ARM (NASDAQ:ARM) and Rambus (NASDAQ:RMBS) Head to Head Review

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

Insider and Institutional Ownership

88.5% of Rambus shares are held by institutional investors. Comparatively, 7.5% of ARM shares are held by institutional investors. 1.0% of Rambus shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Volatility & Risk

Rambus has a beta of 1.2, indicating that its stock price is 20% more volatile than the S&P 500. Comparatively, ARM has a beta of 4.48, indicating that its stock price is 348% more volatile than the S&P 500.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Rambus	32.31%	17.47%	14.45%
ARM	21.82%	11.94%	8.62%

Analyst Recommendations

This is a breakdown of recent recommendations for Rambus and ARM, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Rambus	0	0	7	1	3.13
ARM	2	6	18	1	2.67

Rambus currently has a consensus target price of $76.71, suggesting a potential upside of 67.79%. ARM has a consensus target price of $166.20, suggesting a potential upside of 65.00%. Given Rambus’ stronger consensus rating and higher possible upside, equities analysts clearly believe Rambus is more favorable than ARM.

Earnings & Valuation

This table compares Rambus and ARM”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Rambus	$556.62 million	8.83	$179.82 million	$1.66	27.54
ARM	$3.69 billion	28.57	$306.00 million	$0.76	132.54

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

Summary

Rambus beats ARM on 8 of the 14 factors compared between the two stocks.

About Rambus

Rambus Inc. provides semiconductor products in the United States, South Korea, Singapore, and internationally. The company offers DDR memory interface chips, including DDR5 and DDR4 memory interface chips to module manufacturers, OEMs, and hyperscalers; silicon IP, such as interface and security IP solutions that move and protect data in advanced data center, government, and automotive applications; and interface IP solutions for high-speed memory and chip-to-chip digital controller IP. It also provides a portfolios of security IP solutions, including crypto cores, hardware roots of trust, high-speed protocol engines, and chip provisioning technologies; and portfolio of patents that covers memory architecture, high-speed serial links, and security products. It markets its products and services through its direct sales force and distributors. Rambus Inc. was incorporated in 1990 and is headquartered in San Jose, California.

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.