Arm Holdings plc (ARM) Stock Analysis — Fair Value, Risk & Moat Rating
NMS · Technology · Semiconductors
Is Arm Holdings plc a safe investment right now?
Arm Holdings plc's Altman Z-Score of 61.68 places it in the safe zone. Our fair value estimate is $32.80 (Overvalued). Moat rating: 3.4/5 stars.
Could Arm Holdings plc go bankrupt? Altman Z-Score analysis
Z-Score of 61.68 is above 3.0, indicating the company is financially healthy by this metric.
- Below 1.8 — Distress Zone (high bankruptcy risk)
- 1.8 to 3.0 — Gray Zone (elevated uncertainty)
- Above 3.0 — Safe Zone (financially healthy)
What drives ARM's Z-Score?
| Component | Formula | Value | Weight | Contribution |
|---|---|---|---|---|
| A · Working Capital / Total Assets | WC / TA | 0.4367 | 1.2 | 0.52 |
| B · Retained Earnings / Total Assets | RE / TA | 0.3967 | 1.4 | 0.56 |
| C · EBIT / Total Assets | EBIT / TA | 0.093 | 3.3 | 0.31 |
| D · Market Cap / Total Liabilities | MCap / TL | 99.7406 | 0.6 | 59.84 |
| E · Revenue / Total Assets | Rev / TA | 0.4486 | 1.0 | 0.45 |
How has ARM's financial health changed over time?
| Year | Z-Score | Zone |
|---|---|---|
| 2022 | 43.78 | Safe |
| 2023 | 46.09 | Safe |
| 2024 | 48.94 | Safe |
| 2025 | 61.68 | Safe |
Source: Calculated from ARM's latest 10-K filing on SEC EDGAR.
What is Arm Holdings plc actually worth?
How we calculated this
| Input | Value | Source |
|---|---|---|
| Predicted EPS (α) | $0.82 | Proprietary blend of reported actuals (3Q actual) + analyst consensus, weighted by α |
| Last Year EPS | $0.61 | Annual report (SEC EDGAR) |
| Analyst Consensus EPS (This Year) | $1.76 | 36 analysts consensus |
| Trailing P/E | 262.1x | Current market pricing |
| Fair P/E (β discount) | 40.0x | Trailing PE adjusted by value discount factor β, hard-capped |
| Earnings Trend (γ) | Growing | Directional signal: predicted vs trailing EPS |
Wall Street Reference: Analyst consensus target price is $169.59 (36 analysts). This is shown for reference only and is not used in our valuation model.
Source: Earnings data from SEC EDGAR filings. Market data via Yahoo Finance.
Does Arm Holdings plc have a durable competitive advantage?
Moat rating: 3.4/5.
What makes up ARM's moat score?
ROIC Stability
ROIC variability over the past decade. Score: 4/5.
Gross Margin Trend
Gross margin trajectory over the past decade. Score: 3/5.
Switching Costs
Estimated customer lock-in based on margin level. Score: 3/5.
How stable is ARM's return on invested capital?
| Year | ROIC | Trend |
|---|---|---|
| 2022 | 19.2% | — |
| 2023 | 16.7% | Declining |
| 2024 | 2.2% | Declining |
| 2025 | 12.2% | Rising |
Source: ROIC calculated from SEC EDGAR filings.
Is Arm Holdings plc's dividend safe?
Arm Holdings plc's key financial metrics
| Metric | Latest | 1Y Ago | 3Y Ago | Trend |
|---|---|---|---|---|
| Revenue | $4.0B | $3.2B | $2.7B | Rising |
| Net Income | $0.8B | $0.3B | $0.5B | Rising |
| Free Cash Flow | $0.2B | $0.9B | $0.4B | Declining |
| Gross Margin | 97.0% | 95.2% | 95.2% | Stable |
Recent events that affect our ARM analysis
ARM earnings report scheduled
Upcoming report. Consensus EPS estimate: $0.58. Revenue estimate: $1.47B. Our current Fair Value: $32.80 — a significant beat or miss could shift this estimate.
ARM analyst consensus: 69% bullish (27 of 39 analysts)
7 Strong Buy, 20 Buy, 10 Hold, 1 Sell, 1 Strong Sell. Consensus target: $169.59 (13.7% downside). Compare with our independent Fair Value: $32.80.
ARM beat EPS estimates by 5.1%
Reported EPS: $0.43 vs estimate $0.41. Earnings strength supports our Fair Value of $32.80 (83.3% below current price).
ARM beat EPS estimates by 17.7%
Reported EPS: $0.39 vs estimate $0.33. Earnings strength supports our Fair Value of $32.80 (83.3% below current price).
ARM missed EPS estimates by 0.3%
Reported EPS: $0.35 vs estimate $0.35. Our Fair Value of $32.80 may face downward pressure if the trend continues.
ARM beat EPS estimates by 5.0%
Reported EPS: $0.55 vs estimate $0.52. Earnings strength supports our Fair Value of $32.80 (83.3% below current price).
ARM beat EPS estimates by 14.0%
Reported EPS: $0.39 vs estimate $0.34. Earnings strength supports our Fair Value of $32.80 (83.3% below current price).
Common questions about Arm Holdings plc
What is Arm Holdings plc stock price today?
Arm Holdings plc (ARM) stock price is $196.57 as of the latest market close, traded on the NASDAQ exchange.
What does Arm Holdings plc do?
