Financial Review: ARM (NASDAQ:ARM) and Sequans Communications (NYSE:SQNS)

ARM (NASDAQ:ARM) and Sequans Communications (NYSE:SQNS) are both computer and technology companies, but which is the superior business? We will contrast the two businesses based on the strength of their valuation, profitability, dividends, risk, institutional ownership, earnings and analyst recommendations.

Institutional & Insider Ownership

7.5% of ARM shares are held by institutional investors. Comparatively, 63.3% of Sequans Communications shares are held by institutional investors. 9.4% of Sequans Communications shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Risk & Volatility

ARM has a beta of 4.57, indicating that its stock price is 357% more volatile than the S&P 500. Comparatively, Sequans Communications has a beta of 0.36, indicating that its stock price is 64% less volatile than the S&P 500.

Profitability

This table compares ARM and Sequans Communications’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
ARM	21.82%	11.94%	8.62%
Sequans Communications	138.26%	403.46%	31.37%

Earnings and Valuation

This table compares ARM and Sequans Communications”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	52.01	$306.00 million	$0.76	211.13
Sequans Communications	$36.76 million	1.74	-$40.99 million	$2.00	1.28

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

Analyst Ratings

This is a breakdown of current ratings and target prices for ARM and Sequans Communications, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
ARM	2	6	19	1	2.68
Sequans Communications	0	0	1	0	3.00

ARM currently has a consensus price target of $162.83, suggesting a potential upside of 1.47%. Sequans Communications has a consensus price target of $7.50, suggesting a potential upside of 192.40%. Given Sequans Communications’ stronger consensus rating and higher probable upside, analysts clearly believe Sequans Communications is more favorable than ARM.

Summary

Sequans Communications beats ARM on 8 of the 15 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 Sequans Communications

Sequans Communications S.A. engages in the fabless designing, developing, and supplying of cellular semiconductor solutions for massive and broadband Internet of Things (IoT) markets in Taiwan, Korea, China, rest of Asia, Germany, the United States, and internationally. It offers baseband solutions for use in encoding and decoding data based on 4G and 5G protocols for wireless processing platform for a cellular device; RF transceivers used to transmit and receive wireless transmissions; highly integrated SoC solutions that combine various functions into a single die or package; and LTE modules. The company also provides software, including source code and tools to enable manufacturers to integrate their solutions into their devices; and design support services. The company serves OEMs and ODMs Customers, as well as 4G and 5G wireless carriers. Sequans Communications S.A. was incorporated in 2003 and is based in Paris, France.