Yahoo Finance How Has Alarmcom Holdings Inc’s (NASDAQ:ALRM) Performed Against The Industry?
Analyzing Alarmcom Holdings Inc’s (NASDAQ:ALRM) track record of past performance is a valuable exercise for investors. It enables us to reflect on whether or not the company has met expectations, which is a powerful signal for future performance. Today I will assess ALRM’s recent performance announced on 30 June 2018 and compare these figures to its long-term trend and industry movements.
See our latest analysis for Alarm.com Holdings
Did ALRM beat its long-term earnings growth trend and its industry?
ALRM’s trailing twelve-month earnings (from 30 June 2018) of US$36.7m has jumped 89.4% compared to the previous year. Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of 71.3%, indicating the rate at which ALRM is growing has accelerated. What’s enabled this growth? Well, let’s take a look at if it is only because of an industry uplift, or if Alarm.com Holdings has seen some company-specific growth.
Over the last couple of years, Alarm.com Holdings grew its bottom line faster than revenue by effectively controlling its costs. This brought about a margin expansion and profitability over time. Scanning growth from a sector-level, the US internet industry has been growing its average earnings by double-digit 41.7% over the prior year, and 22.6% over the past five. This growth is a median of profitable companies of 25 Internet companies in US including Dragon Victory International, SPS Commerce and Sino-i Technology. This suggests that any tailwind the industry is gaining from, Alarm.com Holdings is able to leverage this to its advantage.
In terms of returns from investment, Alarm.com Holdings has fallen short of achieving a 20% return on equity (ROE), recording 13.8% instead. However, its return on assets (ROA) of 9.8% exceeds the US Internet industry of 7.2%, indicating Alarm.com Holdings has used its assets more efficiently. Though, its return on capital (ROC), which also accounts for Alarm.com Holdings’s debt level, has declined over the past 3 years from 23.2% to 15.7%. This correlates with an increase in debt holding, with debt-to-equity ratio rising from 14.1% to 25.9% over the past 5 years.
What does this mean?
Alarm.com Holdings’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. While Alarm.com Holdings has a good historical track record with positive growth and profitability, there’s no certainty that this will extrapolate into the future. You should continue to research Alarm.com Holdings to get a better picture of the stock by looking at:
Future Outlook: What are well-informed industry analysts predicting for ALRM’s future growth? Take a look at our free research report of analyst consensus for ALRM’s outlook.
Financial Health: Are ALRM’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.
Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
NB: Figures in this article are calculated using data from the trailing twelve months from 30 June 2018. This may not be consistent with full year annual report figures.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.
