Analyzing ARM Holdings plc (NASDAQ:ARMH) and Xilinx (XLNX)
ARM Holdings plc (NASDAQ: ARMH) and Xilinx (NASDAQ:XLNX) are both technology companies, but which is the superior stock? We will contrast the two companies based on the strength of their risk, analyst recommendations, dividends, earnings, profitabiliy, valuation and institutional ownership.
ARM Holdings plc pays an annual dividend of $0.34 per share and has a dividend yield of 0.5%. Xilinx pays an annual dividend of $1.40 per share and has a dividend yield of 2.2%. ARM Holdings plc pays out 30.1% of its earnings in the form of a dividend. Xilinx pays out 60.1% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Xilinx has increased its dividend for 6 consecutive years. Xilinx is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Institutional and Insider Ownership
19.7% of ARM Holdings plc shares are owned by institutional investors. Comparatively, 94.1% of Xilinx shares are owned by institutional investors. 3.0% of ARM Holdings plc shares are owned by insiders. Comparatively, 0.4% of Xilinx shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.
Earnings & Valuation
This table compares ARM Holdings plc and Xilinx’s gross revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|ARM Holdings plc||N/A||N/A||N/A||$1.13||59.68|
|Xilinx||$2.39 billion||6.58||$755.86 million||$2.33||27.16|
Xilinx has higher revenue and earnings than ARM Holdings plc. Xilinx is trading at a lower price-to-earnings ratio than ARM Holdings plc, indicating that it is currently the more affordable of the two stocks.
Volatility & Risk
ARM Holdings plc has a beta of 1.44, meaning that its share price is 44% more volatile than the S&P 500. Comparatively, Xilinx has a beta of 1.09, meaning that its share price is 9% more volatile than the S&P 500.
This table compares ARM Holdings plc and Xilinx’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|ARM Holdings plc||33.10%||19.72%||16.87%|
This is a breakdown of current recommendations and price targets for ARM Holdings plc and Xilinx, as provided by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|ARM Holdings plc||0||1||1||0||2.50|
Xilinx has a consensus price target of $63.89, suggesting a potential upside of 0.97%. Given Xilinx’s higher possible upside, analysts clearly believe Xilinx is more favorable than ARM Holdings plc.
Xilinx beats ARM Holdings plc on 8 of the 14 factors compared between the two stocks.
About ARM Holdings plc
ARM Holdings plc (ARM) is a company engaged in designing a range of inter-related intellectual property (IP), including microprocessors, Physical IP, and supporting software and tools. Its product offering includes 16/32/64-bit reduced instruction set computing (RISC) microprocessors, data engines, graphics processors, digital libraries, embedded memories, peripherals, software and development tools, as well as analog functions and high-speed connectivity products. The Company licenses and sells its technology and products to international electronics companies, which in turn manufacture, market and sell microprocessors, application-specific integrated circuits (ASICs), application-specific standard processors (ASSPs) and microcontrollers (MCUs) based on ARM’s technology to systems companies for incorporation into a range of end products. Its principal geographic markets are Europe, the United States and Asia Pacific.
Xilinx, Inc. (Xilinx) is engaged in designing and developing programmable devices and associated technologies. The Company’s programmable devices and associated technologies include integrated circuits (ICs) in the form of programmable logic devices (PLDs), including programmable System on Chips (SoCs) and three-dimensional ICs (3D ICs); software design tools to program the PLDs; targeted reference designs; printed circuit boards, and intellectual property (IP), which consists of Xilinx, and various third-party verification and IP cores. The Company provides design services, customer training, field engineering and technical support. Its PLDs include field programmable gate arrays (FPGAs), complex programmable logic devices (CPLDs) that its customers program to perform desired logic functions, and programmable SoCs, which combine (Advanced reduced instruction set computing (RISC) Machines (ARM)) processor-based systems with programmable logic in a single device.
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