Critical Analysis: Qorvo (NASDAQ:QRVO) and ARM (NASDAQ:ARM)

Qorvo (NASDAQ:QRVO) and ARM (NASDAQ:ARM) are both large-cap technology companies, but which is the superior investment? We will contrast the two companies based on the strength of their valuation, earnings, analyst recommendations, dividends, risk, profitability and institutional ownership.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Qorvo	10.95%	17.23%	10.06%
ARM	20.25%	12.24%	9.41%

Analyst Ratings

This is a summary of recent recommendations for Qorvo and ARM, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Qorvo	1	14	3	0	2.11
ARM	1	7	18	1	2.70

Qorvo currently has a consensus price target of $94.00, suggesting a potential downside of 17.67%. ARM has a consensus price target of $303.32, suggesting a potential downside of 1.36%. Given ARM’s stronger consensus rating and higher probable upside, analysts plainly believe ARM is more favorable than Qorvo.

Valuation & Earnings

This table compares Qorvo and ARM”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Qorvo	$3.68 billion	2.74	$338.99 million	$4.31	26.49
ARM	$4.92 billion	66.75	$904.00 million	$0.97	317.00

ARM has higher revenue and earnings than Qorvo. Qorvo is trading at a lower price-to-earnings ratio than ARM, indicating that it is currently the more affordable of the two stocks.

Risk & Volatility

Qorvo has a beta of 1.42, meaning that its share price is 42% more volatile than the S&P 500. Comparatively, ARM has a beta of 3.78, meaning that its share price is 278% more volatile than the S&P 500.

Insider & Institutional Ownership

88.6% of Qorvo shares are owned by institutional investors. Comparatively, 7.5% of ARM shares are owned by institutional investors. 0.5% of Qorvo shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Summary

ARM beats Qorvo on 10 of the 15 factors compared between the two stocks.

About Qorvo

Qorvo, Inc. engages in development and commercialization of technologies and products for wireless, wired, and power markets. It operates through three segments: High Performance Analog (HPA), Connectivity and Sensors Group (CSG), and Advanced Cellular Group (ACG). The HPA segment supplies radio frequency and power management solutions for automotive, defense and aerospace, cellular infrastructure, broadband, and other markets. The CSG segment supplies connectivity and sensor components and systems featuring various technologies, such as UWB, Matter, Bluetooth Low Energy, Zigbee, Thread, Wi-Fi, cellular IoT, and MEMS-/BAW-based sensors. It serves markets, such as smart home, industrial automation, automotive, smartphones, wearables, gaming, and industrial and enterprise access points. The ACG segment supplies cellular RF solutions for smartphones, wearables, laptops, tablets, and various other devices. The company also offers foundry services for defense primes and other defense and aerospace customers. The company sells its products directly to original equipment manufacturers and original design manufacturers, as well as through a network of sales representative firms and distributors. It operates in the United States, China, other Asian countries, Taiwan, and Europe. The company was founded in 1957 and is headquartered in Greensboro, North Carolina.

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.