ARM (NASDAQ:ARM) vs. Credo Technology Group (NASDAQ:CRDO) Critical Analysis

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

Institutional & Insider Ownership

7.5% of ARM shares are owned by institutional investors. Comparatively, 80.5% of Credo Technology Group shares are owned by institutional investors. 11.8% of Credo Technology Group shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Analyst Recommendations

This is a summary of recent recommendations and price targets for ARM and Credo Technology Group, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
ARM	1	8	17	0	2.62
Credo Technology Group	0	2	15	2	3.00

ARM presently has a consensus target price of $297.65, suggesting a potential upside of 14.48%. Credo Technology Group has a consensus target price of $266.17, suggesting a potential upside of 24.87%. Given Credo Technology Group’s stronger consensus rating and higher possible upside, analysts plainly believe Credo Technology Group is more favorable than ARM.

Earnings and Valuation

This table compares ARM and Credo Technology Group”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
ARM	$4.92 billion	56.45	$904.00 million	$0.84	309.54
Credo Technology Group	$1.34 billion	29.77	$472.28 million	$2.48	85.95

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

Volatility & Risk

ARM has a beta of 3.76, indicating that its share price is 276% more volatile than the S&P 500. Comparatively, Credo Technology Group has a beta of 3.2, indicating that its share price is 220% more volatile than the S&P 500.

Profitability

This table compares ARM and Credo Technology Group’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
ARM	18.37%	12.43%	9.48%
Credo Technology Group	35.37%	32.30%	28.88%

Summary

Credo Technology Group beats ARM on 9 of the 15 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 Credo Technology Group

Credo Technology Group Holding Ltd provides various high-speed connectivity Credo Technology Group Holding Ltd provides various high-speed connectivity solutions for optical and electrical Ethernet applications in the United States, Taiwan, Mainland China, Hong Kong, and internationally. Its products include HiWire active electrical cables, optical digital signal processors, low-power line card PHY, serializer/deserializer (SerDes) chiplets, and SerDes IP, as well as integrated circuits, active electrical cables. The company also offers intellectual property solutions consist of SerDes IP licensing. It sells its products to hyperscalers, original equipment manufacturers, original design manufacturers and optical module manufacturers, as well as into the enterprise and HPC markets. The company was founded in 2008 and is based in Grand Cayman, Cayman Islands.