Buy ARM Stock For NVIDIA Like Gains?! | ARM Stock Analysis! |
Summary
TLDRARM Holdingsは、2020年にNvidiaからの4000億ドルの買収に失敗した後、最近1億4700万ドルの株式を取得しました。このAIブームの中で、ARMの最新の収益や成長を分析し、競合他社と比較し、株主の利益を最大化するための適切な購入価格を探ります。ARMはCPU、GPU、NPUのIPを開発・ライセンスし、世界中の280億以上のチップにその技術が使用されています。しかし、株価の急上昇と比べて、売上高や利益の成長は不安定で、今後の成長予測にも懸念があります。
Takeaways
- 🚀 Nvidia曾试图以400亿美元收购ARM,但因监管问题在2020年失败。
- 📈 ARM自IPO以来表现强劲,股价自去年以来上涨了77.4%。
- 📊 ARM的市值约为1370亿美元,远小于Nvidia的近2万亿美元。
- 📉 ARM的营收增长在2022年到2023年期间相对平稳,但股价增长迅速。
- 💹 ARM的现金流健康,2022年现金1.6亿美元,债务2.41亿美元。
- 📝 ARM的自由现金流在过去12个月增长了63%,显示出强劲的财务表现。
- 🔄 ARM的股价与自由现金流增长不完全一致,存在一定的不一致性。
- 📌 机构投资者在过去一年中对ARM的持股增加了2.6亿美元。
- 📊 ARM的财务指标显示,其运营效率和资本分配能力良好。
- 💰 根据折现现金流模型,ARM的内在价值约为117美元,表明当前股价可能被高估。
- 🔮 华尔街对ARM未来12个月的目标价为100美元,认为其当前股价被极度高估。
Q & A
Nvidia为什么会失败收购ARM?
-Nvidia在2020年尝试以400亿美元收购ARM,但由于监管问题未能成功。
ARM公司的主要业务是什么?
-ARM公司主要业务是架构开发和授权高性能、低成本、高效的IP(知识产权),包括CPU、GPU和NPU的指令集。
ARM的市场份额有多大?
-全球70%的人口使用基于ARM的产品,已出货超过2800亿颗芯片,99%的智能手机运行基于ARM的处理器。
ARM自IPO以来的表现如何?
-自IPO以来,ARM的表现非常强劲,股价自去年9月的IPO以来上涨了77.4%。
ARM的财务状况如何?
-ARM持有16亿美元现金,总债务相对较小,为2.21亿美元,现金远多于债务。
ARM的营收和利润增长情况如何?
-ARM的营收在过去几年有所增长,但利润增长不一致,2021年为3.88亿美元,2022年增长到5.49亿美元,但2023年有所下降。
ARM的自由现金流表现如何?
-ARM的自由现金流在过去12个月增长了63%,显示出良好的财务健康状况。
ARM的内部交易情况如何?
-过去12个月,ARM没有内部买入或卖出的记录。
机构投资者对ARM的态度如何?
-机构投资者在过去12个月中增持了ARM的股票,净买入额达到2.6亿美元。
ARM的估值模型显示其内在价值是多少?
-根据折现现金流(DCF)模型,ARM的内在价值约为117美元,这表明当前股价可能被高估。
华尔街对ARM未来12个月的预期是什么?
-华尔街对ARM未来12个月的价格目标为100美元,认为ARM目前被极度高估。
Outlines
📉 Nvidia's Failed Acquisition of ARM
Nvidia's attempt to acquire ARM for $40 billion in 2020 failed due to regulatory issues. However, Nvidia now holds a stake worth $147 million in ARM. The video discusses whether ARM, which licenses intellectual property for CPUs, GPUs, and NPU chips, is a good investment. ARM's products are used by 70% of the world's population, and 99% of smartphones run on ARM-based processors. The company's IPO performance has been strong, with a 77.4% increase since the IPO in September 2023. The video will analyze ARM's financial health, growth, and performance against competitors.
📈 ARM's Financial Performance and Market Position
The video script reviews ARM's financial performance, including revenue growth, earnings, and debt-to-cash ratios. ARM's top line has seen growth, but the bottom line has been inconsistent. The company's cash holdings have increased, and it has a positive net debt to EBITDA ratio. The script also discusses insider buying and selling activities, as well as institutional ownership, indicating strong institutional interest in ARM. The video will further analyze ARM's financial metrics, including free cash flow, sales growth, and return on investment.
