Stock Buzz: ARM Holdings plc (ARMH)

ARM Holdings plc (NASDAQ:ARMH) reported earnings for the three months ended Mar2016 on April 20, 2016. The company earned $0.36 per share on revenue of $398M. Analysts had been modeling earning per share of $0.36 with $393.92M in revenue.

ARM Holdings plc (NASDAQ:ARMH) announces its unaudited financial results for the first quarter ended 31 March 2016.

Q1 2016 Financial Summary

• Group revenues in US$ up 14% year-on-year (£ revenues up 22% year-on-year)


• Processor royalty revenues in US$ up 15% year-on-year, outperforming the industry by 18pp1


• Normalised operating expenses were impacted by weaker sterling; at constant exchange rate normalised operating expenses were 2% higher than Q4 2015, and around the top end of the guidance range2


• Normalised PBT and EPS up 14% and 15% year-on-year respectively Progress on long-term growth drivers in Q1 2016


• Growth in adoption of ARM® processor technology

o 39 processor licences signed by a broad range of companies, including leading semiconductor vendors and OEMs

o Target applications included mobile computing, automotive, networking infrastructure and servers

• Strong demand for ARM’s most advanced technology

o 8 licences signed for ARM Cortex-A technology for high-performance and highly efficient application processors

o 2 Mali™ multimedia processor licences signed, including licences for advanced graphics and display processors

o ARM extended long-term agreements with two leading foundries to cover a wider range of physical IP technologies from 55nm to 14nm

• Growth in shipments of chips based on ARM technology

o 4.1 billion ARM-based chips shipped, up 10% year-on-year

o ARMv8-A, octacore and Mali penetration increased in smartphones, driving a higher royalty per mobile device

o Continuing growth in chips for networking infrastructure, up 10% year-on-year

o ARM-based microcontrollers and smartcards up 20% year-on-year

o 50% of physical IP royalty generated from leading-edge nodes from 28nm to 14nm as ARM technology is increasingly used in semiconductor companies’ most advanced chips

ARM Holdings plc earnings per share showed an increasing trend of 33.1% for the current fiscal year. The company’s expected EPS growth rate for next fiscal year is 174%.Analysts project EPS growth over the next 5 years at 16.8%. It has EPS annual growth over the past 5 fiscal years of 30.3% when sales grew 19. It reported 21.5% sales growth, and 7.9% EPS growth in the last quarter.

The stock is trading at $43.1, up 18.17% from 52-week low of $36.68. The stock trades down -20.05% from its peak of $54.41 and 12.23% above the consensus price target of $48.37. Its volume clocked up at 1.01 million shares which is lower than the average volume of 1.7 million shares. Its market capitalization currently stands at $20.21B.