ARM HOLDINGS PLC NDQ-ARM RECENT

PRICE 125.54 P/ERATIONMF(Trailing:

Median: NMF) P/E RATIO NMF YLD
NMF RELATIVE DIV’D
Nil VALUE
LINE
TIMELINESS – E High:
Low:
78.7
46.5
188.8
65.1
Target Price Range
2027 2028 2029
SAFETY 3 New 12/22/23 LEGENDS
. . . . Relative Price Strength 320
TECHNICAL – E Options: Yes
Shaded area indicates recession
BETA NMF (1.00 = Market) 200
18-Month Target Price Range 160
Low-High Midpoint (% to Mid) 120
100
$92-$237 $165 (30%) 80
2027-29 PROJECTIONS 60
Ann’l Total
Price Gain Return 40
High 245 (+95%) 18%
Low 165 (+30%) 7%
% TOT. RETURN 8/24
Institutional Decisions THIS VL ARITH.*
4Q2023 1Q2024 2Q2024 STOCK INDEX 18
Percent 36 1 yr. — 14.1
to Buy 189 287 401 shares 24
to Sell 97 138 151 3 yr. — 11.1
traded 12
Hld’s(000) 77413 60859 60040 5 yr. — 80.9
Arm began in 1990 as a joint venture be- 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 © VALUE LINE PUB. LLC 27-29
tween Acorn Computers, Apple, and VLSI -- -- -- -- -- -- -- -- -- 3.11 3.90 4.65 Revenues per sh A 7.80
Technology. ARM was listed on the London -- -- -- -- -- -- -- -- -- 1.43 1.80 2.20 ‘‘Cash Flow’’ per sh 3.55
Stock Exchange and Nasdaq between 1998 -- -- -- -- -- -- -- -- -- 1.26 1.65 2.05 Earnings per sh AB 3.40
to 2016 when it was taken private by Soft- -- -- -- -- -- -- -- -- -- -- Nil Nil Div’ds Decl’d per sh Nil
Bank. ARM Holdings IPO’d 95.5 million -- -- -- -- -- -- -- -- -- .09 .10 .15 Cap’l Spending per sh .25
American Depository shares in September -- -- -- -- -- -- -- -- -- 5.09 6.40 7.00 Book Value per sh C 9.10
of 2023. Barclays, Goldman Sachs, J.P. -- -- -- -- -- -- -- -- - - 1040.3 1036.00 1030.00 Common Shs Outst’g D 1000.0
Morgan, and Mizuho led the offering. -- -- -- -- -- -- -- -- -- 36.8 Bold figures are Avg Ann’l P/E Ratio 60.0
-- -- -- -- -- -- -- -- -- 2.06 Value Line Relative P/E Ratio 3.35
estimates
-- -- -- -- -- -- -- -- -- -- Avg Ann’l Div’d Yield Nil
CAPITAL STRUCTURE as of 6/30/24 -- -- -- -- -- -- -- -- -- 3233.0 3975 4800 Revenues ($mill) 7800
Total Debt None -- -- -- -- -- -- -- -- -- 44.4% 53.5% 53.5% Operating Margin 52.5%
LT Debt None -- -- -- -- -- -- -- -- -- 162.0 160 160 Depreciation ($mill) 150
-- -- -- -- -- -- -- -- -- 1324.0 1605 2100 Net Profit ($mill) 3405
-- -- -- -- -- -- -- -- -- 13.4% 16.0% 17.0% Income Tax Rate 17.0%
No Defined Benefit Pension Plan -- -- -- -- -- -- -- -- -- 41.0% 41.3% 43.8% Net Profit Margin 43.7%
-- -- -- -- -- -- -- -- -- 2692.0 2850 3510 Working Cap’l ($mill) 6000
Pfd Stock None -- -- -- -- -- -- -- -- -- Nil Nil Long-Term Debt ($mill) Nil
Common Stock 1,040,300,000 shs. -- -- -- -- -- -- -- -- -- 5295.0 6640 7190 Shr. Equity ($mill) 9110
as of 6/30/24 -- -- -- -- -- -- -- -- -- 25.0% 24.5% 29.0% Return on Total Cap’l 37.5%
-- -- -- -- -- -- -- -- -- 25.0% 24.5% 29.0% Return on Shr. Equity 37.5%
MARKET CAP: $131 billion (Large Cap) -- -- -- -- -- -- -- -- -- 25.0% 24.5% 29.0% Retained to Com Eq 37.5%
CURRENT POSITION 2022 2023 6/30/24 -- -- -- -- -- -- -- -- -- -- Nil Nil All Div’ds to Net Prof Nil
($MILL.)
