We assign a fundamental rating of 5 out of 10 to ALRM. ALRM was compared to 277 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 decent growth rate and is not valued too expensively.

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1. Profitability

2. Health

3. Growth

4. Valuation

5. Dividend

1. Profitability

1.1 Basic Checks

ALRM had positive earnings in the past year.
ALRM had a positive operating cash flow in the past year.
In the past 5 years ALRM has always 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 74.37% of its industry peers.
ALRM has a better Return On Equity (15.49%) than 83.03% of its industry peers.
The Return On Invested Capital of ALRM (7.43%) is better than 76.90% of its industry peers.
Measured over the past 3 years, the Average Return On Invested Capital for ALRM is significantly below the industry average of 10.78%.
The 3 year average ROIC (4.36%) for ALRM is below the current ROIC(7.43%), indicating increased profibility in the last year.

		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

ALRM has a better Profit Margin (12.92%) than 73.65% of its industry peers.
In the last couple of years the Profit Margin of ALRM has grown nicely.
ALRM has a Operating Margin of 13.06%. This is in the better half of the industry: ALRM outperforms 78.70% of its industry peers.
In the last couple of years the Operating Margin of ALRM has grown nicely.
The Gross Margin of ALRM (66.03%) is comparable to the rest of the industry.
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

ALRM has a Return on Invested Capital (ROIC), which is below the Cost of Capital (WACC), which means it 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

An Altman-Z score of 2.52 indicates that ALRM is not a great score, but indicates only limited risk for bankruptcy at the moment.
ALRM has a Altman-Z score (2.52) which is comparable to the rest of the 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.
A Debt/Equity ratio of 0.59 indicates that ALRM is somewhat dependend on debt financing.
ALRM's Debt to Equity ratio of 0.59 is on the low side compared to the rest of the industry. ALRM is outperformed by 67.87% of its industry peers.

		Industry Rank	Sector Rank
Debt/Equity	0.59
Debt/FCF	6.46
Altman-Z	2.52

ROIC/WACC0.74

WACC10.05%

2.3 Liquidity

ALRM has a Current Ratio of 2.06. This indicates that ALRM is financially healthy and has no problem in meeting its short term obligations.
ALRM has a Current ratio (2.06) which is in line with its industry peers.
A Quick Ratio of 1.92 indicates that ALRM should not have too much problems paying its short term obligations.
ALRM has a Quick ratio (1.92) which is in line with its industry peers.

		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%.
ALRM shows quite a strong growth in Earnings Per Share. Measured over the last years, the EPS has been growing by 8.16% yearly.
Looking at the last year, ALRM shows a small growth in Revenue. The Revenue has grown by 7.35% in the last year.
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

The Earnings Per Share is expected to grow by 7.93% on average over the next years.
The Revenue is expected to grow by 3.96% on average over the next years.

EPS Next Y13.16%

EPS Next 2Y9.75%

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

When comparing the EPS growth rate of the last years to the growth rate of the upcoming years, we see that the growth is stable.
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 20.36 indicates a rather expensive valuation of ALRM.
Based on the Price/Earnings ratio, ALRM is valued a bit cheaper than 74.37% of the companies in the same industry.
The average S&P500 Price/Earnings ratio is at 27.32. ALRM is valued slightly cheaper when compared to this.
With a Price/Forward Earnings ratio of 18.39, ALRM is valued on the expensive side.
Based on the Price/Forward Earnings ratio, ALRM is valued a bit cheaper than the industry average as 75.09% of the companies are valued more expensively.
The average S&P500 Price/Forward Earnings ratio is at 24.32. ALRM is valued slightly cheaper when compared to this.

		Industry Rank	Sector Rank
PE	20.36
Fwd PE	18.39

4.2 Price Multiples

ALRM's Enterprise Value to EBITDA ratio is rather cheap when compared to the industry. ALRM is cheaper than 83.03% of the companies in the same industry.
Based on the Price/Free Cash Flow ratio, ALRM is valued cheaper than 82.31% of the companies in the same industry.

		Industry Rank	Sector Rank
P/FCF	16.46
EV/EBITDA	14.89

4.3 Compensation for Growth

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