ALRM Stock Risk & Deep Value Analysis
Alarm.com Holdings Inc
DVR Score
out of 10
What You Need to Know About ALRM Stock
We analyzed Alarm.com Holdings Inc using our deep value framework. Sign in to see our full verdict and DVR Score.
We ran ALRM through our deep value framework — analyzing financial health, distress signals, competitive moat, and risk factors. Our risk assessment: Moderate. Here's what we found.
ALRM Risk Analysis & Red Flags
What Could Go Wrong
The biggest risk for Alarm.com is a sustained deceleration in organic revenue growth, potentially due to increasing competitive pressure from larger tech players or a slowdown in new property installations, leading to a de-rating of its valuation multiple from current levels.
Risk Matrix
Overall
Moderate
Financial
Low
Market
Medium
Competitive
Medium
Execution
Medium
Regulatory
Low
Red Flags
- ⚠
Q1 2026 EPS consensus ($0.60) is lower than Q4 2025 actual ($0.72), indicating potential sequential deceleration.
- ⚠
Lack of identified significant new growth catalysts that could drive exponential returns.
- ⚠
Reliance on an indirect dealer model, which could be less adaptable to rapid market shifts compared to direct-to-consumer models.
Upcoming Risk Events
- 📅
Q1 2026 earnings miss or weak Q2 2026 guidance
- 📅
Intensified competition from tech giants entering smart home security
- 📅
Economic downturn impacting new construction or consumer spending on upgrades
When to Reconsider
- 🚪
Exit if quarterly revenue growth consistently falls below 10% year-over-year.
- 🚪
Sell if gross or operating margins show sustained contraction over multiple quarters.
- 🚪
Exit if key competitors announce disruptive technologies or significant market share gains.
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Investment Thesis
Alarm.com is a stable, profitable, and cash-generative SaaS leader within the expanding smart security and property management market. Its entrenched position through a vast dealer network and comprehensive, proprietary platform provides durable competitive advantages and predictable recurring revenue growth in the mid-teens, with potential for continued margin expansion. While not a 10x opportunity, it offers a solid foundation for consistent, moderate capital appreciation.
Is ALRM Stock Undervalued?
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ALRM Price Targets & Strategy
12-Month Target
$58.00
Bull Case
$70.00
Bear Case
$35.00
Valuation Basis
Based on 19x forward P/E applied to $3.05 est. FY26 EPS.
Entry Strategy
Dollar-cost average between $42-$46, particularly if there is a post-earnings dip not related to fundamental deterioration, considering historical support levels.
Exit Strategy
Take 50% profit at $65.00, consider stop-loss at $39.00 (below recent lows if growth concerns escalate).
Portfolio Allocation
3-5% for moderate risk tolerance, reflecting stable growth potential rather than high-risk, high-reward.
Price Targets & Strategy
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Is ALRM Financially Healthy?
Valuation
P/E Ratio
17.05
Forward P/E
11.40
EV/EBITDA
7.85
PEG Ratio
1.57
Price/Book
2.60
Price/Sales
2.34
Profitability
Gross Margin
66.15%
Operating Margin
13.22%
Net Margin
13.11%
Return on Equity
16.41%
Revenue Growth
7.59%
EPS
$2.26
Balance Sheet
Current Ratio
1.92
Quick Ratio
1.75
Debt/Equity
1.17
Total Debt
$188.81M
Cash & Equivalents
$556.62M
Cash Flow
Operating Cash Flow
$206.41M
Free Cash Flow
$181.73M
EBITDA
$193.21M
Other
Beta (Volatility)
0.79
Does ALRM Have a Competitive Moat?
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🛡️ Narrow
Moat Trend
Stable
Moat Sources
3 Identified
Alarm.com's moat is durable due to high switching costs for its dealer network (who integrate deeply with the platform) and end-users (who invest in an ecosystem of devices). Its proprietary technology and expanding device compatibility further reinforce its position.
Moat Erosion Risks
- •Rapid technological advancements from tech giants that could bypass Alarm.com's ecosystem.
- •Erosion of its indirect dealer model advantage if direct-to-consumer security services gain significant traction.
- •Increased price competition reducing the profitability for service providers, potentially leading to churn from Alarm.com's platform.
ALRM Competitive Moat Analysis
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ALRM Market Intelligence
Sentiment & Insider Activity
Social Sentiment
Neutral (no strong bullish or bearish trends identified in the current intelligence)
Institutional Sentiment
Neutral (no recent analyst upgrades/downgrades or specific price target changes reported in the current intelligence)
Insider Activity (Form 4)
No specific Form 4 filings reported (buy or sell) in the last 90 days (Feb 7 - May 7, 2026).
Options Flow
Normal options activity (no unusual put/call ratio or large block trades indicating significant institutional positioning was reported).
