solutions Inc | 15.66 | 2.52 | 3.22 | 4.09% | $0.4 | $0.48 | -13.37% |
| Lattice Semiconductor Corp | 38.86 | 13.02 | 11.13 | 8.96% | $0.06 | $0.13 | 1.1% |
| Universal Display Corp | 39.51 | 5.83 | 13.80 | 3.77% | $0.06 | $0.11 | -12.13% |
| Rambus Inc | 26.35 | 7.77 | 16.51 | 10.86% | $0.12 | $0.08 | -6.19% |
| MACOM Technology Solutions Holdings Inc | 65.26 | 6.28 | 9.21 | 2.63% | $0.05 | $0.09 | -15.59% |
| Allegro Microsystems Inc | 21.19 | 4.83 | 5.01 | 6.18% | $0.09 | $0.16 | 15.92% |
| Average | 81.76 | 7.33 | 7.84 | 7.36% | $23.87 | $19.01 | 5.21% |
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.dividend-frequency { font-size: 12px; color: #6c757d; } By closely studying ARM Holdings, we can observe the following trends:
- The current Price to Earnings ratio of 354.33 is 4.33x higher than the industry average, indicating the stock is priced at a premium level according to the market sentiment.
- With a Price to Book ratio of 13.36, which is 1.82x the industry average, ARM Holdings might be considered overvalued in terms of its book value, as it is trading at a higher multiple compared to its industry peers.
- The stock's relatively high Price to Sales ratio of 22.47, surpassing the industry average by 2.87x, may indicate an aspect of overvaluation in terms of sales performance.
- The Return on Equity (ROE) of -2.45% is 9.81% below the industry average, suggesting potential inefficiency in utilizing equity to generate profits.
- The company has lower Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $-120 Million, which is -0.01x below the industry average. This potentially indicates lower profitability or financial challenges.
- Compared to its industry, the company has lower gross profit of $760 Million, which indicates 0.04x below the industry average, potentially indicating lower revenue after accounting for production costs.
- The company's revenue growth of 27.94% exceeds the industry average of 5.21%, indicating strong sales performance and market outperformance.
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.
When comparing ARM Holdings with its top 4 peers based on the Debt-to-Equity ratio, the following insights can be observed:
- ARM Holdings is in a relatively stronger financial position compared to its top 4 peers, as evidenced by its lower debt-to-equity ratio of 0.04.
- This implies that the company relies less on debt financing and has a more favorable balance between debt and equity.
This article was generated by Benzinga's automated content engine and reviewed by an editor.
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