Taking everything into account, ALRM scores 5 out of 10 in our fundamental rating. ALRM was compared to 278 industry peers in the Software industry. ALRM has an excellent profitability rating, but there are some minor concerns on its financial health. ALRM is not valued too expensively and it also shows a decent growth rate.

Quickly go to:

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.
ALRM had positive earnings in each of the past 5 years.
Each year in the past 5 years ALRM had a positive operating cash flow.

1.2 Ratios

With a decent Return On Assets value of 6.04%, ALRM is doing good in the industry, outperforming 74.10% of the companies in the same industry.
ALRM's Return On Equity of 15.49% is amongst the best of the industry. ALRM outperforms 83.09% of its industry peers.
ALRM has a Return On Invested Capital of 7.43%. This is in the better half of the industry: ALRM outperforms 76.98% of its industry peers.
ALRM had an Average Return On Invested Capital over the past 3 years of 4.36%. This is significantly below the industry average of 10.76%.
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 73.74% of its industry peers.
ALRM's Profit Margin has improved in the last couple of years.
Looking at the Operating Margin, with a value of 13.06%, ALRM is in the better half of the industry, outperforming 78.42% of the companies in the same industry.
In the last couple of years the Operating Margin of ALRM has grown nicely.
ALRM has a Gross Margin (66.03%) which is comparable to the rest of the industry.
ALRM's Gross Margin has been stable in the last couple of years.

		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

The Return on Invested Capital (ROIC) is below the Cost of Capital (WACC), so ALRM is destroying value.
Compared to 1 year ago, ALRM has less shares outstanding
The number of shares outstanding for ALRM has been increased compared to 5 years ago.
Compared to 1 year ago, ALRM has a worse debt to assets ratio.

2.2 Solvency

An Altman-Z score of 2.51 indicates that ALRM is not a great score, but indicates only limited risk for bankruptcy at the moment.
Looking at the Altman-Z score, with a value of 2.51, ALRM is in line with its industry, outperforming 56.47% 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.
Looking at the Debt to FCF ratio, with a value of 6.46, ALRM is in line with its industry, outperforming 52.88% of the companies in the same industry.
A Debt/Equity ratio of 0.59 indicates that ALRM is somewhat dependend on debt financing.
With a Debt to Equity ratio value of 0.59, ALRM is not doing good in the industry: 67.99% of the companies in the same industry are doing better.

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

ROIC/WACC0.74

WACC10.01%

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.
ALRM has a Quick Ratio of 1.92. This is a normal value and indicates that ALRM is financially healthy and should not expect problems in meeting 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

The Earnings Per Share has been growing slightly by 6.90% over the past year.
ALRM shows quite a strong growth in Earnings Per Share. Measured over the last years, the EPS has been growing by 8.16% yearly.
The Revenue has been growing slightly by 7.35% in the past year.
ALRM shows quite a strong growth in Revenue. Measured over the last years, the Revenue has been growing by 13.34% yearly.

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.
Based on estimates for the next years, ALRM will show a small growth in Revenue. The Revenue will grow by 3.96% on average per year.

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

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

The Price/Earnings ratio is 19.65, which indicates a rather expensive current valuation of ALRM.
Compared to the rest of the industry, the Price/Earnings ratio of ALRM indicates a somewhat cheap valuation: ALRM is cheaper than 74.46% of the companies listed in the same industry.
ALRM is valuated rather cheaply when we compare the Price/Earnings ratio to 28.60, which is the current average of the S&P500 Index.
With a Price/Forward Earnings ratio of 17.79, ALRM is valued on the expensive side.
Based on the Price/Forward Earnings ratio, ALRM is valued a bit cheaper than 75.54% of the companies in the same industry.
ALRM is valuated rather cheaply when we compare the Price/Forward Earnings ratio to 25.83, which is the current average of the S&P500 Index.

		Industry Rank	Sector Rank
PE	19.65
Fwd PE	17.79

4.2 Price Multiples

83.09% of the companies in the same industry are more expensive than ALRM, based on the Enterprise Value to EBITDA ratio.
Based on the Price/Free Cash Flow ratio, ALRM is valued cheaply inside the industry as 82.73% of the companies are valued more expensively.

		Industry Rank	Sector Rank
P/FCF	15.88
EV/EBITDA	14.72

4.3 Compensation for Growth

The 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.