ARM (NASDAQ:ARM) vs. SolarEdge Technologies (NASDAQ:SEDG) Critical Survey

ARM (NASDAQ:ARM) and SolarEdge Technologies (NASDAQ:SEDG) are both computer and technology companies, but which is the better business? We will compare the two companies based on the strength of their institutional ownership, earnings, valuation, analyst recommendations, risk, dividends and profitability.

Insider and Institutional Ownership

7.5% of ARM shares are held by institutional investors. Comparatively, 95.1% of SolarEdge Technologies shares are held by institutional investors. 0.7% of SolarEdge Technologies shares are held 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.

Earnings & Valuation

This table compares ARM and SolarEdge Technologies”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	45.55	$306.00 million	$0.76	184.91
SolarEdge Technologies	$901.46 million	1.19	$34.33 million	($31.19)	-0.59

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

Volatility & Risk

ARM has a beta of 4.57, indicating that its stock price is 357% more volatile than the S&P 500. Comparatively, SolarEdge Technologies has a beta of 1.56, indicating that its stock price is 56% more volatile than the S&P 500.

Profitability

This table compares ARM and SolarEdge Technologies’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
ARM	21.82%	11.94%	8.62%
SolarEdge Technologies	-192.13%	-95.05%	-41.78%

Analyst Ratings

This is a breakdown of current ratings for ARM and SolarEdge Technologies, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
ARM	2	6	19	1	2.68
SolarEdge Technologies	9	16	3	1	1.86

ARM presently has a consensus price target of $162.83, indicating a potential upside of 15.87%. SolarEdge Technologies has a consensus price target of $21.65, indicating a potential upside of 17.28%. Given SolarEdge Technologies’ higher probable upside, analysts clearly believe SolarEdge Technologies is more favorable than ARM.

Summary

ARM beats SolarEdge Technologies on 11 of the 14 factors compared between the two stocks.

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.

About SolarEdge Technologies

SolarEdge Technologies, Inc., together with its subsidiaries, designs, develops, manufactures, and sells direct current (DC) optimized inverter systems for solar photovoltaic (PV) installations in the United States, Germany, the Netherlands, Italy, rest of Europe, and internationally. It operates in two segments, Solar and Energy Storage. The Solar segment offers power optimizers, inverters, batteries, storage solutions, electric vehicle chargers, smart tracking solutions, and smart energy management software products; Monitoring platform, a cloud-based monitoring platform, which collects power, voltage, current, and system data sent from inverters and power optimizers; and MySolarEdge app, that enables system owners to track their real-time system production and household energy consumption. This segment also provides Designer platform, an web-based tool that helps solar professionals to plan, build, and validate residential and commercial systems; Mapper application for registering the physical layout of new PV sites installed with DC optimized inverter systems; SetApp application that activates and configurate inverters; and grid services. The Energy Storage segment provides lithium-ion cells and containerized battery systems (BESS) solutions for commercial, industrial, and utility markets; modules and racks; purpose-built components and solutions, and hardware and software tools; and pre and post sales engineering support for designing, building, and managing battery and system solutions. The company offers e-mobility products, automated machines, and UPS products; and pre-sales support, ongoing trainings, and technical support and after installation services. It sells its products through solar installers and distributors, electrical equipment wholesalers, and PV module manufacturers, as well as engineering, procurement, and construction firms. SolarEdge Technologies, Inc. was incorporated in 2006 and is headquartered in Herzliya, Israel.