ARM HOLDINGS PLC NDQ-ARM RECENT

PRICE 126.74 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
164.0
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
$N/A-$N/A $N/A (N/A%) 80
2027-29 PROJECTIONS 60
Ann’l Total
Price Gain Return 40
High 245 (+95%) 18%
Low 165 (+30%) 7%
% TOT. RETURN 2/24
Institutional Decisions THIS VL ARITH.*
2Q2023 3Q2023 4Q2023 STOCK INDEX 18
Percent 36 1 yr. — 10.4
to Buy 0 204 189 shares 24
to Sell 0 0 97 3 yr. — 16.5
traded 12
Hld’s(000) 000 71150 77413 5 yr. — 63.1
Arm began in 1990 as a joint venture be- 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 © VALUE LINE PUB. LLC 27-29
tween Acorn Computers, Apple, and VLSI -- -- -- -- -- -- -- -- -- 3.05 3.75 4.50 Revenues per ADS A 7.80
Technology. ARM was listed on the London -- -- -- -- -- -- -- -- -- 1.40 1.70 2.15 ‘‘Cash Flow’’ per ADS 3.55
Stock Exchange and Nasdaq between 1998 -- -- -- -- -- -- -- -- -- 1.25 1.55 2.00 Earnings per ADS AB 3.40
to 2016 when it was taken private by Soft- -- -- -- -- -- -- -- -- -- Nil Nil Nil Div’ds Decl’d per ADS Nil
Bank. ARM Holdings IPO’d 95.5 million -- -- -- -- -- -- -- -- -- .05 .10 .15 Cap’l Spending per ADS .25
American Depository shares in September -- -- -- -- -- -- -- -- -- 4.85 5.90 6.65 Book Value per ADS C 9.10
of 2023. Barclays, Goldman Sachs, J.P. -- -- -- -- -- -- -- -- - - 1050.00 1055.00 1060.00 Common ADS Outst’g D 1000.0
Morgan, and Mizuho led the offering. -- -- -- -- -- -- -- -- - - Bold figures are Avg Ann’l P/E Ratio 60.0
-- -- -- -- -- -- -- -- -- Value Line Relative P/E Ratio 3.35
estimates
-- -- -- -- -- -- -- -- -- Avg Ann’l Div’d Yield Nil
CAPITAL STRUCTURE as of 12/31/23 -- -- -- -- -- -- -- -- -- 3200 3950 4775 Revenues ($mill) 7800
Total Debt None -- -- -- -- -- -- -- -- -- 48.5% 53.0% 54.0% Operating Margin 52.5%
LT Debt None -- -- -- -- -- -- -- -- -- 165 160 160 Depreciation ($mill) 150
-- -- -- -- -- -- -- -- -- 1290 1615 2105 Net Profit ($mill) 3405
-- -- -- -- -- -- -- -- -- 14.0% 16.0% 17.0% Income Tax Rate 17.0%
No Defined Benefit Pension Plan -- -- -- -- -- -- -- -- -- 40.3% 40.8% 44.1% Net Profit Margin 43.7%
-- -- -- -- -- -- -- -- -- 2815 2900 3545 Working Cap’l ($mill) 6580
Pfd Stock None -- -- -- -- -- -- -- -- -- Nil Nil Nil Long-Term Debt ($mill) Nil
Common Stock 1,048,888,489 shs. -- -- -- -- -- -- -- -- -- 5100 6210 7075 Shr. Equity ($mill) 9085
as of 12/31/23 -- -- -- -- -- -- -- -- -- 25.5% 26.0% 29.5% Return on Total Cap’l 37.5%
-- -- -- -- -- -- -- -- -- 25.5% 26.0% 29.5% Return on Shr. Equity 37.5%
MARKET CAP: $133 billion (Large Cap) -- -- -- -- -- -- -- -- -- 25.5% 26.0% 29.5% Retained to Com Eq 37.5%
CURRENT POSITION 2021 2022 12/31/23 -- -- -- -- -- -- -- -- -- Nil Nil Nil All Div’ds to Net Prof Nil
($MILL.)
