Critical Review: ARM (NASDAQ:ARM) & Cirrus Logic (NASDAQ:CRUS)

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

Volatility and Risk

Cirrus Logic has a beta of 1.08, indicating that its stock price is 8% more volatile than the S&P 500. Comparatively, ARM has a beta of 3.33, indicating that its stock price is 233% more volatile than the S&P 500.

Earnings & Valuation

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Cirrus Logic	$1.90 billion	3.96	$331.51 million	$7.59	19.38
ARM	$4.01 billion	39.32	$792.00 million	$0.75	198.81

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

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Cirrus Logic	20.47%	20.41%	17.22%
ARM	17.15%	14.01%	10.65%

Insider and Institutional Ownership

88.0% of Cirrus Logic shares are held by institutional investors. Comparatively, 7.5% of ARM shares are held by institutional investors. 1.2% of Cirrus Logic shares are held by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Analyst Ratings

This is a summary of current ratings and recommmendations for Cirrus Logic and ARM, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Cirrus Logic	0	3	4	1	2.75
ARM	1	6	19	0	2.69

Cirrus Logic currently has a consensus price target of $146.86, suggesting a potential downside of 0.19%. ARM has a consensus price target of $168.58, suggesting a potential upside of 13.06%. Given ARM’s higher probable upside, analysts plainly believe ARM is more favorable than Cirrus Logic.

Summary

Cirrus Logic beats ARM on 8 of the 15 factors compared between the two stocks.

About Cirrus Logic

Cirrus Logic, Inc., a fabless semiconductor company, develops low-power high-precision mixed-signal processing solutions in China, the United States, and internationally. The company offers audio products, including amplifiers; codecs components that integrate analog-to-digital converters (ADCs) and digital-to-analog converters (DACs) into a single integrated circuit (IC); smart codecs, a codec with integrated digital signal processing; standalone digital signal processors; and SoundClear technology, which consists of a portfolio of tools, software, and algorithms that helps to enhance user experience with features, such as louder, high-fidelity sound, audio playback, voice capture, and hearing augmentation for use in smartphones, tablets, laptops, AR/VR headsets, home theater systems, automotive entertainment systems, and professional audio systems. It also provides high-performance mixed-signal products comprising camera controllers, haptic and sensing solutions, and battery and power ICs for use in smartphones, as well as legacy industrial and energy applications, such as digital utility meters, power supplies, energy control, energy measurement, and energy exploration. The company markets and sells its products through direct sales force, external sales representatives, and distributors. Cirrus Logic, Inc. was incorporated in 1984 and is headquartered in Austin, Texas.

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.