ARM HoldingsARM -3.87%62 Return-on-Tangible-Equity is 20.25% as of Mar. 2026, which is 10% above its 10-year median of 18.45. GuruFocus rates ARM with a GF Score™ of 62/100 and a GF Value™ of $177.73 (Significantly Overvalued). The stock has 1 warning sign investors should review. Among 985 Semiconductors companies, ARM Holdings ranks better than 77.36% on this metric.
Return-on-Tangible-Equity is calculated as Net Income divided by its average total shareholder tangible equity. Total shareholder tangible equity equals to Total Stockholders Equity minus Intangible Assets. ARM Holdings's annualized net income for the quarter that ended in Mar. 2026 was $1,252 Mil. ARM Holdings's average shareholder tangible equity for the quarter that ended in Mar. 2026 was $6,183 Mil. Therefore, ARM Holdings's annualized Return-on-Tangible-Equity for the quarter that ended in Mar. 2026 was 20.25%.
The historical rank and industry rank for ARM Holdings's Return-on-Tangible-Equity or its related term are showing as below:
ARM'
s Return-on-Tangible-Equity Range Over the Past 10 Years
Min: 10.53 Med: 18.45 Max: 32.16
Current: 16.09
During the past 6 years, ARM Holdings's highest Return-on-Tangible-Equity was 32.16%. The lowest was 10.53%. And the median was 18.45%.
ARM's Return-on-Tangible-Equity is ranked better than 77.36% of 985
companies
in the Semiconductors industry
Industry Median: 5.19
vs ARM: 16.09
ARM Holdings (NAS:ARM) Return-on-Tangible-Equity Explanation
Return-on-Tangible-Equity measures the rate of return on the ownership interest (shareholder's tangible equity) of the common stock owners. It measures a firm's efficiency at generating profits from every unit of shareholders' tangible equity (shareholders equity minus intangibles). Return-on-Tangible-Equity shows how well a company uses investment funds to generate earnings growth. Return-on-Tangible-Equitys between 15% and 20% are considered desirable.
Be Aware
Net Income is used.
Because a company can increase its Return-on-Tangible-Equity by having more financial leverage, it is important to watch the leverage ratio when investing in high Return-on-Tangible-Equity companies. Like Return-on-Tangible-Asset, Return-on-Tangible-Equity is calculated with only 12 months data. Fluctuations in company's earnings or business cycles can affect the ratio drastically. It is important to look at the ratio from a long term perspective.
Asset light businesses require very few assets to generate very high earnings. Their Return-on-Tangible-Equitys can be extremely high.
ARM Holdings Return-on-Tangible-Equity Related Terms
ARM Holdings Return-on-Tangible-Equity Historical Data
* Premium members only.
The historical data trend for ARM Holdings's Return-on-Tangible-Equity can be seen below:
* 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 vs TXN, QCOM, ADI: Return-on-Tangible-Equity Comparison
For the Semiconductors subindustry, ARM Holdings's Return-on-Tangible-Equity, along with its competitors' market caps and Return-on-Tangible-Equity 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 Return-on-Tangible-Equity vs Semiconductors Industry
For the Semiconductors industry and Technology sector, ARM Holdings's Return-on-Tangible-Equity distribution charts can be found below:
* The bar in red indicates where ARM Holdings's Return-on-Tangible-Equity falls into.
* 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.
In the calculation of annual Return-on-Tangible-Equity, the net income of the last fiscal year and the average total shareholder tangible equity over the fiscal year are used. In calculating the quarterly data,
the net income data used here is four times the quarterly (Mar. 2026) net income data.
Return-on-Tangible-Equity is displayed in the 10-year financial page.
What does a Return-on-Tangible-Equity of 20.25% mean?
ARM Holdings (ARM) has a Return-on-Tangible-Equity of 20.25% as of Mar. 2026. Return on tangible equity is the ratio of current-period net income to average two-period tangible equity. View historical data on ARM Holdings and its competitors. This is 10% above median its historical median of 18.45. Over the past decade, ARM Holdings' Return-on-Tangible-Equity has ranged from 10.53 to 32.16. According to the industry distribution chart, ARM Holdings ranks #223 out of 985 companies in the Semiconductors industry, placing it in the top 22.6%.
