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ALRM vs. AAXN: Which Stock Is the Better Value Option?

Zacks Equity Research
·2-min read

Investors with an interest in Security and Safety Services stocks have likely encountered both Alarm.com Holdings (ALRM) and Axon Enterprise (AAXN). But which of these two stocks offers value investors a better bang for their buck right now? We'll need to take a closer look.

The best way to find great value stocks is to pair a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system. The proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.

Alarm.com Holdings has a Zacks Rank of #2 (Buy), while Axon Enterprise has a Zacks Rank of #3 (Hold) right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that ALRM is likely seeing its earnings outlook improve to a greater extent. But this is just one factor that value investors are interested in.

Value investors also tend to look at a number of traditional, tried-and-true figures to help them find stocks that they believe are undervalued at their current share price levels.

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The Style Score Value grade factors in a variety of key fundamental metrics, including the popular P/E ratio, P/S ratio, earnings yield, cash flow per share, and a number of other key stats that are commonly used by value investors.

ALRM currently has a forward P/E ratio of 29.76, while AAXN has a forward P/E of 60.54. We also note that ALRM has a PEG ratio of 2.28. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. AAXN currently has a PEG ratio of 4.04.

Another notable valuation metric for ALRM is its P/B ratio of 5.99. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. By comparison, AAXN has a P/B of 8.01.

These metrics, and several others, help ALRM earn a Value grade of B, while AAXN has been given a Value grade of D.

ALRM has seen stronger estimate revision activity and sports more attractive valuation metrics than AAXN, so it seems like value investors will conclude that ALRM is the superior option right now.


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Alarm.com Holdings, Inc. (ALRM) : Free Stock Analysis Report
 
Axon Enterprise, Inc (AAXN) : Free Stock Analysis Report
 
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Zacks Investment Research