As smart home technology reshapes modern living, the home automation and security sector is experiencing unprecedented growth. Hence, scooping up shares of solid home automation and securitycompanies like ADT Inc. (ADT), Arlo Technologies, Inc. (ARLO), and Alarm.com (ALRM), which are at the forefront, introducing cutting-edge solutions that combine convenience, safety, and innovation, could be ideal.
The home automation and security industry is experiencing a profound shift, fueled by advancements in smart home technology, IoT integration, and the growing demand for enhanced safety features. With consumers prioritizing convenience, energy efficiency, and security, solutions like cloud-based systems, smart cameras, and automated devices are becoming integral to modern living.
According to market analysis, the global smart home market is projected to grow from $121.59 billion this year to $633.20 billion by 2032, exhibiting a CAGR of 22.9%. As high-tech, connected homes become a symbol of luxury, this growth signals a robust future for companies driving the smart home revolution.
Considering these conducive trends, let’s examine home automation and security stocks in detail.
ADT Inc. (ADT)
ADT offers security, automation, and smart home solutions for residential and small business customers in the U.S., including alarms, video surveillance, and environmental monitoring for comprehensive safety and convenience.
On October 28, 2024, ADT announced a proposed secondary offering of 56 million shares held by affiliates of Apollo Global Management, with a 30-day option for underwriters to buy an additional 8.4 million shares.
It pays an annual dividend of $0.22, which translates to a dividend yield of 2.91% at the prevailing price levels.
During the fiscal third quarter that ended September 30, 2024, ADT’s total revenues increased 5.4% year-over-year to $1.24 billion. Its operating income grew 6.2% from the year-ago value to $326 million. In addition, adjusted income per share came in at $$0.20, rising 25% over the prior-year quarter.
Analysts expect ADT’s revenue for the quarter ending December 31, 2024, to increase marginally year-over-year to $1.23 billion. EPS for the same quarter is likely to be 0.19. It surpassed the Street EPS and revenue estimates in each of the trailing four quarters, which is impressive.
Over the past year, the stock has gained 24% to close the last trading session at $7.55. It soared 10.7% year-to-date.
ADT’s POWR Ratings reflect its robust outlook. The stock has an overall rating of B, equating to a Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree.
ADT has a B grade in Quality. It is ranked #8 out of 57 stocks in the B-rated Home Improvement & Goods industry.
Beyond what we have stated above, we also have given ADT grades for Growth, Value, Momentum, Sentiment, and Stability. Get all the ADT’s ratings here.
Alarm.com Holdings, Inc. (ALRM)
ALRM offers IoT security, automation, and monitoring solutions for residential and commercial markets, including video analytics, energy management, smart home controls, and health and emergency response services.
In the fiscal third quarter ended September 31, 2024, ALRM’s total revenues increased 8.4% year-over-year to $240.50 million. Its operating income was $33.19 million, up 105.3% from the year-ago value. Moreover, its adjusted net income and adjusted net income attributable to common stockholders per share stood at $34.99 million and $0.62, respectively, representing increases of 14.9% and 10.7% over the prior-year quarter.
Street expects ALRM’s revenue for the quarter ending December 31, 2024, to increase 5% year-over-year to $237.44 million and $0.53, respectively. The EPS during the quarter is projected to be $0.53. It surpassed the consensus EPS and revenue estimates in all of the trailing four quarters.
The stock climbed 1.6% over the past year and 11.2% over the past month to close the last trading session at $59.76.
ALRM’s POWR Ratings reflect strong prospects. The stock has an overall rating of B, equating to a Buy in our proprietary rating system.
It has a B grade for Value. It is ranked #18 in the Home Improvement & Goods industry.
To access ALRM’s Growth, Momentum, Stability, Sentiment, and Quality ratings, click here.
Arlo Technologies, Inc. (ARLO)
ARLO offers cloud-based security solutions, including high-resolution cameras, security systems, and monitoring services like Arlo Secure and Arlo Safe. Its products are sold through various retail channels and its website.
On September 24, 2024, ARLO announced that its Board of Directors approved the repurchase of up to $50 million of its common stock through open market purchases, aiming to benefit the company and its stockholders.
ARLO’s total revenue increased 5.9% year-over-year to $137.67 million in the fiscal third quarter that ended on September 31, 2024. Its non-GAAP gross profit came in at $49.50 million, up 12.1% year-over-year, while its non-GAAP net income grew 23.4% from the year-ago value to $11.83 million. Its non-GAAP net income per share increased 10% year-over-year to $0.11.
Street expects ARLO’s revenue for the fiscal year (ending December 2024) to increase 39.7% year-over-year to $510.66 million. Its EPS for the same year is expected to grow 45.3% from the prior year to $0.41. In addition, it surpassed the consensus EPS and revenue estimates in each of the trailing four quarters.
Over the past year, the stock has gained 30.6% to close the last trading session at $11.94. It soared 25.4% year-to-date.
ARLO’s bright prospects are apparent in its POWR Ratings. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system.
It has a B grade for Quality. It is ranked #41 of 129 in the Software - Application industry.
Click here to see ARLO’s ratings for Growth, Value, Momentum, Stability, and Sentiment.
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ADT shares were unchanged in premarket trading Wednesday. Year-to-date, ADT has gained 13.36%, versus a 25.36% rise in the benchmark S&P 500 index during the same period.
About the Author: Kritika Sarmah
Her interest in risky instruments and passion for writing made Kritika an analyst and financial journalist. She earned her bachelor's degree in commerce and is currently pursuing the CFA program. With her fundamental approach, she aims to help investors identify untapped investment opportunities.
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