Is ARM Holdings' Return-on-Tangible-Equity too high?
ARM Holdings' current Return-on-Tangible-Equity of 20.25% is 10% above median its 10-year median of 18.45. Over the past 10 years, this metric has ranged from a low of 10.53 to a high of 32.16. The Semiconductors industry median Return-on-Tangible-Equity is 5.19. ARM Holdings' value of 20.25% is 290.2% above this industry median. Based on the distribution chart, ARM Holdings ranks #223 out of 985 companies in the Semiconductors industry, which is in the top quartile — a strong position relative to peers. Overall, ARM Holdings has a GF Score™ of 62/100 and is considered Significantly Overvalued, reflecting its overall financial health beyond just this single metric.
How does ARM Holdings' Return-on-Tangible-Equity compare to TXN and QCOM?
According to the Semiconductors industry distribution chart, ARM Holdings ranks #223 out of 985 companies for Return-on-Tangible-Equity. This places ARM Holdings in the top 23% of its industry — outperforming the majority of peers. The industry median Return-on-Tangible-Equity is 5.19. ARM Holdings' value of 20.25% is 290.2% above this benchmark. Historically, ARM Holdings' own Return-on-Tangible-Equity has ranged from 10.53 to 32.16 over the past decade. While the company's 10-year median is 18.45 vs. the industry median of 5.19, ARM Holdings has consistently been above the industry average. See the competitive comparison table and distribution chart on this page for a detailed peer-by-peer breakdown.
What is a good Return-on-Tangible-Equity for a Semiconductors company?
The median Return-on-Tangible-Equity among Semiconductors companies is 5.19, based on 985 companies in the industry. Companies in the top quartile (top 25%) have a Return-on-Tangible-Equity significantly above this median, while those in the bottom quartile fall well below. However, Return-on-Tangible-Equity should not be evaluated in isolation — investors should consider it alongside profitability, growth, and financial strength metrics. ARM Holdings's current Return-on-Tangible-Equity of 20.25% is 290.2% above the industry median. Use the industry distribution chart on this page to see where any company falls relative to its peers.
What does a high Return-on-Tangible-Equity mean?
A high Return-on-Tangible-Equity can signal that a stock is expensive relative to its fundamentals. Return on tangible equity is the ratio of current-period net income to average two-period tangible equity. View historical data on ARM Holdings and its competitors. For the Semiconductors industry, the median Return-on-Tangible-Equity is 5.19 — values significantly above this may indicate overvaluation, while values below may suggest a bargain or underlying issues. ARM Holdings's current Return-on-Tangible-Equity is 20.25%, which is 10% above median its own 10-year median of 18.45. 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 $177.73, compared to a current price of $334.27 — trading 88.1% above its estimated fair value. The current Return-on-Tangible-Equity is 20.25%, which is 10% above median its 10-year median of 18.45 and 290.2% above the Semiconductors industry median of 5.19. ARM Holdings' overall GF Score™ is 62/100 with 1 warning sign to review. Investors should evaluate multiple metrics — including profitability, growth, and financial strength — before making a decision.
How is Return-on-Tangible-Equity calculated?
Return-on-Tangible-Equity is calculated from a company's financial statements. For ARM Holdings (ARM), the current Return-on-Tangible-Equity is 20.25% 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 $334.27 is trading 88.1% above its estimated GF Value™ of $177.73.
GuruFocus considers ARM Holdings to be Significantly Overvalued.
Key valuation signals for ARM:
Return-on-Tangible-Equity: 20.25% (10% above median its 10-year median of 18.45)
GF Value™: $177.73 vs. price of $334.27 (88.1% above fair value)
Industry Position: 290.2% above the Semiconductors median (#223 of 985)
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.
62GF Score
Get the complete analysis for ARM
Return-on-Tangible-Equity is just one metric. See GF Value™, 30-year financials, guru trades, warning signs, and more.
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