Stock Analysis

If You Had Bought Resideo Technologies (NYSE:REZI) Stock A Year Ago, You Could Pocket A 147% Gain Today

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NYSE:REZI
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Unfortunately, investing is risky - companies can and do go bankrupt. But when you pick a company that is really flourishing, you can make more than 100%. For example, the Resideo Technologies, Inc. (NYSE:REZI) share price has soared 147% return in just a single year. On top of that, the share price is up 39% in about a quarter. Resideo Technologies hasn't been listed for long, so it's still not clear if it is a long term winner.

View our latest analysis for Resideo Technologies

While markets are a powerful pricing mechanism, share prices reflect investor sentiment, not just underlying business performance. By comparing earnings per share (EPS) and share price changes over time, we can get a feel for how investor attitudes to a company have morphed over time.

During the last year Resideo Technologies saw its earnings per share (EPS) drop below zero. While some may see this as temporary, we're a skeptical bunch, and so we're a little surprised to see the share price go up. It may be that the company has done well on other metrics.

Revenue was pretty flat year on year, but maybe a closer look at the data can explain the market optimism.

The company's revenue and earnings (over time) are depicted in the image below (click to see the exact numbers).

earnings-and-revenue-growth
NYSE:REZI Earnings and Revenue Growth February 8th 2021

It's good to see that there was some significant insider buying in the last three months. That's a positive. On the other hand, we think the revenue and earnings trends are much more meaningful measures of the business. You can see what analysts are predicting for Resideo Technologies in this interactive graph of future profit estimates.

A Different Perspective

Resideo Technologies shareholders should be happy with the total gain of 147% over the last twelve months. And the share price momentum remains respectable, with a gain of 39% in the last three months. Demand for the stock from multiple parties is pushing the price higher; it could be that word is getting out about its virtues as a business. It's always interesting to track share price performance over the longer term. But to understand Resideo Technologies better, we need to consider many other factors. Even so, be aware that Resideo Technologies is showing 3 warning signs in our investment analysis , and 1 of those shouldn't be ignored...

Resideo Technologies is not the only stock that insiders are buying. For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.

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What are the risks and opportunities for Resideo Technologies?

Resideo Technologies, Inc. develops, manufactures, and sells comfort, residential thermal, and security solutions to the commercial and residential end markets in the United States, Europe, and internationally.

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Rewards

  • Trading at 41% below our estimate of its fair value

  • Earnings are forecast to grow 11.03% per year

  • Earnings have grown 45% per year over the past 5 years

Risks

  • Debt is not well covered by operating cash flow

  • Large one-off items impacting financial results

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Resideo Technologies

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