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Will Portfolio Expansion Aid Alarm.com (ALRM) Q4 Earnings?

Zacks Equity Research
Updated

Alarm.com Holdings, Inc. ALRM will report fourth-quarter 2017 results on Feb 27. In the third quarter, the company delivered a positive earnings surprise of 42.1%.

The surprise history has been impressive in Alarm.com’s case. The company surpassed estimates in each of the trailing four quarters, with an average positive surprise of 65.4%.

The company's shares have gained 33.8% in a year’s time, outperforming its industry’s decline of 22.9%.

 

Let's see how things are shaping up for this announcement.

Portfolio Expansion to Drive the Top Line

Alarm.com has been expanding and enhancing its portfolio of video cameras to tap a wide range of commercial customers. In the third quarter, the company expanded its platform to intensify customer engagement and retention. It also added two-way audio functionality to its indoor residential cameras. Also, Alarm.com released updates on both its mobile and Apple TV applications. We expect these factors to make significant contributions to Alarm.com’s hardware and other revenues in the to-be-reported quarter.

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Acquisitions to Boost Margins

Alarm.com closed the acquisition of two business units, Connect and Piper, and the integration has been smooth so far. The company so far has deployed a number of joint development projects with the Connect and Piper teams intending to ramp up R&D operations and improve customer satisfaction. We expect these moves to contribute to Alarm.com’s revenue and margin expansion in the to-be-reported quarter.

Customer Connection Program to Increase Upsell and Retention

The company is also 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.

What Our Model Suggests

According to the Zacks model, a company with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) has a good chance of beating estimates if it also has a positive Earnings ESP. Zacks Rank #4 (Sell) or 5 (Strong Sell) stocks are best avoided, especially if these have a negative Earnings ESP. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Alarm.com has a Zacks Rank #3 and an Earnings ESP of 0.00%, a combination that does not suggest that the company is likely to beat estimates this time around.

Alarm.com Holdings, Inc. Price and EPS Surprise

 

Alarm.com Holdings, Inc. Price and EPS Surprise | Alarm.com Holdings, Inc. Quote

 

Stocks to Consider

We see a likely earnings beat for each of the following companies:

Square, Inc. SQ, with an Earnings ESP of +3.96% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Newfield Exploration Company NFX, with an Earnings ESP of +5.4% and a Zacks Rank #3.

Etsy, Inc. ETSY, with an Earnings ESP of +31.34% and a Zacks Rank #3.

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Etsy, Inc. (ETSY) : Free Stock Analysis Report
 
Square, Inc. (SQ) : Free Stock Analysis Report
 
Newfield Exploration Company (NFX) : Free Stock Analysis Report
 
Alarm.com Holdings, Inc. (ALRM) : Free Stock Analysis Report
 
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