Arm Holdings Plc /Uk (NASDAQ: ARM)

Sector: Technology Industry: Semiconductors CIK: 0001973239
Market Cap 133.90 Bn
P/B 17.17
P/E 167.16
P/S 28.67
ROIC (Qtr) 10.63
Div Yield % 0.00
Rev 1y % (Qtr) 26.35
Total Debt (Qtr) 437.00 Mn
Debt/Equity (Qtr) 0.06

About

Price action

Investment thesis

Bull case

  • Strong operating cash flow of 1.52B provides robust 3.48x coverage of total debt 437M, indicating excellent debt servicing capability and financial flexibility.
  • Healthy cash reserves of 2.81B provide 70.17x coverage of short-term debt 40M, demonstrating strong liquidity position and minimal refinancing risk.
  • Strong tangible asset base of 8.31B provides 19.02x coverage of total debt 437M, indicating robust asset backing and low credit risk.
  • Tangible assets of 8.31B provide exceptional 7.91x coverage of deferred revenue 1.05B, showing strong service capability backing.
  • Robust free cash flow of 977M exceeds capital expenditure of 545M by 1.79x, indicating strong organic growth funding capability.

Bear case

  • Operating cash flow of 1.52B barely covers its investment activities of (312M), with a coverage ratio of -4.88, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • Investment activities of (312M) provide weak support for R&D spending of 2.62B, which is -0.12x, suggesting potentially insufficient investment in innovation relative to other capital deployment.
  • Operating cash flow of 1.52B provides insufficient coverage of deferred revenue obligations of 1.05B, which is 1.45x, raising concerns about future service delivery capabilities.
  • The company's operating cash flow of 1.52B shows concerning coverage of stock compensation expenses of 984M, with a 1.55 ratio indicating potential earnings quality issues.
  • Operating earnings of 820M show weak coverage of depreciation charges of 281M, with a 2.92 ratio indicating high capital intensity and potential reinvestment needs.

Product and Service Breakdown of Revenue (2025)

Geographical Breakdown of Revenue (2025)

Peer comparison

Companies in the Semiconductors
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 NVDA Nvidia Corp 4,120.22 Bn 6,867.04 847.78 10.48 Bn
2 TSM Taiwan Semiconductor Manufacturing Co Ltd 1,782.57 Bn 362.79 138.75 31.18 Bn
3 AVGO Broadcom Inc. 1,393.11 Bn 119.76 35.84 65.14 Bn
4 MU Micron Technology Inc 453.24 Bn 657.82 30.76 12.43 Bn
5 AMD Advanced Micro Devices Inc 338.42 Bn 78.07 9.77 3.85 Bn
6 TXN Texas Instruments Inc 225.71 Bn 66.70 17.17 14.05 Bn
7 INTC Intel Corp 225.13 Bn -843.17 4.26 46.59 Bn
8 QCOM Qualcomm Inc/De 147.37 Bn 27.47 3.28 14.82 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 12.95 4.15
EV to Cash from Ops. EV/CFO 86.59 -405.91
EV to Debt EV to Debt 301.58 81.67
EV to EBIT EV/EBIT 160.72 -94.01
EV to EBITDA EV/EBITDA 114.30 112.02
EV to Free Cash Flow [EV/FCF] EV/FCF 134.89 103.01
EV to Market Cap EV to Market Cap 0.98 0.77
EV to Revenue EV/Rev 28.21 36.18
Price to Book Value [P/B] P/B 17.17 24.05
Price to Earnings [P/E] P/E 167.16 97.65
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Dividend Coverage Ratio 0.00 2.38
Dividend Payout Ratio % Div Payout % (Qtr) 0.00 3.97
Dividend per Basic Share Div per Share (Qtr) 0.00 0.63
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 0.00 21.06
Interest Coverage Interest Coverage 0.00 8.98
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) -249.36 -149.31
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) 37.87 70.06
Dividend Growth (1y) % Dividend Growth (1y) % 0.00 5.42
EBIAT Growth (1y) % EBIAT 1y % (Qtr) -0.62 51.85
EBITDA Growth (1y) % EBITDA 1y % (Qtr) 76.84 91.14
EBIT Growth (1y) % EBIT 1y % (Qtr) 29.34 36.72
EBT Growth (1y) % EBT 1y % (Qtr) 29.34 30.25
EPS Growth (1y) % EPS 1y % (Qtr) -3.90 49.61
FCF Growth (1y) % FCF 1y % (Qtr) 50.31 281.55
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) 27.92 37.25
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.46 0.50
Cash Payout Ratio Cash Payout Ratio 0.00 0.09
Cash Ratio Cash Ratio (Qtr) 2.66 2.35
Current Ratio Curr Ratio (Qtr) 5.43 5.61
Debt to Equity Ratio Debt/Equity (Qtr) 0.06 -0.02
Interest Cover Ratio Interest Cover Ratio 0.00 8.98
Times Interest Earned Times Interest Earned 0.00 8.98
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 23.60 -113.04
EBIT Margin % EBIT Margin % (Qtr) 17.56 -92.05
EBT Margin % EBT Margin % (Qtr) 17.56 -132.99
Gross Margin % Gross Margin % (Qtr) 97.50 47.72
Net Profit Margin % Net Margin % (Qtr) 17.10 -133.93