ARM (NASDAQ:ARM) versus GlobalFoundries (NASDAQ:GFS) Financial Analysis

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

Volatility and Risk

ARM has a beta of 3.93, meaning that its share price is 293% more volatile than the S&P 500. Comparatively, GlobalFoundries has a beta of 1.78, meaning that its share price is 78% more volatile than the S&P 500.

Analyst Recommendations

This is a summary of recent ratings for ARM and GlobalFoundries, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
ARM	1	7	18	1	2.70
GlobalFoundries	1	11	8	0	2.35

ARM presently has a consensus target price of $298.32, suggesting a potential upside of 55.54%. GlobalFoundries has a consensus target price of $73.74, suggesting a potential upside of 82.79%. Given GlobalFoundries’ higher possible upside, analysts plainly believe GlobalFoundries is more favorable than ARM.

Insider & Institutional Ownership

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

Valuation and Earnings

This table compares ARM and GlobalFoundries”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
ARM	$4.92 billion	41.64	$904.00 million	$0.97	197.73
GlobalFoundries	$6.79 billion	3.26	$885.00 million	$1.28	31.52

ARM has higher earnings, but lower revenue than GlobalFoundries. GlobalFoundries 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 ARM and GlobalFoundries’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
ARM	20.25%	12.24%	9.41%
GlobalFoundries	10.36%	6.69%	4.69%

Summary

ARM beats GlobalFoundries on 11 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 GlobalFoundries

GlobalFoundries Inc., a semiconductor foundry, provides range of mainstream wafer fabrication services and technologies worldwide. It manufactures various semiconductor devices, including microprocessors, mobile application processors, baseband processors, network processors, radio frequency modems, microcontrollers, and power management units. GlobalFoundries Inc. has a strategic partnership with Efficient Computer to develop high-performance computer processors. The company was incorporated in 2008 and is headquartered in Malta, New York.