ARM (NASDAQ:ARM) versus POET Technologies (NASDAQ:POET) Critical Comparison

POET Technologies (NASDAQ:POET) and ARM (NASDAQ:ARM) are both computer and technology companies, but which is the superior business? We will compare the two companies based on the strength of their earnings, valuation, analyst recommendations, risk, dividends, profitability and institutional ownership.

Insider and Institutional Ownership

2.0% of POET Technologies shares are held by institutional investors. Comparatively, 7.5% of ARM shares are held by institutional investors. 0.5% of POET Technologies shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company will outperform the market over the long term.

Analyst Recommendations

This is a summary of current recommendations for POET Technologies and ARM, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
POET Technologies	1	0	0	0	1.00
ARM	1	6	20	0	2.70

POET Technologies currently has a consensus price target of $8.00, indicating a potential downside of 47.98%. ARM has a consensus price target of $226.92, indicating a potential downside of 44.90%. Given ARM’s stronger consensus rating and higher possible upside, analysts plainly believe ARM is more favorable than POET Technologies.

Risk and Volatility

POET Technologies has a beta of 0.75, indicating that its stock price is 25% less volatile than the S&P 500. Comparatively, ARM has a beta of 3.78, indicating that its stock price is 278% more volatile than the S&P 500.

Profitability

This table compares POET Technologies and ARM’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
POET Technologies	-5,786.60%	-27.24%	-20.63%
ARM	18.37%	12.43%	9.48%

Valuation & Earnings

This table compares POET Technologies and ARM”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
POET Technologies	$1.08 million	2,186.67	-$62.96 million	($0.72)	-21.36
ARM	$4.92 billion	88.44	$904.00 million	$0.84	490.27

ARM has higher revenue and earnings than POET Technologies. POET Technologies is trading at a lower price-to-earnings ratio than ARM, indicating that it is currently the more affordable of the two stocks.

Summary

ARM beats POET Technologies on 12 of the 14 factors compared between the two stocks.

About POET Technologies

POET Technologies Inc. designs, develops, manufactures, and sells discrete and integrated opto-electronic solutions in Canada, the United States, Singapore, and China. It offers integration solutions based on the POET Optical Interposer, a novel platform that allows the seamless integration of electronic and photonic devices into a single multi-chip module using advanced wafer-level semiconductor manufacturing techniques. It also develops photonic integrated components. The company serves the data center, telecommunications, Internet of things and industrial sensing, automotive LIDAR, optical coherence tomography for medical devices, and virtual reality systems markets. The company was formerly known as Opel Technologies Inc. and changed its name to POET Technologies Inc. in June 2013. POET Technologies Inc. was incorporated in 1972 and is headquartered in Toronto, Canada.

About ARM

Arm Holdings Plc engages in the licensing, marketing, research, and development of microprocessors, systems IP, graphics processing units, physical IP and associated systems IP, software, and tools. It operates through the following geographical segments: United Kingdom, United States, and Other Countries. The company was founded on November 12, 1990 and is headquartered in Cambridge, the United Kingdom.