ROIC % measures how well a company generates cash flow relative to the capital it has invested in its business. It is also called ROC %. ARM Holdings's annualized return on invested capital (ROIC %) for the quarter that ended in Mar. 2026 was 17.84%.
As of today (2026-06-25), ARM Holdings's WACC % is 10.93%. ARM Holdings's ROIC % is 11.53% (calculated using TTM income statement data).
ARM Holdings generates higher returns on investment than it costs the company to raise the capital needed for that investment. It is earning excess returns. A firm that expects to continue generating positive excess returns on new investments in the future will see its value increase as growth increases.
ARM Holdings (MEX:ARMN) ROIC % Explanation
ROIC % measures how well a company generates cash flow relative to the capital it has invested in its business. It is also called ROC %. The reason book values of debt and equity are used is because the book values are the capital the company received when issuing the debt or receiving the equity investments.
There are four key components to this definition. The first is the use of operating income or EBIT rather than net income in the numerator. The second is the tax adjustment to this operating income or EBIT, computed as a hypothetical tax based on an effective or marginal tax rate. The third is the use of book values for invested capital, rather than market values. The final is the timing difference; the capital invested is from the end of the prior year whereas the operating income or EBIT is the current year's number.
Why is ROIC % important?
Because it costs money to raise capital. A firm that generates higher returns on investment than it costs the company to raise the capital needed for that investment is earning excess returns. A firm that expects to continue generating positive excess returns on new investments in the future will see its value increase as growth increases, whereas a firm that earns returns that do not match up to its cost of capital will destroy value as it grows.
As of today, ARM Holdings's WACC % is 10.93%. ARM Holdings's ROIC % is 11.53% (calculated using TTM income statement data).
ARM Holdings generates higher returns on investment than it costs the company to raise the capital needed for that investment. It is earning excess returns. A firm that expects to continue generating positive excess returns on new investments in the future will see its value increase as growth increases.
Be Aware
Like ROE % and ROA %, ROIC % is calculated with only 12 months of data. Fluctuations in the company's earnings or business cycles can affect the ratio drastically. It is important to look at the ratio from a long term perspective.
ARM Holdings ROIC % Related Terms
ARM Holdings ROIC % Historical Data
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The historical data trend for ARM Holdings's ROIC % 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.
For the Semiconductors subindustry, ARM Holdings's ROIC %, along with its competitors' market caps and ROIC % 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 ROIC % vs Semiconductors Industry
For the Semiconductors industry and Technology sector, ARM Holdings's ROIC % distribution charts can be found below:
* The bar in red indicates where ARM Holdings's ROIC % falls into.
Note:
The Operating Income data used here is four times the quarterly (Mar. 2026) data.
The tax rate is limited to between 0% and 100%.
* 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 (MEX:ARMN) has a ROIC % of 17.84% as of Mar. 2026. Return on invested capital is the ratio of current-period net income to average two-period invested capital. View historical data on ARM Holdings and its competitors.
Is ARM Holdings' ROIC % too high?
ARM Holdings' current ROIC % is 17.84%. The Semiconductors industry median ROIC % is 3.74. ARM Holdings' value of 17.84% is 377% above this industry median. Overall, ARM Holdings has a GF Score™ of 61/100 and is considered Significantly Overvalued, reflecting its overall financial health beyond just this single metric.
How does ARM Holdings' ROIC % compare to TXN and QCOM?
ARM Holdings' ROIC % of 17.84% can be compared against companies in the Semiconductors industry. The industry median ROIC % is 3.74. ARM Holdings' value of 17.84% is 377% above this benchmark. See the competitive comparison table and distribution chart on this page for a detailed peer-by-peer breakdown.
What is a good ROIC % for a Semiconductors company?
The median ROIC % among Semiconductors companies is 3.74, based on 1,012 companies in the industry. Companies in the top quartile (top 25%) have a ROIC % significantly above this median, while those in the bottom quartile fall well below. However, ROIC % should not be evaluated in isolation — investors should consider it alongside profitability, growth, and financial strength metrics. ARM Holdings's current ROIC % of 17.84% is 377% 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 ROIC % mean?
A high ROIC % can signal that a stock is expensive relative to its fundamentals. Return on invested capital is the ratio of current-period net income to average two-period invested capital. View historical data on ARM Holdings and its competitors. For the Semiconductors industry, the median ROIC % is 3.74 — values significantly above this may indicate overvaluation, while values below may suggest a bargain or underlying issues. ARM Holdings's current ROIC % is 17.84%. 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 (MEX:ARMN) is currently considered Significantly Overvalued. The stock's GF Value™ is MXN3,132.07, compared to a current price of MXN6,331.50 — trading 102.2% above its estimated fair value. The current ROIC % is 17.84% and 377% above the Semiconductors industry median of 3.74. ARM Holdings' overall GF Score™ is 61/100 with 1 warning sign to review. Investors should evaluate multiple metrics — including profitability, growth, and financial strength — before making a decision.
How is ROIC % calculated?
ROIC % is calculated from a company's financial statements. For ARM Holdings (MEX:ARMN), the current ROIC % is 17.84% 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 (MEX:ARMN) Overvalued in 2026?
Based on GuruFocus' analysis, ARM Holdings stock appears to be overvalued.
The current stock price of MXN6,331.50 is trading 102.2% above its estimated GF Value™ of MXN3,132.07.
GuruFocus considers ARM Holdings to be Significantly Overvalued.
Key valuation signals for MEX:ARMN:
ROIC %: 17.84%
GF Value™: MXN3,132.07 vs. price of MXN6,331.50 (102.2% above fair value)
Industry Position: 377% above the Semiconductors median
No single metric tells the full story. See the MEX:ARMN 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.
61GF Score
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