Is Arm Holdings plc American Depositary Shares (ARM) overvalued?
On Equity Rank's model estimate, ARM trades 460% above its fair value. Arm Holdings plc American Depositary Shares (ARM) last closed at $174.62; the multi-method model fair value is $31.19.
| Price | Model fair value | Price vs model |
|---|---|---|
| $174.62 | $31.19 | 460% above |
What the answer rests on
- 0 of 6 valuation methods put ARM's value above its price and 6 put it below, so the methods mostly agree.
- To justify today's price, ARM's free cash flow would need to grow about 44.3% a year for ten years (a reverse discounted cash flow). Over the last three years it actually grew 14.9% a year.
- Over the past year the price sat below the model fair value on 0% of trading days. The gap ranged from 16% above to 667% above the model fair value.
Read this before relying on it
The model fair value is an estimate from published financial statements. It is not a forecast of where the price goes, and it can be wrong. Within 10% either side we call it close to fair value: valuation models are not precise enough to read more into a smaller gap. Our own lists have no proven edge over the market yet; the live record shows every result, misses included.
Every valuation method behind ARM's fair value · What prices assume · Other companies