Cash Assets -- 2923 2465 BUSINESS: Arm Holdings plc designs central processing units in 2023, China 21%, Taiwan 19%, Korea 7%, other 11%. Annual-
Receivables -- 781 804 (CPUs) and is the world’s most widely used CPU technology. It li- ized Contract Value $1.108 billion (9/23). Employs 7,096 as of 3/24
Inventory -- -- -- censes high-performance, low-cost, energy-efficient CPU products (80% engineers). Chrmn: Masayoshi San. CEO: Rene Haas. Stock
Other -- 493 571
Current Assets -- 4197 3840 and technology. Customers can license individual products or li- owners: Off’s & dir’s, less than 1%; SoftBank Group 90.6% (9/23
Accts Payable -- 107 182 cense a range of technology through Arm Total Access or Arm proxy). Inc. UK. Address: 110 Fulbourn Rd. Cambridge, UK CB1
Debt Due -- -- -- Flexible Access programs. Sales to U.S. accounted for 42% of total 9NJ. Telephone: 44 1223 400 400 Internet: www.arm.com
Other -- 1398 873
Current Liab. -- 1505 1065 Arm Holdings’ powerful operating the cloud, infrastructure, internet of
momentum shows no sign of slowing. things, and automotive markets.
ANNUAL RATES Past Past Est’d ’21-’23 June-period revenue was up 39% over the The latest technological iteration of
of change (per ADS) 10 Yrs. 5 Yrs. to ’27-’29
Revenues -- -- NMF prior year level. Licensing revenue soared ARM chip design, Armv9, is fueling
‘‘Cash Flow’’ -- -- NMF 72%, while royalty revenue grew 17%. growth. Increased complexity and work-
Earnings -- -- NMF Remaining performance obligations grew load requirements are being met by ARM’s
Dividends -- -- Nil
Book Value -- -- NMF 29%. Non-GAAP margins totaled 49%, current architecture. For example, in 2016
Fiscal Full
leading to earnings per ADS of $0.40, or high-end cloud chips needed 8 processing
Year QUARTERLY REVENUES ($ mill.) A Fiscal $0.04 above our estimate. We have raised cores, but currently necessitate 192 cores.
Begins Jun.30 Sep.30 Dec.31 Mar.31 Year
our non-GAAP earnings-per-ADS estimate ARM’s superior processing technology,
2021 -- -- -- -- - - for fiscal 2024 (ends March 31, 2025) by a coupled with lower energy consumption,
2022 -- -- -- -- - - dime to the top of the company’s fore- make it the desired platform for chip
2023 675.0 806.0 824.0 928.0 3233.0 casted range ($1.45 to $1.65). designers.
2024 939.0 850 1000 1186 3975
2025 1050 1100 1200 1450 4800 Long-term prospects are still excep- Only risk-tolerant investors with a
Fiscal Full
tional. The stock price slipped a bit since long-term investment horizon should
Year EARNINGS PER ADS AB Fiscal our last report three months ago. ARM consider taking a position. At 32x this
Begins Jun.30 Sep.30 Dec.31 Mar.31 Year
shares are not immune to stock market fiscal year’s estimated revenue and rough-
2021 -- -- -- -- -- volatility, even though the outlook for ly 76x earnings per share, the valuation is
2022 -- -- -- -- -- their sophisticated semiconductor designs very demanding. Indeed, investors should
2023 .24 .36 .31 .35 1.26
2024 .40 .30 .40 .55 1.65 is arguably one of the brightest in the sec- be aware that the stock traded below the
2025 .45 .45 .50 .65 2.05 tor. In fact, roughly 20 million developers $100 level in August amidst the market
use ARM’s software ecosystem to develop turmoil, despite no evidence of weakening
Cal- QUARTERLY DIVIDENDS PAID Full numerous CPU products, giving it a last- company-specific fundamentals. In sum,
endar Mar.31 Jun.30 Sep.30 Dec.31 Year
ing competitive advantage. Growth in capital appreciation out to 2027-2029 is al-
2020 artificial intelligence applications should ready above average, but we suspect that
2021 NO CASH DIVIDENDS sustain superior growth over multiple nimble investors may be able to find a
2022 BEING PAID years, as developers move from the mobile cheaper entry point.
2023
2024 phone industry to massive opportunities in Charles C. Moran September 20, 2024
(A) Fiscal years end March 31st of the follow- (C) Includes intangibles. At 3/31/2024: $1,777 due to short trading history. Company’s Financial Strength B++
ing calendar year. All figures in $US. (B) Non- million, or $1.70 per share. Stock’s Price Stability NMF
GAAP diluted earnings. Next earnings report (D) In millions. (E) Unranked for Timeliness Price Growth Persistence NMF
due early Nov. Earnings Predictability NMF
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