Earnings Intelligence
Next Earnings
2026-05-07
Surprise Probability
Medium
Historical Earnings Pattern
Alarm.com's stock tends to react significantly to forward guidance and outlook on subscriber growth rather than just the immediate beat/miss on EPS or revenue.
Key Metrics to Watch
Competitive Position
Top Competitor
ADT
Market Share Trend
Stable
Valuation vs Peers
Trading at a P/S of 2.4x forward, which is generally inline or a slight discount to higher-growth SaaS peers, but potentially a premium to traditional security service providers. Its valuation reflects its recurring revenue model and profitability, but also acknowledges its more moderate growth trajectory compared to hyper-growth SaaS companies.
Competitive Advantages
- •Extensive network of independent security dealers and service providers.
- •Comprehensive and integrated cloud-based platform for smart home and business security.
- •Proprietary technology and a robust ecosystem of compatible devices.
Market Intelligence
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What Could Drive ALRM Stock Higher?
Near-Term (0-6 months)
- •Q1 2026 Earnings Release (May 7, 2026 after market close)
- •Q2 2026 Earnings Release (Estimated early August 2026)
Medium-Term (6-18 months)
- •Expansion of dealer network and international market penetration
- •Introduction of new AI-driven features in smart home/business platform
- •Strategic partnerships with property developers or insurance companies
Long-Term (18+ months)
- •Increased adoption of comprehensive smart property management solutions across residential and commercial sectors
- •Potential for strategic acquisition by a larger technology or security firm
- •Deep integration into broader IoT ecosystems
Catalysts & Growth Drivers
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What's the Bull Case for ALRM?
- ✓
Acceleration in subscriber growth metrics or ARPU across both residential and commercial segments.
- ✓
Expansion of partnerships that significantly broaden its market reach or technological capabilities.
- ✓
Successful integration of new AI/ML features that enhance its platform's value proposition.
Bull Case Analysis
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Competing with ALRM
See how Alarm.com Holdings Inc compares to related companies
| Company | Market Cap | DVR Score | P/E | Revenue | Profit Margin | Rev Growth | |
|---|---|---|---|---|---|---|---|
Alarm.com Holdings Inc ALRM | $2.3B | 4.2 | 17.0 | $939.8M | 13.1% | 7.6% |
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How Alarm.com Holdings Inc Makes Money
Alarm.com provides a leading cloud-based software platform and hardware ecosystem for smart property management, focusing on security, automation, and energy solutions. The company primarily generates revenue by licensing its interactive security and home automation software to a vast network of independent security service providers and dealers. These partners then utilize Alarm.com's platform to offer services like remote monitoring, video surveillance, and smart device control to their residential and business customers, paying Alarm.com a recurring subscription fee for platform access. Additionally, Alarm.com sells complementary hardware, such as cameras and sensors, to its service provider partners.
Read Full Business Model BreakdownFAQ
What is the DVR Score for Alarm.com Holdings Inc (ALRM)?
As of May 7, 2026, Alarm.com Holdings Inc has a DVR Score of 4.2 out of 10, placing it in the "Proceed with Caution" category. This score is generated by our AI-powered deep value analysis framework that evaluates growth potential, financial health, competitive moat, and risk factors.
What is the market capitalization of Alarm.com Holdings Inc?
Alarm.com Holdings Inc's market capitalization is approximately $2.3B..
What is the risk level for ALRM stock?
Our analysis rates Alarm.com Holdings Inc's overall risk as Moderate. This assessment considers execution risk, market risk, financial risk, competitive risk, and regulatory risk. For a full breakdown, see the risk analysis section above.
What is the P/E ratio of ALRM?
Alarm.com Holdings Inc currently has a price-to-earnings (P/E) ratio of 17.0. This is in line with broader market averages.
Is Alarm.com Holdings Inc's revenue growing?
Alarm.com Holdings Inc has reported revenue growth of 7.6%. The company is growing at a moderate pace.
Is ALRM stock profitable?
Alarm.com Holdings Inc has a profit margin of 13.1%. The company is profitable but margins are modest.
How often is the ALRM DVR analysis updated?
Our AI-powered analysis of Alarm.com Holdings Inc is refreshed regularly to incorporate the latest financial data, market conditions, and news. The most recent update was on May 7, 2026.
Important Disclaimer – Not Financial Advice
Deep Value Reports is an independent research platform for educational and informational purposes only. We are not financial advisors, investment advisors, or licensed professionals. The analysis, scores, and information provided on this page for ALRM (Alarm.com Holdings Inc) should not be construed as personalized investment advice, a recommendation to buy or sell any security, or an offer to provide investment advisory services.
All investments involve risk, including the potential loss of principal. Past performance does not guarantee future results. Always conduct your own research, consider your financial situation, and consult with a qualified financial advisor before making any investment decisions.