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ariticle, would you like to share it?","listText":"Great ariticle, would you like to share it?","text":"Great ariticle, would you like to share it?","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":2,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/272681473953984","repostId":"2410741773","repostType":4,"isVote":1,"tweetType":1,"viewCount":128,"authorTweetTopStatus":1,"verified":2,"comments":[],"imageCount":0,"langContent":"EN","totalScore":0}],"hots":[{"id":272681473953984,"gmtCreate":1707610567343,"gmtModify":1707613190621,"author":{"id":"3563846055711241","authorId":"3563846055711241","name":"LaiKF","avatar":"https://static.laohu8.com/default-avatar.jpg","crmLevel":5,"crmLevelSwitch":0,"followedFlag":false,"idStr":"3563846055711241","authorIdStr":"3563846055711241"},"themes":[],"htmlText":"Great ariticle, would you like to share it?","listText":"Great ariticle, would you like to share it?","text":"Great ariticle, would you like to share it?","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":2,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/272681473953984","repostId":"2410741773","repostType":4,"repost":{"id":"2410741773","kind":"highlight","pubTimestamp":1707550757,"share":"https://ttm.financial/m/news/2410741773?lang=&edition=fundamental","pubTime":"2024-02-10 15:39","market":"us","language":"en","title":"Arm Holdings' Earnings: Showering Profits","url":"https://stock-news.laohu8.com/highlight/detail?id=2410741773","media":"seekingalpha","summary":"And given that its guidance for the quarter ahead points to approximately 44% y/y revenue growth rates, I believe the answer is markedly affirmative. Case in point, as you can see in the graphic that follows, Arm wasn't supposed to turn around its prospects until much later in 2024. SA Premium Given that Arm has so significantly turned around its revenues, this has dramatically destroyed the bear case facing this stock, namely that its stock was ove","content":"<html><head></head><body><ul style=\"\"><li><p>Arm Holdings has demonstrated a turnaround in its business and is back to growth mode, debunking its bear case.</p></li><li><p>The company's near-term prospects are positive, with growth expected in both royalty and license revenue.</p></li><li><p>Arm's revenue growth rates have turned around, with a projected 44% y/y growth for the upcoming quarter.</p></li><li><p>There's a lot to like here.</p></li></ul><h2 id=\"id_2879109661\">Investment Thesis</h2><p><strong>Arm Holdings</strong> had a bear case against it - that the stock was too expensive. Well, Arm's impressive guidance provided with its fiscal Q3 2024 results demonstrated to all that this business has now turned around and is back to growth mode.</p><p>On the surface, I estimate Arm is priced at 69x forward free cash flows. But this is a worst-case scenario and presumes that Arm minimally benefits from strong operating leverage. Perhaps, a more realistic outlook would put this stock priced at 50x forward free cash flows, which appears to be the going price for world-class chip companies, particularly given that Arm is expecting to grow by approximately 25% to 30% CAGR in the coming year.</p><h2 id=\"id_4197282984\">Why Arm? Why Now?</h2><p>Arm's near-term prospects appear positive with growth attributed to both royalty and license revenue, with the highest-ever royalty revenue driven by factors such as increased adoption of Armv9 technology. The transition to Armv9 products, with royalty rates typically double those of Armv8, is a significant contributor to revenue growth.</p><p>Arm is gaining market share in growth markets like cloud servers and automotive, further boosting royalty revenue. The recovery in the broader semiconductor market, particularly in smartphones, also positively impacted Q3 results (more on this soon).</p><p>Additionally, Arm's licensing revenue is supported by rising demand for new technology driven by AI applications, making Arm a key player in the AI ecosystem.</p><p>However, Arm is not without its challenges. The global supply chain uncertainties could impact Arm's performance, as seen in cautious data points from the smartphone ecosystem.</p><p>The company's success is also contingent on the broader economic environment, especially in the context of rapidly evolving AI space.</p><p>Given this framework, let's now discuss its financials.</p><h2 id=\"id_783736573\">Revenue Growth Rates Have Turned Around</h2><p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/a1b4653389e8acfbb62d65da79fbdd00\" tg-width=\"640\" tg-height=\"224\"/></p><p>ARM revenue growth rates</p><p>Arm's royal revenues turned around and this helped the company deliver 14% y/y CAGR on the topline for its fiscal Q3 2024 results.