Analyzing ARM (NASDAQ:ARM) & Nova (NASDAQ:NVMI)

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

Insider and Institutional Ownership

7.5% of ARM shares are owned by institutional investors. Comparatively, 83.0% of Nova shares are owned by institutional investors. 1.0% of Nova shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Profitability

This table compares ARM and Nova’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%
Nova	29.44%	22.90%	13.65%

Analyst Ratings

This is a summary of current recommendations and price targets for ARM and Nova, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
ARM	1	6	18	0	2.68
Nova	0	2	8	0	2.80

ARM presently has a consensus target price of $174.83, suggesting a potential downside of 19.01%. Nova has a consensus target price of $442.25, suggesting a potential downside of 16.60%. Given Nova’s stronger consensus rating and higher possible upside, analysts clearly believe Nova is more favorable than ARM.

Risk & Volatility

ARM has a beta of 3.33, indicating that its share price is 233% more volatile than the S&P 500. Comparatively, Nova has a beta of 1.8, indicating that its share price is 80% more volatile than the S&P 500.

Valuation & Earnings

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
ARM	$4.01 billion	56.92	$792.00 million	$0.75	287.84
Nova	$880.58 million	19.14	$259.22 million	$8.01	66.20

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

Summary

Nova beats ARM on 8 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 Nova

Nova Ltd. designs, develops, produces, and sells process control systems used in the manufacture of semiconductors in Israel, Taiwan, the United States, China, Korea, and internationally. Its product portfolio includes a set of metrology platforms for dimensional, films, and materials and chemical metrology measurements for process control for various semiconductor manufacturing process steps, including lithography, etch, chemical mechanical planarization, deposition, electrochemical plating, and advanced packaging. The company serves various sectors of the integrated circuit manufacturing industry, including logic, foundries, and memory manufacturers, as well as process equipment manufacturers. Nova Ltd. was formerly known as Nova Measuring Instruments Ltd. and changed its name to Nova Ltd. in July 2021. Nova Ltd. was incorporated in 1993 and is headquartered in Rehovot, Israel.