What You Need to Know About ARM Holdings' Upcoming Results

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LONDON -- Britain's biggest tech group, ARM Holdings , is due to announce its annual results on Tuesday this coming week (Feb. 5).

At the time of writing, the shares of this world leader in semiconductor intellectual property are trading at 869 pence -- up 46% from a year ago compared with a 10% rise in the FTSE 100.

How will ARM's business have performed in 2012 compared with last year? And will the results justify the strong performance of the shares? Here's your cut-out-and-check results table!

Metric 

FY 2011

Forecast FY 2012

Forecast FY Growth

Revenue (millions of pounds)

492

563

14.4%

Operating margin

45%

45%

 --

Normalized pre-tax profit (millions of pounds)

230

266

15.7%

Normalized EPS (pence)

12.45

14.5

16.5%

Dividend per share (pence)

3.48

4.15

19.3%


Revenue and margin
Analysts are forecasting total revenue of around 563 million pounds for 2012, with Q4 completing a year of quarter-by-quarter increases.

Metric 

Q1 2012

Q2 2012

Q3 2012

Q4 2012 (forecast)

Revenue (millions of pounds) 

132.5

135.5

144.6

150.4

Increase from 2011

14%

15%

20%

9%

The forecast Q4 revenue of just over 150 million pounds would represent an increase of 9% on Q4 2011, which is a lesser rate of growth than in the first three quarters. In its Q3 results, the company said the indications were that Q4 would see "another strong quarter" for licensing revenue but a "moderate sequential increase" in royalty revenue. Nevertheless, I'd suggest there's scope for ARM to better the 150 million pound Q4 forecast -- and that the market could give a frosty reception to anything less.

Analysts are expecting ARM's operating margin to continue at around 45% -- an excellent margin that indicates the strength of the company's position in its markets.

Profits and dividend
Look out for normalized pre-tax profit and EPS to be up around 16% on 2011. As with revenue, I'd say there's scope for the pre-tax profit and EPS forecast numbers to be beaten. The Q4 profit number to look out for is around 70 million pounds; the Q4 EPS number, around 3.9 pence.

So far as the dividend is concerned, ARM hiked the interim 20% to 1.67 pence a share. Analyst forecasts are for a full-year increase of roughly the same order to around 4.15 pence, so expect to see a final dividend at around the 2.5 pence mark.

Making a million
After the strong rise in the share price over the past year to 869 pence, ARM is trading on an eye-watering 60 times 2012's forecast earnings. Even if you back out the company's net cash of 478 million pounds -- 35 pence a share -- the earnings multiple is still a sky-high 57.5 pence. The prospective dividend yield is just 0.5%.

There have been opportunities for investors to buy into Britain's top tech company on a cheaper earnings rating in the past -- 30-35 as recently as last summer. Buying great companies when they're reasonably priced is one way investors like you and I can target a million-pound portfolio. A mere dream? It may be easier than you think.

To find out how to go about reaching the magic million, help yourself to a free copy of The Motley Fool guide, "10 Steps To Making A Million In The Market." We urge you to read the free report today -- it may transform your wealth. Simply click here.

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The article What You Need to Know About ARM Holdings' Upcoming Results originally appeared on Fool.com.

G.A. Chester has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. 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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