Analyzing Arrowroot Acquisition (NASDAQ:ARRW) & PDF Solutions (NASDAQ:PDFS)

Arrowroot Acquisition (NASDAQ:ARRW) and PDF Solutions (NASDAQ:PDFS) are both small-cap business services companies, but which is the better investment? We will compare the two companies based on the strength of their institutional ownership, earnings, analyst recommendations, dividends, profitability, risk and valuation.

Profitability

This table compares Arrowroot Acquisition and PDF Solutions’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Arrowroot Acquisition	N/A	N/A	-12.56%
PDF Solutions	1.87%	6.09%	4.73%

Analyst Recommendations

This is a summary of recent ratings and price targets for Arrowroot Acquisition and PDF Solutions, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Arrowroot Acquisition	0	0	1	0	3.00
PDF Solutions	0	0	2	0	3.00

Arrowroot Acquisition currently has a consensus target price of $18.00, indicating a potential upside of 80.00%. PDF Solutions has a consensus target price of $46.00, indicating a potential upside of 41.80%. Given Arrowroot Acquisition’s higher possible upside, equities analysts clearly believe Arrowroot Acquisition is more favorable than PDF Solutions.

Earnings & Valuation

This table compares Arrowroot Acquisition and PDF Solutions’ top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Arrowroot Acquisition	N/A	N/A	-$5.85 million	N/A	N/A
PDF Solutions	$165.84 million	7.51	$3.11 million	$0.07	463.43

PDF Solutions has higher revenue and earnings than Arrowroot Acquisition.

Institutional & Insider Ownership

32.9% of Arrowroot Acquisition shares are held by institutional investors. Comparatively, 79.5% of PDF Solutions shares are held by institutional investors. 61.5% of Arrowroot Acquisition shares are held by insiders. Comparatively, 11.2% of PDF Solutions shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.

Risk and Volatility

Arrowroot Acquisition has a beta of 0.02, suggesting that its stock price is 98% less volatile than the S&P 500. Comparatively, PDF Solutions has a beta of 1.48, suggesting that its stock price is 48% more volatile than the S&P 500.

Summary

PDF Solutions beats Arrowroot Acquisition on 8 of the 10 factors compared between the two stocks.

About Arrowroot Acquisition

Arrowroot Acquisition Corp. does not have significant operations. It focuses on effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization, or similar business combination with one or more businesses. The company intends to identify and acquire a business focusing on the enterprise software sector. Arrowroot Acquisition Corp. was incorporated in 2020 and is based in Marina Del Rey, California.

About PDF Solutions

PDF Solutions, Inc. provides proprietary software and physical intellectual property products for integrated circuit designs, electrical measurement hardware tools, proven methodologies, and professional services in the United States, China, Japan, and internationally. The company offers Exensio software products, such as Manufacturing Analytics that store collected data in a common environment with a consistent view for enabling product engineers to identify and analyze production yield, performance, reliability, and other issues; Process Control that provides failure detection and classification capabilities for monitoring, alarming, and controlling manufacturing tool sets; Test Operations that offer data collection and analysis capabilities; and Assembly Operations that provide device manufacturers with the capability to link assembly and packaging data, including fabrication and characterization data over the product life cycle. It also provides Design-For-Inspection (DFI) systems, such as DFI On-Chip Instruments; eProbe Non-Contact E-Beam Tool; and Characterization Vehicle (CV) system, which includes CV Test Chips and pdFasTest Electrical Testers, as well as Exensio characterization software, designed to analyze the measurements collected using the eProbe tool. In addition, the company offers Cimetrix software products that enables equipment manufacturers to provide industry standard interfaces on their products; and software-as-a-service, software related services, and characterization services. It sells its technologies and services through direct sales force, service teams, and strategic alliances to integrated device manufacturers, fabless semiconductor companies, foundries, equipment manufacturers, electronics manufacturing suppliers, original device manufacturers, out-sourced semiconductor assembly and test, and system houses. PDF Solutions, Inc. was founded in 1991 and is headquartered in Santa Clara, California.