Overall ALRM gets a fundamental rating of 5 out of 10. We evaluated ALRM against 278 industry peers in the Software industry. ALRM has an excellent profitability rating, but there are some minor concerns on its financial health. ALRM has a correct valuation and a medium growth rate.

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1. Profitability

2. Health

3. Growth

4. Valuation

5. Dividend

1. Profitability

1.1 Basic Checks

In the past year ALRM was profitable.
ALRM had a positive operating cash flow in the past year.
Each year in the past 5 years ALRM has been profitable.
In the past 5 years ALRM always reported a positive cash flow from operatings.

1.2 Ratios

ALRM has a Return On Assets of 6.04%. This is in the better half of the industry: ALRM outperforms 74.10% of its industry peers.
The Return On Equity of ALRM (15.49%) is better than 83.09% of its industry peers.
Looking at the Return On Invested Capital, with a value of 7.43%, ALRM is in the better half of the industry, outperforming 76.98% of the companies in the same industry.
Measured over the past 3 years, the Average Return On Invested Capital for ALRM is significantly below the industry average of 10.73%.
The last Return On Invested Capital (7.43%) for ALRM is above the 3 year average (4.36%), which is a sign of increasing profitability.

		Industry Rank	Sector Rank
ROA	6.04%
ROE	15.49%
ROIC	7.43%

ROA(3y)5.32%

ROA(5y)6.17%

ROE(3y)12.75%

ROE(5y)12.69%

ROIC(3y)4.36%

ROIC(5y)5.04%

1.3 Margins

The Profit Margin of ALRM (12.92%) is better than 73.74% of its industry peers.
In the last couple of years the Profit Margin of ALRM has grown nicely.
ALRM's Operating Margin of 13.06% is fine compared to the rest of the industry. ALRM outperforms 78.42% of its industry peers.
ALRM's Operating Margin has improved in the last couple of years.
ALRM has a Gross Margin (66.03%) which is in line with its industry peers.
In the last couple of years the Gross Margin of ALRM has remained more or less at the same level.

		Industry Rank	Sector Rank
OM	13.06%
PM (TTM)	12.92%
GM	66.03%

OM growth 3Y11.98%

OM growth 5Y2.86%

PM growth 3Y23.67%

PM growth 5Y4.4%

GM growth 3Y3.35%

GM growth 5Y0.57%

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ROA

ROE

ROIC

Operating and Profit Margin

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2. Health

2.1 Basic Checks

With a Return on Invested Capital (ROIC) below the Cost of Capital (WACC), ALRM is destroying value.
ALRM has less shares outstanding than it did 1 year ago.
Compared to 5 years ago, ALRM has more shares outstanding
ALRM has a worse debt/assets ratio than last year.

2.2 Solvency

ALRM has an Altman-Z score of 2.51. This is not the best score and indicates that ALRM is in the grey zone with still only limited risk for bankruptcy at the moment.
With a Altman-Z score value of 2.51, ALRM perfoms like the industry average, outperforming 57.55% of the companies in the same industry.
ALRM has a debt to FCF ratio of 6.46. This is a slightly negative value and a sign of low solvency as ALRM would need 6.46 years to pay back of all of its debts.
ALRM has a Debt to FCF ratio (6.46) which is in line with its industry peers.
ALRM has a Debt/Equity ratio of 0.59. This is a neutral value indicating ALRM is somewhat dependend on debt financing.
ALRM has a Debt to Equity ratio of 0.59. This is in the lower half of the industry: ALRM underperforms 67.99% of its industry peers.

		Industry Rank	Sector Rank
Debt/Equity	0.59
Debt/FCF	6.46
Altman-Z	2.51

ROIC/WACC0.74

WACC9.99%

2.3 Liquidity

A Current Ratio of 2.06 indicates that ALRM has no problem at all paying its short term obligations.
Looking at the Current ratio, with a value of 2.06, ALRM is in the better half of the industry, outperforming 60.07% of the companies in the same industry.
A Quick Ratio of 1.92 indicates that ALRM should not have too much problems paying its short term obligations.
The Quick ratio of ALRM (1.92) is comparable to the rest of the industry.

		Industry Rank	Sector Rank
Current Ratio	2.06
Quick Ratio	1.92

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WACC

Debt/Equity

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Altman-Z score

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3. Growth

3.1 Past

ALRM shows a small growth in Earnings Per Share. In the last year, the EPS has grown by 6.90%.
Measured over the past years, ALRM shows a quite strong growth in Earnings Per Share. The EPS has been growing by 8.16% on average per year.
ALRM shows a small growth in Revenue. In the last year, the Revenue has grown by 7.35%.
The Revenue has been growing by 13.34% on average over the past years. This is quite good.

EPS 1Y (TTM)6.9%

EPS 3Y4.46%

EPS 5Y8.16%

EPS Q2Q%22.58%

Revenue 1Y (TTM)7.35%

Revenue growth 3Y7.86%

Revenue growth 5Y13.34%

Sales Q2Q%6.61%

3.2 Future

ALRM is expected to show a small growth in Earnings Per Share. In the coming years, the EPS will grow by 7.93% yearly.
ALRM is expected to show a small growth in Revenue. In the coming years, the Revenue will grow by 3.96% yearly.

EPS Next Y13.16%

EPS Next 2Y9.59%

EPS Next 3Y7.93%

EPS Next 5YN/A

Revenue Next Year6.95%

Revenue Next 2Y5.52%

Revenue Next 3Y5%

Revenue Next 5Y3.96%

3.3 Evolution

The EPS growth rate is stable: in the next years the growth will be about the same than in the last years.
The Revenue growth rate is decreasing: in the next years the growth will be less than in the last years.

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4. Valuation

4.1 Price/Earnings Ratio

A Price/Earnings ratio of 19.67 indicates a rather expensive valuation of ALRM.
Based on the Price/Earnings ratio, ALRM is valued a bit cheaper than the industry average as 73.02% of the companies are valued more expensively.
When comparing the Price/Earnings ratio of ALRM to the average of the S&P500 Index (28.30), we can say ALRM is valued slightly cheaper.
The Price/Forward Earnings ratio is 17.82, which indicates a rather expensive current valuation of ALRM.
Compared to the rest of the industry, the Price/Forward Earnings ratio of ALRM indicates a somewhat cheap valuation: ALRM is cheaper than 74.46% of the companies listed in the same industry.
The average S&P500 Price/Forward Earnings ratio is at 25.57. ALRM is valued slightly cheaper when compared to this.

		Industry Rank	Sector Rank
PE	19.67
Fwd PE	17.82

4.2 Price Multiples

Compared to the rest of the industry, the Enterprise Value to EBITDA ratio of ALRM indicates a rather cheap valuation: ALRM is cheaper than 83.09% of the companies listed in the same industry.
Based on the Price/Free Cash Flow ratio, ALRM is valued cheaper than 81.30% of the companies in the same industry.

		Industry Rank	Sector Rank
P/FCF	15.9
EV/EBITDA	14.77

4.3 Compensation for Growth

ALRM's PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates a correct valuation of the company.
The decent profitability rating of ALRM may justify a higher PE ratio.