📊 ALRM Key Takeaways
Is Alarm.com Holdings, Inc. (ALRM) a Good Investment?
Alarm.com demonstrates fortress-like financial health with exceptional liquidity (5.16x current ratio), conservative leverage (0.13x debt/equity), and strong free cash flow generation ($49.7M, 18.7% FCF margin). However, profitability growth has stalled with net income rising only 0.7% YoY despite 7.6% revenue growth, and returns on equity (2.7%) and assets (1.4%) remain critically low, indicating poor capital deployment efficiency and a mature, slowing business.
Alarm.com shows solid fundamental quality with mid-single-digit revenue growth, double-digit operating and net margins, and strong free cash flow generation. The balance sheet is a major strength, with nearly $961M in cash, low leverage, and healthy liquidity, though the relatively flat net income growth suggests some margin pressure or rising costs that should be monitored.
Alarm.com Holdings, Inc. Key Strengths (ALRM)
- Exceptional liquidity with $497.4M cash and 5.16x current ratio providing significant financial flexibility
- Strong free cash flow generation of $49.7M with 18.7% FCF margin despite minimal capex requirements
- Conservative capital structure with 0.13x debt/equity ratio and only $110M long-term debt limiting financial risk
- Solid operating infrastructure with 11.9% operating margin and 8.9% net margin
- Strong balance sheet with high cash reserves and low debt burden
- Consistent profitability with 13.2% operating margin and 13.1% net margin
- Healthy cash generation, including $137.05M of free cash flow and a 13.6% FCF margin
ALRM Stock Risks: Alarm.com Holdings, Inc. Investment Risks
- Net income growth has essentially stalled at 0.7% YoY while revenue grew 7.6%, indicating margin compression and rising operating costs outpacing revenue growth
- Critically low returns on equity (2.7%) and assets (1.4%) suggest the company is not deploying its substantial balance sheet productively despite having ample capacity
- Appears to be in mature, slow-growth phase with limited organic growth trajectory and unclear capital allocation strategy for excess cash
- Large cash accumulation relative to operating scale suggests potential shareholder capital inefficiency or lack of compelling growth reinvestment opportunities
- Net income growth of just 0.7% lagged revenue growth, indicating possible cost pressure
- Revenue growth of 7.6% is solid but not high, leaving less room for execution missteps
- Gross margin and interest coverage are unavailable, limiting visibility into cost structure and fixed-charge resilience
Key Metrics to Watch
- Net income growth rate - must exceed revenue growth to demonstrate improving operational leverage
- Return on equity trend - needs to move materially above 3% to justify retained capital
- Revenue growth acceleration and gross margin stability - verify if 7.6% can be sustained
- Cash deployment strategy - monitor how excess cash is allocated (buybacks, dividends, acquisitions)
- Operating and net margin trend
- Free cash flow growth relative to revenue growth
Alarm.com Holdings, Inc. (ALRM) Financial Metrics & Key Ratios
💡 AI Analyst Insight
Strong liquidity with a 5.16x current ratio provides a solid financial cushion.
ALRM Profit Margin, ROE & Profitability Analysis
ALRM vs Technology Sector: How Alarm.com Holdings, Inc. Compares
How Alarm.com Holdings, Inc. compares to Technology sector averages
Sector benchmarks are approximate industry averages. Actual sector performance may vary.
Is Alarm.com Holdings, Inc. Stock Overvalued? ALRM Valuation Analysis 2026
Based on fundamental analysis, Alarm.com Holdings, Inc. has mixed fundamental signals relative to the Technology sector in 2026.
Note: This is a fundamental analysis based on SEC filings. For P/E ratio, price targets, and market-based valuation, consult financial data providers. This is not investment advice.
Alarm.com Holdings, Inc. Balance Sheet: ALRM Debt, Cash & Liquidity
ALRM Revenue & Earnings Growth: 5-Year Financial Trend
5-Year Trend Summary: Alarm.com Holdings, Inc.'s revenue has grown significantly by 35% over the 5-year period, indicating strong business expansion. The most recent EPS of $1.53 reflects profitable operations.
