Head-To-Head Survey: nLIGHT (NASDAQ:LASR) versus ARM (NASDAQ:ARM)

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

Risk and Volatility

ARM has a beta of 4.67, indicating that its share price is 367% more volatile than the S&P 500. Comparatively, nLIGHT has a beta of 2.2, indicating that its share price is 120% more volatile than the S&P 500.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
ARM	18.13%	13.69%	9.70%
nLIGHT	-24.16%	-19.53%	-15.91%

Analyst Recommendations

This is a breakdown of current recommendations for ARM and nLIGHT, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
ARM	2	6	18	1	2.67
nLIGHT	0	0	3	0	3.00

ARM currently has a consensus price target of $150.32, suggesting a potential upside of 13.75%. nLIGHT has a consensus price target of $16.17, suggesting a potential upside of 60.22%. Given nLIGHT’s stronger consensus rating and higher possible upside, analysts clearly believe nLIGHT is more favorable than ARM.

Valuation and Earnings

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
ARM	$3.54 billion	39.17	$306.00 million	$0.60	220.25
nLIGHT	$203.06 million	2.41	-$41.67 million	($1.03)	-9.80

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

Insider and Institutional Ownership

7.5% of ARM shares are held by institutional investors. Comparatively, 83.9% of nLIGHT shares are held by institutional investors. 6.1% of nLIGHT shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.

Summary

ARM beats nLIGHT on 11 of the 15 factors compared between the two stocks.

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.

About nLIGHT

nLIGHT, Inc. designs, develops, manufactures, and sells semiconductor and fiber lasers for industrial, microfabrication, and aerospace and defense applications. The company operates in two segments, Laser Products and Advanced Development. It offers semiconductor lasers with various ranges of power levels, wavelengths, and output fiber sizes; and programmable and serviceable fiber lasers for use in industrial and aerospace and defense applications. The company also provides laser sensors, including light detection and ranging technologies for intelligence, surveillance, and reconnaissance applications; and fiber amplifiers, beam combination, and control systems for use in high-energy laser systems in directed energy applications. It sells its products through direct sales force in the United States, China, South Korea, and European countries, as well as through independent sales representatives and distributors in Asia, Australia, Europe, the Middle East, and South America. The company was formerly known as nLight Photonics Corporation and changed its name to nLIGHT, Inc. in January 2016. nLIGHT, Inc. was incorporated in 2000 and is headquartered in Camas, Washington.