Based on the aggregated intelligence of 180,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, microprocessor designer ARM Holdings (ARMH +0.00%) has received a distressing two-star ranking.
With that in mind, let's take a closer look at ARM and see what CAPS investors are saying about the stock right now.
ARM facts
|
Headquarters (founded) |
Cambridge, England (1990) |
|
Market Cap |
$21.1 billion |
|
Industry |
Semiconductors |
|
Trailing-12-Month Revenue |
$988.0 million |
|
Management |
CEO Warren East Co-Founder/Chief Technology Officer Michael Muller |
|
Return on Equity (average, past 3 years) |
12.4% |
|
Cash/Debt |
$881.8 million / $9.3 million |
|
Dividend Yield |
0.5% |
|
Competitors |
Intel MIPS Technologies Rambus |
Sources: S&P Capital IQ and Motley Fool CAPS.
On CAPS, 11% of the 915 members who have rated ARM believe the stock will underperform the S&P 500 going forward.
Earlier this month, one of those Fools, Gainster, succinctly summed up the ARM bear case for our communtiy:
I don't want to be overly pessimistic, but the facts are overwhelming, ARM is extremely overpriced, they lost the single technological advantage they had, they are competing with Intel that has a major brand and an enormous R&D budget. The mere fact that a phone needs two CPU's, tells us that the world is ready for something more powerful and Intel is ready to deliver.
Based on an assumption that the P/E has to go down to around a more reasonable level of 20, then the share price should go down to a quarter of the current share price. Further there will be some earnings losses, which will push down the price further down.
