Comparing SemiLEDS (NASDAQ:LEDS) & ARM (NASDAQ:ARM)

ARM (NASDAQ:ARM) and SemiLEDS (NASDAQ:LEDS) are both computer and technology companies, but which is the superior stock? We will contrast the two businesses based on the strength of their institutional ownership, valuation, analyst recommendations, dividends, earnings, risk and profitability.

Risk & Volatility

ARM has a beta of 3.33, meaning that its share price is 233% more volatile than the S&P 500. Comparatively, SemiLEDS has a beta of 1.15, meaning that its share price is 15% more volatile than the S&P 500.

Institutional & Insider Ownership

7.5% of ARM shares are held by institutional investors. Comparatively, 76.3% of SemiLEDS shares are held by institutional investors. 57.4% of SemiLEDS shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
ARM	17.15%	14.01%	10.65%
SemiLEDS	-6.71%	-89.53%	-13.38%

Earnings and Valuation

This table compares ARM and SemiLEDS”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
ARM	$4.01 billion	61.91	$792.00 million	$0.75	313.08
SemiLEDS	$43.01 million	0.31	-$1.13 million	($0.28)	-5.82

ARM has higher revenue and earnings than SemiLEDS. SemiLEDS 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 ARM and SemiLEDS, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
ARM	1	6	18	0	2.68
SemiLEDS	1	0	0	0	1.00

ARM currently has a consensus target price of $174.83, suggesting a potential downside of 25.54%. Given ARM’s stronger consensus rating and higher probable upside, equities research analysts plainly believe ARM is more favorable than SemiLEDS.

Summary

ARM beats SemiLEDS on 12 of the 14 factors compared between the two stocks.

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.

About SemiLEDS

SemiLEDs Corporation develops, manufactures, and sells light emitting diode (LED) chips, LED components, and LED modules and systems in the United States, Taiwan, the Netherlands, Germany, Japan, and internationally. The company also sells enhanced vertical, LED product series in blue, white, green, and UV; LED chips to packagers or distributors; and lighting products primarily to original design manufacturers of lighting products and the end-users of lighting devices, as well as packs and sells its LED chips. Its products are used for general lighting applications, including commercial, industrial, and residential lighting; and specialty industrial applications, such as ultraviolet or UV, curing of polymers, LED light therapy in medical/cosmetic applications, counterfeit detection, germicidal and viricidal devices LED lighting for horticulture applications, architectural lighting, and entertainment lighting. The company was incorporated in 2005 and is based in Chu-Nan, Taiwan.