Semiconductors · NASDAQ
Current Price
$201.69
Intrinsic Value
Use the calculator below to estimate
Run a full DCF analysis on Arm Holdings plc American Depositary Shares with auto-filled fundamentals, adjustable assumptions, and sensitivity heatmap.
Arm Holdings plc architects, develops, and licenses central processing unit products and related technologies for semiconductor companies and original equipment manufacturers rely on to develop products. It offers microprocessors, systems intellectual property (IPs), graphics processing units, physical IP and associated systems IPs, software, tools, and other related services. Its products are used in various markets, such as automotive, computing infrastructure, consumer technologies, and Internet of things. The company operates in the United States, the People's Republic of China, Taiwan, South Korea, and internationally. The company was founded in 1990 and is headquartered in Cambridge, the United Kingdom. Arm Holdings plc operates as a subsidiary of Kronos II LLC.
ROIC (TTM)
9.3%
ROE (TTM)
11.0%
FCF Yield
0.45%
Based on trailing twelve-month data, ARM shows a free cash flow per share of N/A and a ROIC of 9.3%, key inputs for stock valuation using the DCF method. The P/FCF ratio of N/A and FCF yield of 0.45% are important context metrics when evaluating ARM's stock valuation relative to peers.
The intrinsic value of ARM depends on assumptions about future growth rate, discount rate (WACC), and terminal value. A DCF model discounts projected free cash flows back to present value — small changes in WACC can shift the estimate by 20% or more, which is why sensitivity analysis is essential.
Whether ARM is undervalued depends on comparing the DCF-derived intrinsic value to the current market price of $201.69. A positive margin of safety (intrinsic value above market price) suggests potential undervaluation, but the degree of confidence depends on the reliability of your growth and discount rate assumptions.
To perform a DCF valuation on Arm Holdings plc American Depositary Shares: (1) Start with the trailing free cash flow per share as the base, (2) project future FCF growth over 5-10 years based on Semiconductors industry trends and company fundamentals, (3) apply a discount rate (WACC) reflecting ARM's risk profile, and (4) add a terminal value for cash flows beyond the projection period.
DCF (Discounted Cash Flow) estimates what a company is worth today based on its future cash generation. For Arm Holdings plc American Depositary Shares, this means projecting how much free cash flow the Semiconductors will produce over the next 5-10 years, then discounting those amounts to today's dollars. ARM's ROIC of 9.3% shows moderate capital returns.
WACC (Weighted Average Cost of Capital) is the discount rate in a DCF model — it reflects the minimum return investors require. For ARM, the capital structure and equity risk premium determine WACC. A 1% increase in WACC typically reduces the intrinsic value by 10-15%.
