The 10-second takeaway
For the quarter ended Sep. 30 (Q3), ARM Holdings beat expectations on revenues and missed estimates on earnings per share.
Compared to the prior-year quarter, revenue grew significantly and GAAP earnings per share expanded.
Gross margins were steady, operating margins grew, net margins grew.
ARM Holdings tallied revenue of $233.1 million. The 22 analysts polled by S&P Capital IQ expected a top line of $224.3 million on the same basis. GAAP reported sales were 24% higher than the prior-year quarter's $187.9 million.
Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions. Non-GAAP figures may vary to maintain comparability with estimates.
EPS came in at $0.05. The six earnings estimates compiled by S&P Capital IQ averaged $0.17 per share. GAAP EPS of $0.05 for Q3 were 25% higher than the prior-year quarter's $0.04 per share.
Source: S&P Capital IQ. Quarterly periods. Non-GAAP figures may vary to maintain comparability with estimates.
For the quarter, gross margin was 94.3%, about the same as the prior-year quarter. Operating margin was 36.4%, 210 basis points better than the prior-year quarter. Net margin was 28.6%, 250 basis points better than the prior-year quarter.
Next quarter's average estimate for revenue is $243.8 million. On the bottom line, the average EPS estimate is $0.19.
Next year's average estimate for revenue is $906.2 million. The average EPS estimate is $0.70.
The stock has a three-star rating (out of five) at Motley Fool CAPS, with 820 members out of 896 rating the stock outperform, and 76 members rating it underperform. Among 209 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 187 give ARM Holdings a green thumbs-up, and 22 give it a red thumbs-down.
Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on ARM Holdings is outperform, with an average price target of $31.67.
Is ARM Holdings the best semiconductor stock for you? You may be missing something obvious. Check out the semiconductor company that Motley Fool analysts expect to lead "The Next Trillion-dollar Revolution." Click here for instant access to this free report.
- Add ARM Holdings to My Watchlist.
Seth Jayson had no position in any company mentioned here at the time of publication. You can view his stock holdings here. He is co-advisor of Motley Fool Hidden Gems, which provides new small-cap ideas every month, backed by a real-money portfolio. The Motley Fool has no positions in the stocks mentioned above. Motley Fool newsletter services recommend ARM Holdings. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
More from The Motley Fool
Better Buy: ARM Holdings plc vs. Intel Corporation
This really isn't a competition at all, since the British chip technologist is dropping out of the public markets altogether. Here's what you need to know.
How ARM Holdings plc Gained 46% in July
A Japanese telecom with global ambitions is buying this chip technology specialist with a generous premium. Nobody saw this deal coming.
SoftBank's Bet on ARM Holdings Is All About the Internet of Things
SoftBank is looking ahead to the billions of Internet of Things connections that will come online over the coming years -- and it thinks ARM's chip designs will be powering many of them.