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ARM shares have gained 48% year to date. The company’s continued robust performance across businesses and encouraging guidance have boosted investors’ confidence in the stock.
ARM Holdings PLC Sponsored ADR Price and Consensus
We expect continued top-line strength in the to-be-reported quarter, driven by both Royalty and License revenues. The Zacks Consensus Estimate for revenues is currently pegged at $885 million, indicating sequential growth of 7.4%. The company had guided a range of $850 million to $900 million for the fiscal fourth quarter, suggesting 6.2% sequential growth at the midpoint.
ARM had forecasted mid-single digit sequential growth in Royalty revenues for the fiscal fourth quarter, anticipating a higher adoption of Armv9, which typically commands double the royalty rates compared to Armv8 products. Royalty revenues have been boosted by the resurgence of the smartphone market and increased market share outside mobile. Additionally, the company anticipated a significant uptick in Licensing revenues driven by several new ATA deals and robust demand for compute subsystems in the fourth quarter.
Revenue strength and operating performance are likely to get reflected in EPS in the to-be-reported quarter, the consensus estimate for which stands at 30 cents, indicating 3.4% sequential growth. The company has an expected long-term (three to five years) earnings per share growth rate of 47%.
Should You Buy ARM?
We expect ARM’s price momentum to continue post earnings as both top and bottom-line growth prospects look healthy.
Moreover, an earnings beat may contribute to the price momentum on an immediate basis. Our quantitative model suggests that the combination of two key elements — a positive Earnings ESP and a Zacks Rank #3 (Hold) or better — increases the odds of a positive earnings surprise. And that’s the case with ARM at present, as it has an Earnings ESP of +5.26% and carries a Zacks Rank #2 (Buy).
Hence, given the factors mentioned above, ARM seems to be a compelling buy right now.
Other Stocks That Warrant a Look
Here are a few other stocks from the broader Business Services sector, which, according to our model, also have the right combination of elements to beat on earnings this season.
Envestnet (ENV - Free Report) : The Zacks Consensus Estimate for the company’s first-quarter 2024 revenues is pegged at $1.4 million, indicating 10.1% growth from the year-ago quarter. For earnings, the consensus mark is pegged at $2.6 per share, suggesting a 22.1% rise from the year-ago quarter. It has an average negative surprise of 7.7%.
AppLovin (APP - Free Report) : The Zacks Consensus Estimate for the company’s first-quarter 2024 revenues is pegged at $4.1 million, indicating a rise of more than 23.9% from the year-ago quarter. The consensus mark for earnings is pegged at $2.5 per share, suggesting a rise of more than 100% year-over-year. The company has an average negative surprise of 26.5%.
APP currently has an Earnings ESP of +4.39% and a Zacks Rank of 3. The company is scheduled to post its first-quarter results on May 8.
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Should You Buy Arm Holdings (ARM) Ahead of Q4 Earnings?
Arm Holdings plc (ARM - Free Report) will report its fourth-quarter fiscal 2024 results on May 8, after the bell.
Strong Growth Across Businesses Expected in Q4
ARM shares have gained 48% year to date. The company’s continued robust performance across businesses and encouraging guidance have boosted investors’ confidence in the stock.
ARM Holdings PLC Sponsored ADR Price and Consensus
ARM Holdings PLC Sponsored ADR price-consensus-chart | ARM Holdings PLC Sponsored ADR Quote
We expect continued top-line strength in the to-be-reported quarter, driven by both Royalty and License revenues. The Zacks Consensus Estimate for revenues is currently pegged at $885 million, indicating sequential growth of 7.4%. The company had guided a range of $850 million to $900 million for the fiscal fourth quarter, suggesting 6.2% sequential growth at the midpoint.
ARM had forecasted mid-single digit sequential growth in Royalty revenues for the fiscal fourth quarter, anticipating a higher adoption of Armv9, which typically commands double the royalty rates compared to Armv8 products. Royalty revenues have been boosted by the resurgence of the smartphone market and increased market share outside mobile. Additionally, the company anticipated a significant uptick in Licensing revenues driven by several new ATA deals and robust demand for compute subsystems in the fourth quarter.
Revenue strength and operating performance are likely to get reflected in EPS in the to-be-reported quarter, the consensus estimate for which stands at 30 cents, indicating 3.4% sequential growth. The company has an expected long-term (three to five years) earnings per share growth rate of 47%.
Should You Buy ARM?
We expect ARM’s price momentum to continue post earnings as both top and bottom-line growth prospects look healthy.
Moreover, an earnings beat may contribute to the price momentum on an immediate basis. Our quantitative model suggests that the combination of two key elements — a positive Earnings ESP and a Zacks Rank #3 (Hold) or better — increases the odds of a positive earnings surprise. And that’s the case with ARM at present, as it has an Earnings ESP of +5.26% and carries a Zacks Rank #2 (Buy).
Hence, given the factors mentioned above, ARM seems to be a compelling buy right now.
Other Stocks That Warrant a Look
Here are a few other stocks from the broader Business Services sector, which, according to our model, also have the right combination of elements to beat on earnings this season.
Envestnet (ENV - Free Report) : The Zacks Consensus Estimate for the company’s first-quarter 2024 revenues is pegged at $1.4 million, indicating 10.1% growth from the year-ago quarter. For earnings, the consensus mark is pegged at $2.6 per share, suggesting a 22.1% rise from the year-ago quarter. It has an average negative surprise of 7.7%.
ENV currently has an Earnings ESP of +1.23% and a Zacks Rank of 3. The company is scheduled to declare its first-quarter results on May 7. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
AppLovin (APP - Free Report) : The Zacks Consensus Estimate for the company’s first-quarter 2024 revenues is pegged at $4.1 million, indicating a rise of more than 23.9% from the year-ago quarter. The consensus mark for earnings is pegged at $2.5 per share, suggesting a rise of more than 100% year-over-year. The company has an average negative surprise of 26.5%.
APP currently has an Earnings ESP of +4.39% and a Zacks Rank of 3. The company is scheduled to post its first-quarter results on May 8.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.