ALRM Revenue Growth, EPS Growth & YoY Performance
ALRM Quarterly Earnings & Performance
| Quarter | Revenue | Net Income | EPS |
|---|---|---|---|
| Q1 2026 | $238.8M | $23.4M | $0.47 |
| Q3 2025 | $240.5M | $35.1M | $0.65 |
| Q2 2025 | $233.8M | $32.5M | $0.62 |
| Q1 2025 | $223.3M | $23.4M | $0.44 |
| Q3 2024 | $221.9M | $19.4M | $0.37 |
| Q2 2024 | $223.9M | $15.6M | $0.30 |
| Q1 2024 | $209.7M | $14.2M | $0.28 |
| Q3 2023 | $216.1M | $18.1M | $0.35 |
Data sourced from SEC EDGAR 10-Q quarterly filings. Figures may represent quarterly or cumulative values.
Alarm.com Holdings, Inc. Dividends, Buybacks & Capital Allocation
ALRM SEC Filings: Latest 10-K & 10-Q Analysis
Access official SEC EDGAR filings for Alarm.com Holdings, Inc. (CIK: 0001459200)
📋 Recent SEC Filings
❓ Frequently Asked Questions about ALRM
What is the AI rating for ALRM?
Alarm.com Holdings, Inc. (ALRM) has a Combined AI Grade of A from Claude (B) and ChatGPT (A) with 78% combined confidence, based on fundamental analysis of SEC EDGAR filings.
What are ALRM's key strengths?
Claude: Exceptional liquidity with $497.4M cash and 5.16x current ratio providing significant financial flexibility. Strong free cash flow generation of $49.7M with 18.7% FCF margin despite minimal capex requirements. ChatGPT: Strong balance sheet with high cash reserves and low debt burden. Consistent profitability with 13.2% operating margin and 13.1% net margin.
What are the risks of investing in ALRM?
Claude: Net income growth has essentially stalled at 0.7% YoY while revenue grew 7.6%, indicating margin compression and rising operating costs outpacing revenue growth. Critically low returns on equity (2.7%) and assets (1.4%) suggest the company is not deploying its substantial balance sheet productively despite having ample capacity. ChatGPT: Net income growth of just 0.7% lagged revenue growth, indicating possible cost pressure. Revenue growth of 7.6% is solid but not high, leaving less room for execution missteps.
What is ALRM's revenue and growth?
Alarm.com Holdings, Inc. reported revenue of $265.2M.
Does ALRM pay dividends?
Alarm.com Holdings, Inc. does not currently pay dividends.
Where can I find ALRM SEC filings?
Official SEC filings for Alarm.com Holdings, Inc. (CIK: 0001459200) including 10-K, 10-Q, and 8-K reports are available on SEC EDGAR.
What is ALRM's EPS?
Alarm.com Holdings, Inc. has a diluted EPS of $0.47.
How is the AI analysis conducted?
Two independent AI systems — Claude (Anthropic) and ChatGPT (OpenAI) — analyze SEC EDGAR filings including 10-K annual reports and 10-Q quarterly reports. Each AI evaluates financial health, profitability ratios, balance sheet strength, and growth metrics. The combined grade reflects both perspectives for balanced insights.
What is ALRM's fundamental grade?
Based on our AI fundamental analysis in June 2026, Alarm.com Holdings, Inc. has a A grade with 78% confidence. The AI analysis suggests favorable fundamentals based on SEC filings. This is not investment advice.
Is ALRM stock overvalued or undervalued?
Valuation metrics for ALRM: ROE of 2.7% (sector avg: 22%), net margin of 8.9% (sector avg: 18%). Compare these metrics with sector averages to assess valuation.
What is ALRM's AI grade for 2026?
Our dual AI analysis gives Alarm.com Holdings, Inc. a combined A grade for 2026. Revenue is data pending, with profitability at or below sector average. Always conduct your own research.
What is ALRM's free cash flow?
Alarm.com Holdings, Inc.'s operating cash flow is $50.6M, with capital expenditures of $912.0K. FCF margin is 18.7%.
How does ALRM compare to other Technology stocks?
Vs Technology sector averages: Net margin 8.9% (avg: 18%), ROE 2.7% (avg: 22%), current ratio 5.16 (avg: 2.5).