Cash Assets -- -- 2401 BUSINESS: Arm Holdings plc designs central processing units in 2023, China 21%, Taiwan 19%, Korea 7%, other 11%. Annual-
Receivables -- -- 799 (CPUs) and is the world’s most widely used CPU technology. It li- ized Contract Value $1.108 billion (9/2023). Employs 6,629 as of
Inventory -- -- -- censes high-performance, low-cost, energy-efficient CPU products 9/23 (80% engineers). Chrmn: Masayoshi San. CEO: Rene Haas.
Other -- -- 428
Current Assets -- -- 3628 and technology. Customers can license individual products or li- Stock owners: Off’s & dir’s, less than 1%; SoftBank Group 90.6%
Accts Payable -- -- 25 cense a range of technology through Arm Total Access or Arm (9/23 proxy). Inc. UK. Address: 110 Fulbourn Rd. Cambridge, UK
Debt Due -- -- -- Flexible Access programs. Sales to U.S. accounted for 42% of total CB1 9NJ. Telephone: 44 1223 400 400 Internet: www.arm.com
Other -- -- 841
Current Liab. -- -- 866 The stock price of ARM Holdings has ation potential out to 2027-2029. The
nearly doubled since our last report. emergence of generative artificial in-
ANNUAL RATES Past Past Est’d ’21-’23
Adjusted earnings for the fiscal third telligence and large language models will
of change (per ADS) 10 Yrs. 5 Yrs. to ’27-’29
Revenues -- -- quarter (ended December 31st) were $0.31
-- require substantial processing power. Not
‘‘Cash Flow’’ -- -- per share, $0.06 above our forecast. The
-- only does ARM technology provide high-
Earnings -- -- --
subsequent surge in the stock price was performance, but it does so within greater
Dividends -- -- Nil
Book Value -- -- aided by the thin share float in our view
-- power constraints. Another leg of growth
Fiscal Full
(Softbank still owned 90% as of the IPO). will likely come through differentiating it-
Year QUARTERLY REVENUES ($ mill.) A
Fiscal Demand is robust at present. Royalty self in the marketplace by creating specific
Begins Jun.30 Sep.30 Dec.31 Mar.31 Year
and licensing revenues jumped 11% and computing subsystems. By configuring
2021 -- -- -- -- - - 18%, respectively in the third quarter. ARM platforms for certain industries, the
2022 -- -- -- -- - - Customers are scrambling for ARM’s de- company will better serve design custom-
2023 675.0 806.0 824.0 895 3200 sign technology in order to take advantage ers, permitting greater efficiency and
2024 865 960 975 1150 3950
2025 1065 1160 1200 1350 4775 of new artificial intelligence (AI) applica- reducing critical development times.
Fiscal Full
tions. As royalty revenue grows for ap- This unranked issue should interest
Year EARNINGS PER ADS AB
Fiscal plications in everything from autos to patient investors with long time hori-
Begins Jun.30 Sep.30 Dec.31 Mar.31 Year
cloud servers, this in turn fuels more prod- zons. From a fundamental view, there are
2021 -- -- -- -- -- ucts and more engineers choose to develop few tech companies with better long-term
2022 -- -- -- -- -- software utilizing ARM technology. The prospects. However, the stock price is very
2023 .24 .36 .31 .34 1.25
2024 .32 .43 .37 .43 1.55 latest shift to ARMv9-based chips is driv- erratic, making it inappropriate for conser-
2025 .45 .50 .50 .55 2.00 ing up royalty rates, and sales of the im- vative accounts. Plus, a lockup period ex-
proved platform are now 15% of the total, pired on March 12th and might exacerbate
Cal- QUARTERLY DIVIDENDS PAID Full up from just 10% in the previous quarter. volatility. Strong cash flows may allow
endar Mar.31 Jun.30 Sep.30 Dec.31 Year
Several ARM-based smartphones will be buybacks to occur, but capital allocation
2020 released by prominent vendors this year, plans are not set in stone. Finally, inves-
2021 NO CASH DIVIDENDS allowing a slew of new functions, such as tors should note even solid results may not
2022 BEING PAID live translation and intuitive search. prevent the p/e ratio from contracting.
2023
2024 ARM offers above-average appreci- Charles C. Moran March 22, 2024
(A) Fiscal years end March 31st of the follow- (C) Includes intangibles. At 12/31/2023: $1,841 Company’s Financial Strength B++
ing calendar year. All figures in $US. (B) Non- million, or $1.75 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 May. due to short trading history. Earnings Predictability NMF
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