🔍 Valuation and Future Outlook for ARM
The video script delves into ARM's valuation using the discounted cash flow (DCF) model, considering a conservative growth rate of 35%. The intrinsic value calculated is around $117, suggesting that ARM's current trading price of $147 is overvalued. The video also discusses the margin of safety and compares ARM's valuation with Wall Street's forecast, which targets a price of $100, indicating a potential downside. The video concludes with a reminder for viewers to do their own due diligence before investing.
Mindmap
Keywords
💡Nvidia
💡ARM
💡Regulation issues
💡Artificial Intelligence (AI)
💡IPO
💡Top Line
💡Bottom Line
💡Insider Buys and Sales
💡Institution Ownership
💡Stock Valuation
💡Discounted Cash Flow (DCF)
Highlights
Nvidia's failed attempt to acquire ARM for $40 billion in 2020 due to regulatory issues.
ARM's recent stake acquisition by Nvidia worth $147 million.
ARM's strong performance since its IPO, with a 77.4% increase just this year.
ARM's market cap is around $137 billion, significantly smaller than Nvidia's $2 trillion.
ARM's top line growth has been inconsistent, with a flat growth from March 22 to March 23.
ARM's bottom line growth is inconsistent and questionable given the high trading price.
ARM holds $1.6 billion in cash and has a relatively small total debt of $221 million.
No insider buying or selling has occurred over the last 12 months.
Institutional ownership shows a net increase in buying, with $2.6 billion in purchases over the last 12 months.
ARM's Q3 FY24 shows a 14% increase in top line year on year, with licensing and other revenue up 18%.
ARM's trailing 12 months free cash flow is up 63% year on year.
ARM's sales growth in 2022 was 33%, with a slight drop in 2023, but expectations for 2024 are positive.
ARM's return on invested capital (ROIC) has been double digits year on year for the last two years.
ARM's operating margin has been increasing over the last few years.
ARM's free cash flow margin is strong at 24%, though it has dropped from 53%.
ARM's net debt to EBITDA ratio shows strong balance sheet strength, with the ability to pay off all debt in less than a day.
The intrinsic value of ARM, based on a conservative 35% growth forecast, is around $117, indicating overvaluation.
Wall Street's 12-month price target for ARM is $100, suggesting a -32% upside, which is unusually low for the industry.
Transcripts
Nvidia failed in its attempts to buy ARM
Holding for 40 billion in 2020 due to
regulation issues however over the last
few weeks we can see they now have a
stake worth 147 million in this company
let's find out whether or not this is a
company we should be looking to add with
the boom of artificial intelligence it
has been on a very strong run since its
IPO last year we're going to take a look
of a lot of information we're going to
look at their latest earning with their
revenues up 14% we'll also look at their
top line over the last few years to see
whether or not both Top Line and bottom
line are increasing the way we would
expect we're also look at the health of
the company their total cash versus
their total debt and we'll see exactly
how well they've performed versus some
of their competitors over the last few
years we'll also run it through the
screener for Insider buys and Insider
sales over the last few months and we'll
look to the institutions to see whether
or not they are increasing their
position within their own portfolios and
don't forget we will take a look at some
of their financial metrics to see
whether or not this is in line with what
we expect from a very strong AI company
as always we will run it into the stock
valuation model getting to the intrinsic
value as well as our acceptable Buy
price given that investor margin of
safety and look towards Wall Street to
see their expectations over the next 12
months take a look here for a little
brief narration essentially what arm do
is they are architect develop and
license these high performance lowcost
efficient IP which is their intellectual
property for the CPUs the gpus and npus
so ultimately what this company does is
license as we can see the instruction
set for these chips to their Partners
who ultimately make these chips with any
customizations that they want for their
own unique application 70% of the
world's population used arm-based
products over 280 billion of these chips
have been shipped 99% of these
smartphones run on These Arm based
processors so ultimately you will have
this in your phone and we can see 50% of
all chips with processors are Arm based
so a lot of uses throughout the world
right now and what we want to have a
very quick look at is the company now
since its IPO up
77.4% in fact that is just from this
year and over the last year we can see
around $51 in its IPO of September 2023
nearly tripled from that so very very
strong performance if you have bought
since that point it is trading near that
52 we high but it does have an extremely
high P which we'll touch upon and its
forward earnings per share is $120
something just understand the market cap
is around 137 billion so a lot smaller
than Nvidia which sits at nearly 2
trillion in terms of their top line as
always whilst we do look for 3 to 7%
growth year on-ear for companies with
these large tech companies companies
around the artificial intelligence boom
we are seeing a very very large increase
March 21 then 2 billion on their Top
Line March 22 2.7 billion and what we
