ARM Holdings Catches Analysts Sleeping Again

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ARM Holdings (NAS: ARMH) reported earnings yesterday. Here are the numbers you need to know.

The 10-second takeaway
For the quarter ended Dec. 31 (Q4), ARM Holdings beat expectations on revenues and beat expectations on earnings per share.

Compared to the prior-year quarter, revenue increased significantly, and GAAP earnings per share grew.

Gross margins grew, operating margins increased, net margins contracted.

Revenue details
ARM Holdings tallied revenue of $214.5 million. The 20 analysts polled by S&P Capital IQ expected a top line of $192.9 million. Sales were 21% higher than the prior-year quarter's $177.9 million.

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Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions.

EPS details
Non-GAAP EPS came in at $0.17. The five earnings estimates compiled by S&P Capital IQ predicted $0.13 per share on the same basis. GAAP EPS of $0.04 for Q4 were 33% higher than the prior-year quarter's $0.03 per share.

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Source: S&P Capital IQ. Quarterly periods. Figures may be non-GAAP to maintain comparability with estimates.

Margin details
For the quarter, gross margin was 95.2%, 100 basis points better than the prior-year quarter. Operating margin was 34.2%, 480 basis points better than the prior-year quarter. Net margin was 24.0%, 210 basis points worse than the prior-year quarter.

Looking ahead
Next quarter's average estimate for revenue is $201.8 million. On the bottom line, the average EPS estimate is $0.13.

Next year's average estimate for revenue is $875.2 million. The average EPS estimate is $0.61.

Investor sentiment
The stock has a three-star rating (out of five) at Motley Fool CAPS, with 823 members out of 885 rating the stock outperform, and 62 members rating it underperform. Among 256 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 239 give ARM Holdings a green thumbs-up, and 17 give it a red thumbs-down.

Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on ARM Holdings is hold, with an average price target of $27.65.

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At the time this article was published Seth Jayson had no position in any company mentioned here at the time of publication. You can view his stock holdings here. He is co-advisor ofMotley Fool Hidden Gems, which provides new small-cap ideas every month, backed by a real-money portfolio. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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