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Here's Why You Should Add Alarm.com (ALRM) to Your Portfolio

Alarm.com Holdings, Inc. ALRM is currently one of the top-performing stocks in the technology sector, and an increase in share price and strong fundamentals signal its bull run. Therefore, if you haven’t taken advantage of the share price appreciation yet, it’s time you add the stock to your portfolio.

The company has performed extremely well in the last year and has the potential to carry on the momentum in the near term.

Why an Attractive Pick?

Share Price Appreciation: A glimpse of the company’s price trend shows that the stock has had an impressive run on the bourses over the last year. Alarm.com has returned 28.4% in a year’s time, outperforming its industry’s loss of 29.7%.

Solid Rank: Alarm.com sports a Zacks Rank #1 (Strong Buy) and has a Growth Score of B. Our research shows that stocks with a Growth Score of A or B when combined with a Zacks Rank #1 or 2 (Buy) offer the best investment opportunities. Thus, the company appears to be a compelling investment proposition at the moment.

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Northward Estimate Revisions: Eight estimates for the current year moved north over the past 60 days against no southward revisions, reflecting analysts’ confidence in the stock. Over the same period, the Zacks Consensus Estimate for the current year increased 19%. Also, for 2019, the Zacks Consensus Estimate moved up by 20% over the same time frame to $1.33.

Positive Earnings Surprise History: Alarm.com has an impressive earnings surprise history. The company outpaced the Zacks Consensus Estimate in the trailing four quarters, with an average positive earnings surprise of 55.94%.

Strong Growth Prospects: The company’s Zacks Consensus Estimate for 2018 earnings of $1.13 reflects year-over-year growth of 22.8%. Moreover, earnings are expected to register 17.5% growth in 2019. The stock has a long term expected earnings per share growth rate of 15.6%.

Growth Drivers: Alarm.com has been expanding and enhancing its portfolio of video cameras to tap a wide range of commercial customers. During the last reported fourth quarter, it expanded its platform to intensify customer engagement and retention. The company unveiled a new smart thermostat that combines cloud intelligence with more advanced device hardware. This will broaden the range of systems with which Alarm.com can integrate.

Further, the company is making considerable progress with its Customer Connection program aimed at increasing upsell and retention. Since its launch, the company has successfully added several pre-configured campaigns to help service providers increase up-sells and referrals, and boost consumer engagement. Significant progress is also expected on this front.

In the most recent quarter, Alarm.com witnessed adjusted earnings of 26 cents per share, surpassing the Zacks Consensus Estimate of 24 cents. Total quarterly revenues came in at $88.8 million, reflecting an increase of 27.2% year over year. Also, the company provided an improving outlook. For the upcoming first quarter, the company expects SaaS and license revenues to be in the range of $66.9-$67.1 million.

For full-year 2018, management expects its SaaS and license revenues to be within $282.5-$283 million. Also, the company expects total revenues in the range of $380-$382 million.

We believe that Alarm.com is in a great position to grow sustainably and profitably based on its new products, supported by expanding opportunities in the home and business security market.

Alarm.com Holdings, Inc. Price and Consensus

 

Alarm.com Holdings, Inc. Price and Consensus | Alarm.com Holdings, Inc. Quote

Other Stocks to Consider

Some other top-ranked stocks in the technology sector are Stamps.com Inc. STMP, PetMed Express PETS and Alibaba Group Holding Limited BABA. While Stamps.com sports a Zacks Rank #1, PetMed and Alibaba carry a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Long-term earnings per share growth rate for Stamps.com, PetMed and Alibaba is projected to be 15%, 10% and 30.5%, respectively.

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