note here is in March 23 2.7 billion so
we can see in fact from March 22 to
March 23 it was pretty flat but we are
expecting their full March 24 report
fairly soon and just based on the
trailing 12 months whilst we do see an
increase from 2023 it isn't as rapid as
what we saw when we took a look at
Nvidia in terms of their bottom line
what we can see again 388 million in
2021 nice growth to 2022 of 549 million
but when we see that drop into 2023 it
is a bit questionable given how high
this company is trading at and how
quickly that share price is growing in
terms of the trading 12 months well we
do expect a drop to their bottom line
based on this information when we get
the full annual put we will break it
down but what we can see is their bottom
line is very inconsistent that doesn't
necessarily follow their Top Line in
terms of a quick health check then total
cash versus total debt 1.6 billion of
cash in 2022 2.4 billion from their
latest report so whilst they do hold a
fair amount of cash this has increased
over the last few years and when we
compare this to their total debt
numerically and directionally we can see
in fact it is pretty small
261 it did drop slightly as well to 221
million so they do hold a lot more cash
than they do total debt so no worries
there especially when we look at that
net debt to ebit diametric in terms of
their performance well over the last
year bearing in mind they did recently
IPO they are up
188% which as we can see is an
incredibly strong performance far out
performing the second best which we have
here is Intel up 71% which will surprise
a lot of people given they did have a
dividend cut last year so as always they
have had a very strong performance but
do bear in mind past performance isn't
an indicator of future now taking a look
at the inside of buys and sells what we
typically do run it through all
transaction types buys and sells minimum
100 shares now we've had to go over the
last year just to be transparent and
show that over those last 12 months
there has been no Insider buying as well
as no Insider selling what about the
institutional ownership well that sits
at around 170 in terms of the number of
buyers 186 Million worth of sales by
these institutions over the last 12
months but we see a lot more buying 2.6
billion over the same period so again we
can see institutions do love this stock
a lot more than they don't Q3 their
largest Buy in fact there were no sells
given that it had just ipoed 1.5 billion
and even in their latest quarter whilst
we do see some selling of 186 million a
lot more buying 1.1 billion so again
just remember just because these
institutions are buying a lot of shares
of these companies do not fall into the
Trap of just copying and always always
do your own due diligence now in terms
of just some things we want to point out
in terms of their quarter three
highlights for FY 24 their top line is
up 14% year on year which is positive
their licensing and other Revenue as
part of that is up 18% royalty Revenue
up 11% so we are seeing some nice double
digit growth but do bear in mind that
share price has rocketed up and we are
seeing only low double digigit growth
something just to bear in mind one thing
that is very very nice to see is their
trailing 12 months free cash flow up 63%
year on-ear and you know how important
that free cash flow is if you're a
regular member of this channel it is one
of those that we do think is very key
now the other thing that we just wanted
to point out within this select guide
and you can obviously obtain that just
by going on their website is that that
quarter Revenue year on year now if you
have watched our Nvidia report and
review you will notice their quarterly
increase is something to behold very
very strong especially over the last few
quarters with ARM Holding just bear in
mind they're quarteron quarter we don't
even see increases every year for
example q1 to Q2 last year so just bear
that in mind in fact from Q2 to Q3 there
isn't a very large movement so when you
are looking at your investment thesis
that we will come on to especially for
that stock valuation do bear these in
mind when we're looking at the
forward-looking numbers in terms of the
next 5 to 10 years so let's jump into
some of their metrics now before we take
a look at this just to let you know we
have released our latest free Weekly
Newsletter article if you want to grab a
copy of this and have access to these
other articles which are completely free
do click on that pin comment below now
the free cash flow is one that we all
draw your attention to earnings always
susceptible to manipulation by
management through accounting what we
want to show here is in 2021 it was
pretty high
$14 now it did decrease in 2022 however
we have seen it bounced back up nicely
in 2023 to 63 C and they are expecting a
50% % increase to their free cash flow
over the next 12 months with
expectations of around 93 C now keep
that in mind as we will be using and
talking about some of those figures when
looking at the valuation in terms of the
sales growth well 2022 33% very solid
and as we mentioned they did have a
slight drop in 2023 of around 1% but
2024 they are expecting some nice
increases given Q3 that we just went
through was up around 11 to 18% so again
it is a little a little bit inconsistent
for a company that has rocked it up but
then some could argue that it was
already undervalued at the IPO stage and
