Arm Holdings plc (ARM) — Quantitative Forecast & Factor Scores
ARM screens as moderate-quality and fully priced — upside depends on sustained earnings execution at current multiples.
ARM's quantitative grade is Hold, with elevated downside risk (CVaR -24.2%), and quality metrics (net margin 17%, ROE 11%). Arm Holdings plc (ARM) trades at $144.13 with a valuation grade of Hold: a trailing P/E of 192.2x at a 501% premium to sector median, net margins of 17.1%, a DCF-implied intrinsic range of $64–$188 suggesting a -13% margin of safety, beta 4.13 (highly aggressive risk profile).
Key Takeaways
- Valuation: Hold grade — P/E 192.2x — DCF range $64–$188 implies -13% margin of safety
- Risk: CVaR -24.2% (95th percentile, 1-month) indicates moderate tail exposure; beta of 4.13 amplifies broad market moves in both directions
- Strengths: Size 4.0/5, 17% net margin, 11% ROE dominate the factor profile
- Watch: Value score of 2.0/5 signals premium pricing
Quantitative Factor Profile
Key Metrics
| Metric | Value |
|---|---|
| Current Price | $144.13 |
| P/E Ratio (TTM) | 192.2x |
| Forward P/E | 67.4x |
| P/S Ratio | 32.8 |
| EV/EBITDA | 138.4 |
| Beta | 4.13 |
| Net Margin | 17.1% |
| ROE | 11.3% |
| Debt/Equity | 5.9% |
| CVaR (95%, 1M) | -24.2% |
| Market Cap | $153.1B |
Earnings History
| Quarter | EPS Est. | EPS Actual | Surprise |
|---|---|---|---|
| Q4 2025 | $0.41 | $0.43 | +5.1% ✓ |
| Q3 2025 | $0.33 | $0.39 | +17.7% ✓ |
| Q2 2025 | $0.35 | $0.35 | -0.3% ✗ |
| Q1 2025 | $0.52 | $0.55 | +5.0% ✓ |
ARM vs. Sector Peers
| Ticker | P/E (TTM) | Beta | CVaR-95 | Net Margin |
|---|---|---|---|---|
| ARM | 192.2x | 4.13 | -24.2% | 17.1% |
| NVDA | 34.1x | 2.38 | -11.2% | 55.6% |
| AMD | 77.4x | 2.02 | -21.8% | 12.5% |
| AVGO | 58.5x | 1.26 | -13.2% | 36.6% |
| TSM | 31.5x | 1.28 | -9.6% | 45.1% |
Pairwise Correlation Matrix
ARM screens as a fundamentally sound business, at a fully-priced valuation with limited margin of safety. Three of the last four quarters beat consensus — execution is solid, with improving surprise magnitude (+5.1% most recently).
ARM trades at 192.2x trailing earnings — 501% above the Technology sector median of 32.0x. The current price implies a 13% premium to DCF fair value — the risk/reward depends entirely on above-consensus growth materialising.
ARM is not a name I am actively adding to. The business quality is real, but at 192x I am already paying for a lot of the future, and the margin of safety does not justify conviction-sized exposure. The variable I track most closely is gross margin trajectory. That multiple can only be sustained if operating leverage is real — specifically whether the margin profile at scale supports what the market is already pricing in, or whether that future still needs to be earned. Re-accelerating earnings surprise magnitude would shift my view constructive. Continued compression of beat magnitude at this multiple would move me toward a reduce.
Is ARM a buy, hold, or sell?
ARM carries a valuation grade of Hold. The trailing P/E of 192.2 sits 501% above the Technology sector median of 32.0x — a premium that demands sustained earnings delivery. Our discounted cash flow model produces an intrinsic range of $64–$188 — implying a -13% margin of safety at the current price of $144.13. The width of the DCF range reflects genuine uncertainty in the terminal growth rate assumption: the correct framework is a probability-weighted distribution over scenarios, not a single point estimate.
The company has beaten estimates in 75% of recent quarters. The most recent quarter delivered a 5.1% earnings surprise. Analyst estimate revisions are trending upward.
What are ARM's key risk factors?
With a beta of 4.13, ARM exhibits a highly aggressive risk profile relative to the broad market. The 95th-percentile CVaR of -24.2% on a one-month horizon should inform position sizing directly: at a 10% portfolio weight, this tail event contributes approximately 2.4% of total portfolio loss in the worst 5% of months. Net margins of 17.1% fall below the Technology sector average of 22%, suggesting margin pressure. The balance sheet is conservatively leveraged at 6% debt-to-equity.
At 0.28, the put/call ratio skews bullish, with call buyers dominating recent flow. Implied volatility of 63.4% is below realized volatility of 73.4%, potentially making options relatively cheap. Short interest of 10.6% of float is elevated, reflecting meaningful bearish positioning.
How does ARM fit in a diversified portfolio?
At typical HENRY portfolio weights — 10–20% of the equity allocation — ARM carries a beta of 4.13, meaning it amplifies broad market moves proportionally. The appropriate weight is not a function of conviction alone, but of the full covariance structure across all holdings. See the Ledoit-Wolf covariance framework for the methodology behind these calculations.
Among closely correlated names, ARM shows the strongest co-movement with NVDA (0.62), QCOM (0.61), AVGO (0.60). Investors seeking diversification should note these correlation dynamics when constructing multi-asset portfolios.
True portfolio risk is a function of the full covariance structure across all holdings — not individual stock metrics. The Portfolio Health Check quantifies this at the portfolio level: it surfaces hidden concentration, marginal CVaR contributions, and the degree to which your overall allocation deviates from an optimal risk-adjusted mandate. The ARM analysis here is a single node in that larger structure.
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Launch Live Analysis →This analysis is produced using a systematic quantitative framework applied to market data and does not constitute investment advice. Prose commentary is AI-assisted and generated from structured quantitative inputs. All data and metrics are as of 2026-03-28 and are point-in-time estimates subject to revision without notice. CVaR figures are based on historical simulation and do not guarantee future outcomes. DCF ranges and upgrade/downgrade triggers are forward-looking statements based on current assumptions and may not materialise. Past performance does not guarantee future results. This analysis does not account for individual circumstances, tax position, or investment objectives — consult a qualified financial advisor before making investment decisions. This content is intended for informational purposes only and does not constitute regulated investment advice under MiFID II or FCA guidelines. This content is not intended for US persons or residents of jurisdictions where its distribution would be contrary to local law or regulation. This service is not directed at residents of Finland, Sweden, Norway, Denmark, Iceland, or Poland. The author may hold long or short positions in securities mentioned in this analysis. Nothing on this page represents a solicitation to buy or sell any security. A.L. Capital Advisory is an independent private advisory practice and is not affiliated with Arm Holdings plc.