Ultra Clean (NASDAQ:UCTT) versus ARM (NASDAQ:ARM) Financial Review

ARM (NASDAQ:ARM) and Ultra Clean (NASDAQ:UCTT) are both business services companies, but which is the better investment? We will compare the two businesses based on the strength of their risk, valuation, institutional ownership, analyst recommendations, dividends, earnings and profitability.

Profitability

This table compares ARM and Ultra Clean’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
ARM	9.46%	16.94%	11.45%
Ultra Clean	-2.09%	2.19%	1.05%

Analyst Ratings

This is a breakdown of recent ratings for ARM and Ultra Clean, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
ARM	1	12	14	0	2.48
Ultra Clean	0	0	3	0	3.00

Ultra Clean has a consensus price target of $57.00, suggesting a potential upside of 16.33%. Given Ultra Clean’s stronger consensus rating and higher possible upside, analysts plainly believe Ultra Clean is more favorable than ARM.

Earnings and Valuation

This table compares ARM and Ultra Clean’s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
ARM	$3.23 billion	53.03	$306.00 million	N/A	N/A
Ultra Clean	$1.73 billion	1.26	-$31.10 million	($0.82)	-59.76

ARM has higher revenue and earnings than Ultra Clean.

Institutional and Insider Ownership

7.5% of ARM shares are held by institutional investors. Comparatively, 96.1% of Ultra Clean shares are held by institutional investors. 2.2% of Ultra Clean shares are held by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.

Summary

ARM beats Ultra Clean on 7 of the 11 factors compared between the two stocks.

About ARM

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.

About Ultra Clean

Ultra Clean Holdings, Inc. develops and supplies critical subsystems, components and parts, and ultra-high purity cleaning and analytical services for the semiconductor industry in the United States and internationally. The company provides ultra-clean valves, high purity connectors, industrial process connectors and valves, pneumatic actuators, manifolds and safety solutions, hoses, pressure gauges, and gas line and component heaters; chemical delivery modules that deliver gases and reactive chemicals in a liquid or gaseous form from a centralized subsystem to the reaction chamber; and gas delivery systems, such as weldments, filters, mass flow controllers, regulators, pressure transducers and valves, component heaters, and an integrated electronic and/or pneumatic control system. It also offers various industrial and automation production equipment; fluid delivery systems consist of one or more chemical delivery units, including PFA tubing, filters, flow controllers, regulators, component heaters, and an integrated electronic and/or pneumatic control system; precision robotic systems; top-plate assemblies; frame assemblies; process modules, a subsystem of semiconductor manufacturing tools that process integrated circuits onto wafers; and other high-level assemblies. In addition, the company provides tool chamber parts cleaning and coating services; micro-contamination analysis services for tool parts, wafers and depositions, chemicals, cleanroom materials, deionized water, and airborne molecular contamination; and analytical verification services for process tool chamber part cleaning. It primarily serves original equipment manufacturing customers in the semiconductor capital equipment and semiconductor integrated device manufacturing industries, as well as display, consumer, medical, energy, industrial, and research equipment industries. The company was founded in 1991 and is headquartered in Hayward, California.