again we'll take a look at that when we
take a look at the valuation numbers
total sales then 2 billion in 2021 2.7
billion in 2023 so it is increasing but
again we can clearly see that
inconsistency of a little drop from year
on-year movement shares outstanding then
always we like to see share BuyBacks
returning excess cash to investor
Pockets unfortunately over the last few
years they have in fact issued shares so
your position would be diluted but very
minimal and when you compare this to the
share price return as a shareholder you
probably wouldn't be worry too much but
again do bear in mind given it just
ipoed you would have just seen the
increase from 1.03 to 1.04 over the last
12 months roic what I want to see here
is a minimum 10% to Give Me Faith that
management are able to effectively
allocate their Capital nice to note
double digits year on year over the last
two years looking very solid and this is
something I would want to see maintain
over the next few years especially given
that price that we're about to discuss
operating margin nice to note it has
been increasing over the last few years
always nice to know operational
efficiency by Management on the free
cash flow margin very strong even at
that 24% level which is a little bit of
a drop from that 53% so even though we
see that very very strong we want to see
here a minimum of around 12% so nice to
note that very high double digigit
number finally the net debt ebit Dar so
earnings before interest tax depreciate
ation ammortization as always this gives
us the faith around the dividend safety
given they don't currently pay a
dividend this essentially shows us the
balance sheet strength so what we're
saying here is in fact it wouldn't take
them even one day to pay off all of
their debt net of cash on hand in 2023
or 2022 and the same for 2024 expected
so looking very positive in some of
these metrics so let's get into the main
part of this which is the valuation as
always if you do enjoy the content value
is being provided smash that like button
hit that subscribe and Bell button so
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videos as they drop now typically we
would run through every single one of
these models on the show when we do our
deep Dives however given they aren't all
relevant to um we're going to jump
straight into the discounted cash flow
now as they have just IPO we only have
this information that we screen on
screen available to us the average
growth around 59% this is again just
using one year's data moving forward for
next year analysts are expecting and the
management around 50 % so what we've
done here is we've gone lower than the
average which is purely the year-on-year
increase we've gone lower than the
expectation of 50% and we've gone around
35% Now using that we get the present
value of the future free cash flows
alongside that discount rate we've added
that to the cash subtracted total debt
got to the equity value divided by
shares outstanding and we can see based
on this we get an intrinsic value of
around
$117 which is a sign of overvaluation
now just if we did use what management
work expecting over the next year or 50%
we would be looking at a price which is
nearly twice the current value but you
do need to bear in mind we are
forecasting out in the future for at
least 10 years so if you were expecting
50% your thesis would have to be 50%
over the next 10 years at a minimum
again we have been conservative in what
we believe at around that 35% Mark so
again we do see that essential
overvaluation sign so in today's episode
as we mentioned the intrinsic value is
purely just the DCF price which comes to
$117 don't forget you can grab a copy of
this valuation model to get to the
intrinsic value and acceptable Buy price
of companies in your own portfolio by
clicking on that pinned comment below
margin of safety as always then we use a
starting point of 10% if we believe it
has a wide mode strong financial metrics
and good forward-looking data for arm we
would be looking at around $115 for that
10% margin of safety and we can see when
looking at that trading price that is
still within that 52 week range so we
see right now the intrinsic value is
significantly below that current price
of
$147 again people will be looking for
even a 20% margin of safety of $93 and
if you're looking around 25% around 88
in terms of Wall Street and what they
forecast over the next 12 months well
they have a price target of $100 and
they basically see upside of - 32% they
do believe that arm Holdings is
currently extremely overvalued and in
fact on this channel we have done many
videos reviewing companies this is
ultimately the worst upside we have seen
so again do take it with a pinch of soul
in terms of Wall Street forecast if a
company starts to do better they do
start to tend to increase their
forecasted price so always do your own
due diligence as always let us know your
thoughts in the comments below whether
or not ARM Holding is one that you're
looking to add to or maybe you added
towards their IPO price around the $60
Mark as always you can also check out
our in-depth review of Nvidia that we
did just yesterday and don't forget
smash that like button if you enjoyed
today episode hit that subscribe and
Bell button so you are continually
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and as always catch you on the next one
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