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ARM Holdings (ARM Holdings) Earnings Power Value (EPV) : $2.55 (As of Mar24)


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What is ARM Holdings Earnings Power Value (EPV)?

As of Mar24, ARM Holdings's earnings power value is $2.55. *

* GuruFocus does not store EPV value into our database if Average Maintenance CAPEX is 0.

Margin of Safety is -5193.76

The basic concept of EPV is that one should value a stock based on the current free cash flow of a company and not on future projections which may, or may not, come true. It is arguably a better way to analyze stocks than Discounted Cash Flow analysis that relies on highly speculative growth assumptions many years into the future. Assumption: Current profitability is sustainable.


ARM Holdings Earnings Power Value (EPV) Historical Data

The historical data trend for ARM Holdings's Earnings Power Value (EPV) can be seen below:

* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD.
* For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.

* Premium members only.

ARM Holdings Earnings Power Value (EPV) Chart

ARM Holdings Annual Data
Trend Mar21 Mar22 Mar23 Mar24
Earnings Power Value (EPV)
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ARM Holdings Quarterly Data
Mar21 Mar22 Jun22 Sep22 Dec22 Mar23 Jun23 Sep23 Dec23 Mar24
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Competitive Comparison of ARM Holdings's Earnings Power Value (EPV)

For the Semiconductors subindustry, ARM Holdings's Earnings Power Value (EPV), along with its competitors' market caps and Earnings Power Value (EPV) data, can be viewed below:

* Competitive companies are chosen from companies within the same industry, with headquarter located in same country, with closest market capitalization; x-axis shows the market cap, and y-axis shows the term value; the bigger the dot, the larger the market cap. Note that "N/A" values will not show up in the chart.


ARM Holdings's Earnings Power Value (EPV) Distribution in the Semiconductors Industry

For the Semiconductors industry and Technology sector, ARM Holdings's Earnings Power Value (EPV) distribution charts can be found below:

* The bar in red indicates where ARM Holdings's Earnings Power Value (EPV) falls into.



ARM Holdings Earnings Power Value (EPV) Calculation

Earnings Power Value also known as just Earnings Power is a valuation technique popularised by Bruce Greenwald, an authority on value investing at Columbia University. It is arguably a better way to analyze stocks than Discounted Cash Flow analysis that relies on highly speculative growth assumptions many years into the future.

The basic concept of EPV is that one should value a stock based on the current free cash flow of a company and not on future projections which may, or may not, come true. This valuation tool excludes the potential growth that a company may have so that needs to be looked at separately. Since future growth is excluded from the analysis, only the maintenance capital expenditures are subtracted from after-tax EBIT (earnings before interest and taxes) and growth capex is ignored.


ARM Holdings  (NAS:ARM) Earnings Power Value (EPV) Explanation

Assumption: Current profitability is sustainable.

Earnings power value (EPV) uses a very basic equation which assumes no growth, although it does rely on an assumption about the cost of capital as well as the fact that current earnings are sustainable. It also involves several adjustments to clean up the underlying Earnings figures.


Be Aware

Though using today's earnings in calculating Earnings Power Value, GuruFocus is normalizing these earnings to the business cycle. This eliminates the effects on profitability of valuing the firm at different points in the business cycle. This means that we are considering the average earnings over 5 years.


ARM Holdings Earnings Power Value (EPV) Related Terms

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ARM Holdings (ARM Holdings) Business Description

Traded in Other Exchanges
Address
110 Fulbourn Road, Cambridge, GBR, CB1 9NJ
Arm Holdings is the IP owner and developer of the ARM architecture (ARM stands for Acorn RISC Machine), which is used in 99% of the world's smartphone CPU cores, and it also has high market share in other battery-powered devices like wearables, tablets, or sensors. Arm licenses its architecture for a fee, offering different types of licenses depending on the flexibility the customer needs. Customers like Apple or Qualcomm buy architectural licenses, which allows them to modify the architecture and add or delete instructions to tailor the chips to their specific needs. Other clients directly buy off-the-shelf designs from Arm. Both off-the-shelf and architectural customers pay a royalty fee per chip shipped.