Key Takeaways
- A 97.4% gross margin shrinks to a 13.9% operating margin, and a net margin of 17.1% above that suggests non-operating gains help earnings.
- Revenue rose 27.1% over the trailing twelve months, but earnings fell 45.5%, so growth is not reaching profit.
- With a P/E of 200.71, EV/Revenue of 33.62 and a 14 / 100 Opportunity score, the stock is priced well ahead of its current results.
Few businesses look as good on one line and as demanding on another. This Arm Holdings plc stock analysis centers on that tension: a 97.4% gross margin and 27.1% revenue growth on one side, a P/E of 200.71 and a 45.5% earnings decline on the other. The shares trade at $174.62 on a market capitalization of $186.84B.
What Is Happening With the Stock Price
Arm sits at the lower end of its two-year range of $87.71 to $439.46, roughly 60% below the high but about double the low. That is a deep drawdown for a company of this size, and it suggests investors have been reassessing how much to pay for growth that has not yet translated into earnings.
Quality: Is This a Financially Sound Business?
The gross margin is 97.4%, typical of a licensing model, but the operating margin is 13.9%, so heavy operating costs absorb most of it. Net margin is 17.1%, which is above the operating margin. That points to non-operating gains, such as interest income, flattering the bottom line, and it means the P/E and return metrics may look better than the core business supports. Return on equity is 11.3% and return on assets 5.5%.
Cash flow is a relative bright spot: trailing free cash flow of $1.1B is above implied net income of roughly $0.9B on $5.5B of revenue. The balance sheet is very liquid, with debt-to-equity of 0.06, a current ratio of 6.35 and a quick ratio of 6.12. This Arm Holdings plc stock analysis rates quality as solid, with a score of 81 / 100.
Growth: Does This Company Have Real Upside?
Trailing-twelve-month revenue growth is 27.1%, while a five-year CAGR is not available. Trailing earnings growth is -45.5%, so profits are falling even as sales rise, which is a notable mismatch. EV/Revenue is 33.62, a very high price for each dollar of sales. The Growth score is 68 / 100.
Opportunity: Is Now a Good Time to Enter?
Valuation is where the model is most cautious. The P/E of 200.71, EV/EBITDA of 162.92 and price-to-book of 20.56 leave little margin for error, and the free cash flow yield is just 0.6%. The pullback into the lower end of the two-year range might look like a discount, but the multiples show the stock is still priced for strong future growth. The Opportunity score is 14 / 100.
Arm Holdings plc Stock Analysis: The Bottom Line
With Quality at 81, Growth at 68 and Opportunity at 14, the Recommendation Score is 54 / 100 and the StreetBriefs quantitative model signal is Hold. This is a research starting point, not a personalized recommendation to transact.
The bull case is a high-margin licensing model, rising revenue and a cash-rich balance sheet. The bear case is falling earnings, an extreme valuation that relies on growth arriving on schedule, and net income that is partly supported by non-operating gains. Based on Yahoo Finance data as of November 09, 2026; all equities carry risk.
Financial Metrics Summary
| Metric | Value |
|---|---|
| Price & Valuation | |
| Current Price | $174.62 |
| 2-Year Low | $87.71 |
| 2-Year High | $439.46 |
| Market Cap | $186.84B |
| P/E Ratio | 200.71 |
| EV / Revenue | 33.62 |
| Our Scores | |
| Quality Score | 81 / 100 |
| Growth Score | 68 / 100 |
| Opportunity Score | 14 / 100 |
| Profitability | |
| Earnings Per Share | $0.87 |
| Return on Assets | 5.5% |
| Return on Equity | 11.3% |
| Net Profit Margin | 17.1% |
| Gross Margin | 97.4% |
| Operating Margin | 13.9% |
| Growth | |
| Revenue Growth (TTM) | 27.1% |
| Earnings Growth (TTM) | -45.5% |
| Balance Sheet | |
| Debt-to-Equity | 0.06 |
| Current Ratio | 6.35 |
| Quick Ratio | 6.12 |
| Income & Dividends | |
| Dividend Yield | 0.0% |
| Payout Ratio | 0.0% |
Data as of November 09, 2026
Our Three-Pillar Assessment
| Quality |
81/100 |
| Growth |
68/100 |
| Opportunity |
14/100 |
Quality measures business fundamentals: profitability, cash flow discipline, and balance sheet strength.
Growth captures revenue momentum, gross margin scalability, and the Rule of 40 efficiency test.
Opportunity signals entry timing: current valuation versus history and price position in the 2-year range.
Current price: $174.62 trading 60% below its 2-year high of $439.46.
Keep researching ARM
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This analysis is done using financial data from Yahoo Finance.
Always conduct your own due diligence and consult a qualified financial advisor before making investment decisions.