</p><p>But what investors craved to know and have been pleasantly reassured by is whether this was likely to be true for Arm?</p><p>And given that its guidance for the quarter ahead points to approximately 44% y/y revenue growth rates, I believe the answer is markedly affirmative.</p><p>Case in point, as you can see in the graphic that follows, Arm wasn't supposed to turn around its prospects until much later in 2024.</p><p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/70a9780768386821c6de0ec7f045942b\" tg-width=\"640\" tg-height=\"301\"/></p><p>SA Premium</p><p>Given that Arm has so significantly turned around its revenues, this has dramatically destroyed the bear case facing this stock, namely that its stock was overpriced.</p><h2 id=\"id_488853395\">ARM Stock Valuation -- 69x Forward Free Cash Flow</h2><p>As it stands right now, Arm is on an annualized EPS figure of $1.30, which equates to approximately $1.05 billion of free cash flow. But at the pace that Arm is growing its revenues, it's possible that in the coming year, its free cash flow would be approximately $1.5 billion.</p><p>Consequently, including the 30% premarket jump, I believe that Arm is priced at 69x forward free cash flows.</p><p>Is this cheap? No! I don't believe any serious and rational investors would contend that Arm is cheaply priced. But at the same time, I don't know many businesses with the scale or distinctive competitive advantage in the semiconductor industry as Arm.</p><p>More specifically, Arm has an extremely high-margin business, with minimal need for capex. Therefore, to grow, Arm does so without having to reinvest massive sums back into the business.</p><p>One of Arm Holdings' notable peers in the semiconductor industry is Intel (INTC) which, while operating in a similar space, employs a different business model and focuses on manufacturing its own chips, and doesn't license its technology.</p><h2 id=\"id_302300739\">The Bottom Line</h2><p>In wrapping up, I believe Arm Holdings has effectively debunked its bear case through its impressive guidance.</p><p>The turnaround in revenue growth rates, particularly the noteworthy 44% y/y projection for the upcoming quarter, showcases the company's resurgence and alleviates concerns about its prior overvaluation.</p><p>Although the current valuation is positioned at 69x forward free cash flows, adopting a more pragmatic perspective suggests a more reasonable 50x forward free cash flows. This valuation aligns with industry standards for top-tier chip companies. Despite the seemingly high valuation, Arm's distinctive standing in the semiconductor industry, characterized by substantial free cash flow margins, distinguishes it. As I project a 25% to 30% compound annual growth rate in the upcoming year and its continued success in the AI ecosystem, I find Arm to be a compelling investment option.</p></body></html>","source":"seekingalpha","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Arm Holdings' Earnings: Showering Profits</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nArm Holdings' Earnings: Showering Profits\n</h2>\n\n<h4 class=\"meta\">\n\n\n2024-02-10 15:39 GMT+8 <a href=https://seekingalpha.com/article/4668593-arm-holdings-earnings-showering-profits><strong>seekingalpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>Arm Holdings has demonstrated a turnaround in its business and is back to growth mode, debunking its bear case.The company's near-term prospects are positive, with growth expected in both royalty and ...</p>\n\n<a href=\"https://seekingalpha.com/article/4668593-arm-holdings-earnings-showering-profits\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{"BK4550":"红杉资本持仓","BK4533":"AQR资本管理(全球第二大对冲基金)","BK4588":"碎股","LU0321505439.SGD":"Schroder ISF Global Dividend Maximiser A Acc SGD","BK4141":"半导体产品","BK4575":"芯片概念","BK4585":"ETF&股票定投概念","BK4527":"明星科技股","BK4579":"人工智能","BK4554":"元宇宙及AR概念","ARM":"ARM Holdings Ltd","BK4534":"瑞士信贷持仓","BK4535":"淡马锡持仓","BK4529":"IDC概念","BK4515":"5G概念","LU0321505868.SGD":"Schroder ISF Global Dividend Maximiser A Dis SGD","BK4512":"苹果概念"},"source_url":"https://seekingalpha.com/article/4668593-arm-holdings-earnings-showering-profits","is_english":true,"share_image_url":"https://static.laohu8.com/5a36db9d73b4222bc376d24ccc48c8a4","article_id":"2410741773","content_text":"Arm Holdings has demonstrated a turnaround in its business and is back to growth mode, debunking its bear case.The company's near-term prospects are positive, with growth expected in both royalty and license revenue.Arm's revenue growth rates have turned around, with a projected 44% y/y growth for the upcoming quarter.There's a lot to like here.Investment ThesisArm Holdings