Arm Holdings plc (ARM) Stock Analysis — Fair Value, Risk & Moat Rating
NMS · Technology · Semiconductors
Is Arm Holdings plc a safe investment right now?
Arm Holdings plc's Altman Z-Score of 0 places it in the distress zone. Our DCF model estimates intrinsic value at $16.16, suggesting the stock is overvalued by 984%. Moat rating: 2.3/5 stars.
Could Arm Holdings plc go bankrupt? Altman Z-Score analysis
Insufficient data to calculate Z-Score.
- Below 1.8 — Distress Zone (high bankruptcy risk)
- 1.8 to 3.0 — Gray Zone (elevated uncertainty)
- Above 3.0 — Safe Zone (financially healthy)
What drives ARM's Z-Score?
| Component | Formula | Value | Weight | Contribution |
|---|
How has ARM's financial health changed over time?
No Z-Score history available.
| Year | Z-Score | Zone |
|---|
Source: Calculated from ARM's latest 10-K filing on SEC EDGAR.
What could Arm Holdings plc be worth? (High Uncertainty)
Fair value range: $13.61 — $19.99
Valuation Methods Used
| Method | Fair Value | Weight | Detail |
|---|---|---|---|
| DCF (Discounted Cash Flow) | $13.61 | 30% | Two-stage DCF: $0.8B TTM FCF, 10.4% growth, 14.0% WACC |
| EV/FCF Multiple | $19.99 | 20% | TTM FCF × 22x multiple + net cash |
Assumptions & Data Sources
| Parameter | Value | Source |
|---|---|---|
| FCF Growth Rate (Stage 1) | 10.4% | 70% analyst consensus + 30% historical |
| Analyst EPS Growth (This Year) | 8.2% | Consensus (36 analysts) |
| Analyst EPS Growth (Next Year) | 21.6% | Consensus |
| Historical 5Y FCF CAGR | 0% | SEC EDGAR |
| Terminal Growth Rate | 2.5% | Long-term GDP proxy |
| Discount Rate (WACC) | 14.0% | CAPM (Rf=4.3% + 2.5*5.5%) |
| Net Cash / (Debt) | $3,081M | Balance sheet |
| Base FCF (TTM) | $0.8B | Trailing 12 months |
| Shares Outstanding | 1,061,998,569 | Latest |
Sensitivity Analysis
| Growth Rate | 8% WACC | 10% WACC | 14.0% WACC | 13% WACC |
|---|---|---|---|---|
| 0% | $12.50 | $9.24 | $6.11 | $6.67 |
| 2.5% | $14.47 | $10.61 | $6.92 | $7.58 |
| 5.0% | $16.74 | $12.18 | $7.85 | $8.62 |
| 7.5% | $19.82 | $14.29 | $9.06 | $9.98 |
Free Cash Flow History
| Year | FCF | Growth |
|---|
Source: FCF data from SEC EDGAR filings. Price via Yahoo Finance.
Does Arm Holdings plc have a durable competitive advantage?
Moat rating: 2.3/5.
What makes up ARM's moat score?
ROIC Stability
ROIC variability over the past decade. Score: 2/5.
Gross Margin Trend
Gross margin trajectory over the past decade. Score: 3/5.
Switching Costs
Estimated customer lock-in based on margin level. Score: 2/5.
How stable is ARM's return on invested capital?
No ROIC history available.
| Year | ROIC | Trend |
|---|
Source: ROIC calculated from SEC EDGAR filings.
Is Arm Holdings plc's dividend safe?
Arm Holdings plc's key financial metrics
| Metric | Latest | 1Y Ago | 3Y Ago | Trend |
|---|
Common questions about Arm Holdings plc
Is Arm Holdings plc at risk of going bankrupt?
Arm Holdings plc's Altman Z-Score of 0 places it in the distress zone. This metric uses balance sheet ratios to predict bankruptcy probability within 2 years. A score below 1.8 signals distress, while above 3.0 indicates safety.
What is Arm Holdings plc's intrinsic value based on DCF?
Our DCF model estimates Arm Holdings plc's intrinsic value at $16.16 per share. The current margin of safety is -983.5%. This estimate is based on historical free cash flow trends and a risk-adjusted discount rate.
Does Arm Holdings plc have a competitive moat?
Arm Holdings plc receives a moat rating of 2.3 out of 5 stars, based on ROIC stability, gross margin trends, and estimated switching costs. A rating above 3.5 suggests a durable competitive advantage.
Does Arm Holdings plc pay a dividend?
Arm Holdings plc does not currently pay a regular dividend, or has suspended its dividend. Check the dividend safety section for the latest status.
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FairValueLabs Disclaimer
All valuations, scores, ratings, and classifications on this page are produced by the FairValueLabs internal valuation system. They do not represent actual market value, guaranteed outcomes, or professional investment advice. These are analytical estimates for educational and research purposes only.
This is not financial advice. All data is sourced from SEC EDGAR public filings. Always consult a qualified financial advisor before making investment decisions.
Last updated: Apr 20, 2026. Data sources: SEC EDGAR (financial statements), Yahoo Finance (market data, analyst consensus). Data may not reflect the most recent quarter.
ARM analysis methodology: How we calculate fair value, Z-Scores, and moat ratings