GlobalFoundries (NASDAQ:GFS – Get Free Report) and ARM (NASDAQ:ARM – Get Free Report) are both large-cap technology companies, but which is the superior business? We will compare the two businesses based on the strength of their dividends, earnings, profitability, valuation, risk, analyst recommendations and institutional ownership.
Insider & Institutional Ownership
7.5% of ARM shares are held by institutional investors. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.
Profitability
This table compares GlobalFoundries and ARM’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| GlobalFoundries | 2.81% | 7.18% | 5.02% |
| ARM | 17.13% | 11.86% | 9.14% |
Earnings & Valuation
This table compares GlobalFoundries and ARM”s revenue, earnings per share (EPS) and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| GlobalFoundries | $6.79 billion | 3.27 | $885.00 million | $0.35 | 115.74 |
| ARM | $4.92 billion | 40.44 | $904.00 million | $0.87 | 214.14 |
ARM has lower revenue, but higher earnings 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.
Volatility and Risk
GlobalFoundries has a beta of 1.78, indicating that its stock price is 78% more volatile than the S&P 500. Comparatively, ARM has a beta of 3.93, indicating that its stock price is 293% more volatile than the S&P 500.
Analyst Ratings
This is a summary of recent ratings and recommmendations for GlobalFoundries and ARM, as reported by MarketBeat.com.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| GlobalFoundries | 1 | 11 | 8 | 0 | 2.35 |
| ARM | 1 | 7 | 19 | 0 | 2.67 |
GlobalFoundries currently has a consensus price target of $67.79, indicating a potential upside of 67.34%. ARM has a consensus price target of $291.72, indicating a potential upside of 56.59%. Given GlobalFoundries’ higher possible upside, research analysts plainly believe GlobalFoundries is more favorable than ARM.
Summary
ARM beats GlobalFoundries on 11 of the 13 factors compared between the two stocks.
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.
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.
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