ARM (NASDAQ:ARM) versus SMART Global (NASDAQ:SGH) Financial Contrast

ARM (NASDAQ:ARM) and SMART Global (NASDAQ:SGH) are both business services companies, but which is the superior business? We will contrast the two businesses based on the strength of their valuation, profitability, institutional ownership, earnings, dividends, risk and analyst recommendations.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
ARM	9.46%	16.94%	11.45%
SMART Global	-14.35%	8.86%	2.01%

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for ARM and SMART Global, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
ARM	1	11	15	0	2.52
SMART Global	0	0	4	0	3.00

SMART Global has a consensus price target of $32.25, indicating a potential upside of 38.29%. Given SMART Global’s stronger consensus rating and higher probable upside, analysts plainly believe SMART Global is more favorable than ARM.

Institutional & Insider Ownership

7.5% of ARM shares are held by institutional investors. 2.3% of SMART Global shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Earnings and Valuation

This table compares ARM and SMART Global’s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
ARM	$3.23 billion	51.10	$306.00 million	N/A	N/A
SMART Global	$1.44 billion	0.86	-$187.53 million	($3.08)	-7.57

ARM has higher revenue and earnings than SMART Global.

Summary

ARM beats SMART Global on 8 of the 11 factors compared between the two stocks.

About ARM

Arm Holdings plc architects, develops, and licenses central processing unit products and related technologies for semiconductor companies and original equipment manufacturers rely on to develop products. It offers microprocessors, systems intellectual property (IPs), graphics processing units, physical IP and associated systems IPs, software, tools, and other related services. Its products are used in various markets, such as automotive, computing infrastructure, consumer technologies, and Internet of things. The company operates in the United States, the People's Republic of China, Taiwan, South Korea, and internationally. The company was founded in 1990 and is headquartered in Cambridge, the United Kingdom. Arm Holdings plc operates as a subsidiary of Kronos II LLC.

About SMART Global

SMART Global Holdings, Inc., a memory-focused company, engages in the designing and development of enterprise solutions in the United States, China, Europe, and internationally. It operates through Memory Solutions, Intelligent Platform Solutions, and LED Solutions segments. The company offers dynamic random access memory modules, solid-state and flash storage, and other advanced memory solutions for networking and telecom, data analytics, artificial intelligence and machine learning applications; and supply chain services including procurement, logistics, inventory management, temporary warehousing, programming, kitting, and packaging services. It also provides Penguin Computing that focus on technical computing for core and cloud environments through HPC and AI solutions; and Penguin Edge, an edge computing solution for embedded and wireless applications including high-performance products for government, health care, industrial, and telecommunications applications. In addition, the company offers Stratus, which provides simplified, protected, and autonomous fault tolerant computing solutions in the data center and at the Edge through hardware and software services; and leading-edge solutions to education, energy, financial services, government, hyperscale, and manufacturing markets. Further, it provides LED-based products comprising blue and green LED chips based on gallium nitride, and related materials under Cree LED brand; and surface mount devices under the Cree LED XLamp and J Series brand. The company sells its products directly to original equipment manufacturers, enterprise, government and other end customers through direct sales force, e-commerce, customer service representatives, on-site field application engineers, independent sales representatives, distributors, integrators, and resellers. SMART Global Holdings, Inc. was founded in 1988 and is headquartered in Milpitas, California.