Critical Review: United Microelectronics (NYSE:UMC) versus ARM (NASDAQ:ARM)

United Microelectronics (NYSE:UMC) and ARM (NASDAQ:ARM) are both large-cap computer and technology companies, but which is the better business? We will compare the two businesses based on the strength of their analyst recommendations, dividends, earnings, risk, valuation, institutional ownership and profitability.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
United Microelectronics	23.90%	14.80%	9.41%
ARM	12.12%	18.97%	13.23%

Valuation & Earnings

This table compares United Microelectronics and ARM”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
United Microelectronics	$223.46 billion	0.09	$1.95 billion	$0.70	11.86
ARM	$3.50 billion	41.42	$306.00 million	N/A	N/A

United Microelectronics has higher revenue and earnings than ARM.

Analyst Ratings

This is a breakdown of current ratings and recommmendations for United Microelectronics and ARM, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
United Microelectronics	0	1	2	0	2.67
ARM	1	10	17	2	2.67

United Microelectronics currently has a consensus price target of $8.90, indicating a potential upside of 7.23%. ARM has a consensus price target of $125.96, indicating a potential downside of 8.88%. Given United Microelectronics’ higher probable upside, research analysts clearly believe United Microelectronics is more favorable than ARM.

Insider & Institutional Ownership

5.1% of United Microelectronics shares are owned by institutional investors. Comparatively, 7.5% of ARM shares are owned by institutional investors. 8.0% of United Microelectronics shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Summary

ARM beats United Microelectronics on 7 of the 12 factors compared between the two stocks.

About United Microelectronics

United Microelectronics Corporation operates as a semiconductor wafer foundry in Taiwan, Singapore, China, Hong Kong, Japan, the United States, Europe, and internationally. The company provides circuit design, mask tooling, wafer fabrication, and assembly and testing services. It serves fabless design companies and integrated device manufacturers. The company was incorporated in 1980 and is headquartered in Hsinchu City, Taiwan.

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.