had a bear case against it - that the stock was too expensive. Well, Arm's impressive guidance provided with its fiscal Q3 2024 results demonstrated to all that this business has now turned around and is back to growth mode.On the surface, I estimate Arm is priced at 69x forward free cash flows. But this is a worst-case scenario and presumes that Arm minimally benefits from strong operating leverage. Perhaps, a more realistic outlook would put this stock priced at 50x forward free cash flows, which appears to be the going price for world-class chip companies, particularly given that Arm is expecting to grow by approximately 25% to 30% CAGR in the coming year.Why Arm? Why Now?Arm's near-term prospects appear positive with growth attributed to both royalty and license revenue, with the highest-ever royalty revenue driven by factors such as increased adoption of Armv9 technology. The transition to Armv9 products, with royalty rates typically double those of Armv8, is a significant contributor to revenue growth.Arm is gaining market share in growth markets like cloud servers and automotive, further boosting royalty revenue. The recovery in the broader semiconductor market, particularly in smartphones, also positively impacted Q3 results (more on this soon).Additionally, Arm's licensing revenue is supported by rising demand for new technology driven by AI applications, making Arm a key player in the AI ecosystem.However, Arm is not without its challenges. The global supply chain uncertainties could impact Arm's performance, as seen in cautious data points from the smartphone ecosystem.The company's success is also contingent on the broader economic environment, especially in the context of rapidly evolving AI space.Given this framework, let's now discuss its financials.Revenue Growth Rates Have Turned AroundARM revenue growth ratesArm's royal revenues turned around and this helped the company deliver 14% y/y CAGR on the topline for its fiscal Q3 2024 results.But what investors craved to know and have been pleasantly reassured by is whether this was likely to be true for Arm?And given that its guidance for the quarter ahead points to approximately 44% y/y revenue growth rates, I believe the answer is markedly affirmative.Case in point, as you can see in the graphic that follows, Arm wasn't supposed to turn around its prospects until much later in 2024.SA PremiumGiven that Arm has so significantly turned around its revenues, this has dramatically destroyed the bear case facing this stock, namely that its stock was overpriced.ARM Stock Valuation -- 69x Forward Free Cash FlowAs it stands right now, Arm is on an annualized EPS figure of $1.30, which equates to approximately $1.05 billion of free cash flow. But at the pace that Arm is growing its revenues, it's possible that in the coming year, its free cash flow would be approximately $1.5 billion.Consequently, including the 30% premarket jump, I believe that Arm is priced at 69x forward free cash flows.Is this cheap? No! I don't believe any serious and rational investors would contend that Arm is cheaply priced. But at the same time, I don't know many businesses with the scale or distinctive competitive advantage in the semiconductor industry as Arm.More specifically, Arm has an extremely high-margin business, with minimal need for capex. Therefore, to grow, Arm does so without having to reinvest massive sums back into the business.One of Arm Holdings' notable peers in the semiconductor industry is Intel (INTC) which, while operating in a similar space, employs a different business model and focuses on manufacturing its own chips, and doesn't license its technology.The Bottom LineIn wrapping up, I believe Arm Holdings has effectively debunked its bear case through its impressive guidance.The turnaround in revenue growth rates, particularly the noteworthy 44% y/y projection for the upcoming quarter, showcases the company's resurgence and alleviates concerns about its prior overvaluation.Although the current valuation is positioned at 69x forward free cash flows, adopting a more pragmatic perspective suggests a more reasonable 50x forward free cash flows. This valuation aligns with industry standards for top-tier chip companies. Despite the seemingly high valuation, Arm's distinctive standing in the semiconductor industry, characterized by substantial free cash flow margins, distinguishes it. As I project a 25% to 30% compound annual growth rate in the upcoming year and its continued success in the AI ecosystem, I find Arm to be a compelling investment option.","news_type":1},"isVote":1,"tweetType":1,"viewCount":128,"authorTweetTopStatus":1,"verified":2,"comments":[],"imageCount":0,"langContent":"EN","totalScore":0}],"lives":[]}