Arm Holdings plc architects, develops, and licenses central processing unit products and related technologies for semiconductor companies and original equipment manufacturers. It is involved in the licensing, marketing, research, and development of microprocessors, systems intellectual property (IPs), graphics processing units, physical IP and associated systems IPs, software, tools, and other related services. It also offers arm central processing units, accelerators, system IP products, and compute platform products, as well as development tools and software.
What is Arm Holdings plc market cap?
Arm Holdings plc has a market capitalization of $208.76B, classifying it as a mega-cap stock in the Technology sector.
What sector and industry is ARM in?
Arm Holdings plc operates in the Technology sector, specifically within the Semiconductors industry. It trades on the NASDAQ under the ticker symbol ARM.
Is ARM stock overvalued or undervalued?
Based on our valuation model, Arm Holdings plc trades 499.3% above our fair value estimate — potentially overvalued.
- FairValueLabs Fair Value: $32.80
- Current Price: $196.57
- Valuation Zone: Overvalued
What is ARM stock forecast and analyst target price?
Based on 36 Wall Street analysts, the consensus price target for Arm Holdings plc is $169.59, implying downside of 13.7% from the current price.
- Analyst High Target: $240.00
- Analyst Low Target: $95.00
Note: Analyst targets are shown for reference and are not used in our valuation model.
Is Arm Holdings plc revenue and earnings growing?
Here are the analyst consensus growth estimates for Arm Holdings plc:
- Revenue growth (current year est.): 22.3%
- EPS growth (current year est.): 8.2%
- Revenue growth (next year est.): 20.8%
- EPS growth (next year est.): 21.6%
What are Arm Holdings plc's key financial metrics?
| Metric | Latest | Trend |
|---|---|---|
| Revenue | $4.0B | Rising |
| Net Income | $0.8B | Rising |
| Free Cash Flow | $0.2B | Declining |
| Gross Margin | 97.0% | Stable |
What is ARM's P/E ratio?
The price-to-earnings ratio measures how much investors pay per dollar of earnings:
- Trailing P/E (last 12 months): 262.1x
- Forward P/E (next 12 months est.): 91.7x
- FairValueLabs Fair P/E: 40.0x
How volatile is ARM stock?
Arm Holdings plc has a beta of 3.34, meaning it is significantly more volatile than the broader market. A beta above 1.0 indicates higher price swings relative to the S&P 500, while below 1.0 suggests more stability.
How much cash and debt does Arm Holdings plc have?
Arm Holdings plc's balance sheet shows:
- Total Cash: $3.54B
- Total Debt: $461.0M
- Net Cash Position: $3.08B
A positive net cash position means the company holds more cash than debt, reducing financial risk.
What is Arm Holdings plc's free cash flow?
Arm Holdings plc generated $824.8M in trailing twelve-month free cash flow (from $1.52B in operating cash flow). Free cash flow represents the cash available for dividends, buybacks, and debt reduction after all capital expenditures.
Does Arm Holdings plc pay a dividend?
Arm Holdings plc does not currently pay a regular dividend to shareholders. The company may be reinvesting all profits back into growth, or it may have suspended its dividend.
Is Arm Holdings plc at risk of going bankrupt?
Arm Holdings plc's Altman Z-Score is 61.68, placing it in the safe zone (above 3.0) — bankruptcy risk is low. The Z-Score uses five balance sheet ratios to predict bankruptcy probability within two years.
Does Arm Holdings plc have a durable competitive advantage?
Arm Holdings plc scores 3.4/5 stars (Narrow moat) in our moat analysis:
- ROIC Stability: 4/5
- Gross Margin Trend: 3/5
- Switching Costs: 3/5
A score above 3.5 suggests meaningful pricing power and a defensible market position.
What is ARM's return on equity (ROE)?
Arm Holdings plc's return on equity is 11.3%. ROE measures how efficiently a company generates profits from shareholder equity. An ROE above 15% is generally considered strong, while below 10% may signal inefficiency.
How do I buy ARM stock?
ARM shares can be purchased through any brokerage account that provides access to the NASDAQ. Common steps:
- Open an account with a broker (e.g., Fidelity, Schwab, Interactive Brokers)
- Search for ticker symbol ARM
- Place a market or limit order for your desired number of shares
This is not investment advice. Always do your own research before buying any stock.
Is ARM a value stock or speculative?
FairValueLabs classifies Arm Holdings plc as Pure Speculation. It lacks the financial stability or valuation margin typically required for value investing. This stock is considered high risk.
Who is the CEO of Arm Holdings plc?
The current CEO of Arm Holdings plc is Mr. Rene Anthony Andrada Haas.
What is ARM's earnings per share (EPS)?
Earnings per share measures the company's profit allocated to each outstanding share:
- Trailing EPS (last 12 months): $0.75
- Forward EPS (next 12 months est.): $2.14
- Analyst consensus EPS (this year): $1.76
- Analyst consensus EPS (next year): $2.14
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FairValueLabs Disclaimer
All valuations, scores, ratings, and classifications on this page are produced by the FairValueLabs internal valuation system. They do not represent actual market value, guaranteed outcomes, or professional investment advice. These are analytical estimates for educational and research purposes only.
This is not financial advice. All data is sourced from SEC EDGAR public filings. Always consult a qualified financial advisor before making investment decisions.
Last updated: Apr 22, 2026. Data sources: SEC EDGAR (financial statements), Yahoo Finance (market data, analyst consensus). Data may not reflect the most recent quarter.
ARM analysis methodology: How we calculate fair value, Z-Scores, and moat ratings