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ARM Holdings has the Financial Strength Rank of 8. It shows strong financial strength and is unlikely to fall into distressed situations.
Good Sign:
ARM Holdings PLC shows strong financial strength.
GuruFocus Financial Strength Rank measures how strong a company's financial situation is. It is rated on a scale of 1 to 10 and is based on these factors:
1. The debt burden that the company has as measured by its Interest Coverage (current year). The higher, the better.
2. Debt to revenue ratio. The lower, the better.
3. Altman Z-Score.
4. Other debt related ratios.
A higher score indicates a stronger financial position, with companies rated 7 or above considered financially stable and unlikely to face distress. Conversely, a score of 3 or below suggests potential financial difficulties, indicating a higher risk of distress.
GuruFocus does not calculate ARM Holdings's interest coverage with the available data.
ARM Holdings's debt to revenue ratio for the quarter that ended in Mar. 2026 was 0.08.
As of today, ARM Holdings's Altman Z-Score is 70.92.
ARM Holdings (NAS:ARM) Financial Strength Explanation
The rank is rated on a scale of 1 to 10. A higher score indicates a stronger financial position, with companies rated 7 or above considered financially stable and unlikely to face distress. Conversely, a score of 3 or below suggests potential financial difficulties, indicating a higher risk of distress.
ARM Holdings has the Financial Strength Rank of 8. It shows strong financial strength and is unlikely to fall into distressed situations.
ARM Holdings Financial Strength Related Terms
ARM vs TXN, MRVL, QCOM: Financial Strength Comparison
For the Semiconductors subindustry, ARM Holdings's Financial Strength, along with its competitors' market caps and Financial Strength data, can be viewed below:
* Competitive companies are chosen from companies within the same industry, with headquarter located in same country, with closest market capitalization; x-axis shows the market cap, and y-axis shows the term value; the bigger the dot, the larger the market cap. Note that "N/A" values will not show up in the chart.
ARM Holdings Financial Strength vs Semiconductors Industry
For the Semiconductors industry and Technology sector, ARM Holdings's Financial Strength distribution charts can be found below:
* The bar in red indicates where ARM Holdings's Financial Strength falls into.
Interest Coverage is a ratio that determines how easily a company can pay interest expenses on outstanding debt. It is calculated by dividing a company's Operating Income (EBIT) by its Interest Expense:
GuruFocus does not calculate ARM Holdings's interest coverage with the available data.
The higher the ratio, the stronger the company's financial strength is.
Good Sign:
Ben Graham prefers companies' interest coverage to be at least 5. ARM Holdings PLC has enough cash to cover all of its debt. Its financial situation is stable.
2. Debt to revenue ratio. The lower, the better.
ARM Holdings's Debt to Revenue Ratio for the quarter that ended in Mar. 2026 is
Z-Score model is an accurate forecaster of failure up to two years prior to distress. It can be considered the assessment of the distress of industrial corporations.
The zones of discrimination were as such:
When Z-Score is less than 1.81, it is in Distress Zones.
When Z-Score is greater than 2.99, it is in Safe Zones.
When Z-Score is between 1.81 and 2.99, it is in Grey Zones.
ARM Holdings has a Z-score of 70.92, indicating it is in Safe Zones. This implies the Z-Score is strong.
Good Sign:
Altman Z-score of 70.92 is strong.
* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD. * For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.
ARM Holdings (ARM) has a Financial Strength of 8 as of Mar. 2026. The financial strength rank measures the strength of a company's balance sheet based on revenue and debt. View historical data on ARM Holdings and its competitors. This is near median its historical median of 8.00. Over the past decade, ARM Holdings' Financial Strength has ranged from 8.00 to 9.00.
Is ARM Holdings' Financial Strength too high?
ARM Holdings' current Financial Strength of 8 is near median its 10-year median of 8.00. Over the past 10 years, this metric has ranged from a low of 8.00 to a high of 9.00. Overall, ARM Holdings has a GF Score™ of 69/100 and is considered Significantly Overvalued, reflecting its overall financial health beyond just this single metric.
How does ARM Holdings' Financial Strength compare to TXN and MRVL?
ARM Holdings' Financial Strength of 8 can be compared against companies in the Semiconductors industry. Historically, ARM Holdings' own Financial Strength has ranged from 8.00 to 9.00 over the past decade. See the competitive comparison table and distribution chart on this page for a detailed peer-by-peer breakdown.
What is a good Financial Strength for a Semiconductors company?
A good Financial Strength depends on the Semiconductors industry context. However, Financial Strength should not be evaluated in isolation — investors should consider it alongside profitability, growth, and financial strength metrics. Use the industry distribution chart on this page to see where any company falls relative to its peers.
What does a high Financial Strength mean?
A high Financial Strength can signal that a stock is expensive relative to its fundamentals. The financial strength rank measures the strength of a company's balance sheet based on revenue and debt. View historical data on ARM Holdings and its competitors. ARM Holdings's current Financial Strength is 8, which is near median its own 10-year median of 8.00. However, context matters — high-growth companies often justify higher valuations. Always evaluate alongside other metrics like GF Score™ and GF Value™.
Is ARM Holdings stock overvalued right now?
Based on GuruFocus' analysis, ARM Holdings (ARM) is currently considered Significantly Overvalued. The stock's GF Value™ is $180.66, compared to a current price of $260.01 — trading 43.9% above its estimated fair value. The current Financial Strength is 8, which is near median its 10-year median of 8.00. ARM Holdings' overall GF Score™ is 69/100 with 1 warning sign to review. Investors should evaluate multiple metrics — including profitability, growth, and financial strength — before making a decision.
How is Financial Strength calculated?
Financial Strength is calculated from a company's financial statements. For ARM Holdings (ARM), the current Financial Strength is 8 as of Mar. 2026. GuruFocus calculates this using data sourced from SEC filings and annual reports. See the calculation section and 30-year financial data on this page for the full breakdown.
Is ARM Holdings (ARM) Overvalued in 2026?
Based on GuruFocus' analysis, ARM Holdings stock appears to be overvalued.
The current stock price of $260.01 is trading 43.9% above its estimated GF Value™ of $180.66.
GuruFocus considers ARM Holdings to be Significantly Overvalued.
Key valuation signals for ARM:
Financial Strength: 8 (near median its 10-year median of 8.00)
GF Value™: $180.66 vs. price of $260.01 (43.9% above fair value)
No single metric tells the full story. See the ARM stock analysis page for a complete view including 30-year financials, guru trades, and insider activity.
Arm Holdings is the IP owner and developer of the Arm architecture, which is used in 99% of the world's smartphone CPU cores. It also has high market share in other battery-powered devices like wearables, tablets, and sensors. Arm licenses its architecture for a fee, offering different types of licenses depending on the flexibility the customer needs. Customers like Apple or Qualcomm buy architectural licenses, which allow them to modify the architecture and add or delete instructions to tailor the chips to their specific needs. Other clients directly buy off-the-shelf designs from Arm. Both off-the-shelf and architectural customers pay a royalty fee per chip shipped. In 2026, Arm announced the launch of its own CPU products on top of its existing royalty business.
69GF Score
Get the complete analysis for ARM
Financial Strength is just one metric. See GF Value™, 30-year financials, guru trades, warning signs, and more.
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