Head to Head Review: SemiLEDS (NASDAQ:LEDS) versus ARM (NASDAQ:ARM)

SemiLEDS (NASDAQ:LEDS) and ARM (NASDAQ:ARM) are both computer and technology companies, but which is the superior stock? We will contrast the two companies based on the strength of their institutional ownership, profitability, analyst recommendations, risk, dividends, earnings and valuation.

Earnings & Valuation

This table compares SemiLEDS and ARM”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
SemiLEDS	$43.01 million	0.46	-$1.13 million	($0.28)	-8.57
ARM	$4.92 billion	65.82	$904.00 million	$0.84	364.89

ARM has higher revenue and earnings than SemiLEDS. SemiLEDS 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

SemiLEDS has a beta of 1.37, indicating that its stock price is 37% more volatile than the S&P 500. Comparatively, ARM has a beta of 3.4, indicating that its stock price is 240% more volatile than the S&P 500.

Analyst Ratings

This is a summary of current ratings and target prices for SemiLEDS and ARM, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
SemiLEDS	1	0	0	0	1.00
ARM	1	6	20	0	2.70

ARM has a consensus price target of $208.79, indicating a potential downside of 31.88%. Given ARM’s stronger consensus rating and higher probable upside, analysts clearly believe ARM is more favorable than SemiLEDS.

Insider & Institutional Ownership

76.3% of SemiLEDS shares are held by institutional investors. Comparatively, 7.5% of ARM shares are held by institutional investors. 57.4% of SemiLEDS shares are held by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.

Profitability

This table compares SemiLEDS and ARM’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
SemiLEDS	-6.71%	-89.53%	-13.38%
ARM	18.37%	12.43%	9.48%

Summary

ARM beats SemiLEDS on 12 of the 14 factors compared between the two stocks.

About SemiLEDS

SemiLEDs Corporation develops, manufactures, and sells light emitting diode (LED) chips, LED components, and LED modules and systems in the United States, Taiwan, the Netherlands, Germany, Japan, and internationally. The company also sells enhanced vertical, LED product series in blue, white, green, and UV; LED chips to packagers or distributors; and lighting products primarily to original design manufacturers of lighting products and the end-users of lighting devices, as well as packs and sells its LED chips. Its products are used for general lighting applications, including commercial, industrial, and residential lighting; and specialty industrial applications, such as ultraviolet or UV, curing of polymers, LED light therapy in medical/cosmetic applications, counterfeit detection, germicidal and viricidal devices LED lighting for horticulture applications, architectural lighting, and entertainment lighting. The company was incorporated in 2005 and is based in Chu-Nan, Taiwan.

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.