Financial Survey: Applied Materials (NASDAQ:AMAT) versus ARM (NASDAQ:ARM)

Applied Materials (NASDAQ:AMAT) and ARM (NASDAQ:ARM) are both large-cap computer and technology companies, but which is the better business? We will contrast the two companies based on the strength of their risk, institutional ownership, earnings, dividends, valuation, analyst recommendations and profitability.

Valuation & Earnings

This table compares Applied Materials and ARM”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Applied Materials	$28.37 billion	6.94	$7.00 billion	$8.68	28.60
ARM	$4.01 billion	30.21	$792.00 million	$0.78	146.90

Applied Materials has higher revenue and earnings than ARM. Applied Materials is trading at a lower price-to-earnings ratio than ARM, indicating that it is currently the more affordable of the two stocks.

Analyst Ratings

This is a breakdown of current ratings and recommmendations for Applied Materials and ARM, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Applied Materials	0	14	20	0	2.59
ARM	1	7	18	1	2.70

Applied Materials presently has a consensus target price of $245.48, suggesting a potential downside of 1.12%. ARM has a consensus target price of $178.30, suggesting a potential upside of 55.61%. Given ARM’s stronger consensus rating and higher probable upside, analysts plainly believe ARM is more favorable than Applied Materials.

Institutional and Insider Ownership

80.6% of Applied Materials shares are owned by institutional investors. Comparatively, 7.5% of ARM shares are owned by institutional investors. 0.2% of Applied Materials shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Volatility & Risk

Applied Materials has a beta of 1.67, meaning that its share price is 67% more volatile than the S&P 500. Comparatively, ARM has a beta of 4.23, meaning that its share price is 323% more volatile than the S&P 500.

Profitability

This table compares Applied Materials and ARM’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Applied Materials	24.67%	39.26%	22.13%
ARM	18.81%	15.03%	11.39%

Summary

Applied Materials beats ARM on 9 of the 15 factors compared between the two stocks.

About Applied Materials

Applied Materials, Inc. engages in the provision of manufacturing equipment, services, and software to the semiconductor, display, and related industries. The company operates through three segments: Semiconductor Systems, Applied Global Services, and Display and Adjacent Markets. The Semiconductor Systems segment develops, manufactures, and sells various manufacturing equipment that is used to fabricate semiconductor chips or integrated circuits. This segment also offers various technologies, including epitaxy, ion implantation, oxidation/nitridation, rapid thermal processing, physical vapor deposition, chemical vapor deposition, chemical mechanical planarization, electrochemical deposition, atomic layer deposition, etching, and selective deposition and removal, as well as metrology and inspection tools. The Applied Global Services segment provides integrated solutions to optimize equipment and fab performance and productivity comprising spares, upgrades, services, remanufactured earlier generation equipment, and factory automation software for semiconductor, display, and other products. The Display and Adjacent Markets segment offers products for manufacturing liquid crystal displays; organic light-emitting diodes; and other display technologies for TVs, monitors, laptops, personal computers, electronic tablets, smart phones, and other consumer-oriented devices. It operates in the United States, China, Korea, Taiwan, Japan, Southeast Asia, and Europe. The company was incorporated in 1967 and is headquartered in Santa Clara, California.

About ARM

Arm Holdings Plc engages in the licensing, marketing, research, and development of microprocessors, systems IP, graphics processing units, physical IP and associated systems IP, software, and tools. It operates through the following geographical segments: United Kingdom, United States, and Other Countries. The company was founded on November 12, 1990 and is headquartered in Cambridge, the United Kingdom.