A Fresh Look at Alarm.com Holdings (ALRM) Valuation Following Recent Share Price Slide

Alarm.com Holdings (ALRM) shares have drifted lower, with the stock falling around 4% over the past week and 10% for the month. Investors are keeping a close eye on the company's fundamentals and recent performance trends.

See our latest analysis for Alarm.com Holdings.

This downturn follows a year where Alarm.com Holdings' share price return has lagged, with its latest close at $49.88 capping off a steady pullback. While the company is posting modest gains in annual revenues and profits, momentum has been fading as seen in its 12-month total shareholder return of -7.13%. Longer timeframes show a similar trend.

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With Alarm.com Holdings now trading at a significant discount to analyst price targets and recent pullbacks weighing on sentiment, the big question for investors is whether this sets up a compelling buying opportunity or if the market already reflects the company's growth prospects.

Most Popular Narrative: 27% Undervalued

Analyst consensus believes Alarm.com Holdings is trading far below its fair value, with a projected worth much higher than the current market price. The difference between the present share price and narrative fair value points to potential upside, assuming the narrative assumptions hold true.

Continued global expansion of connected devices and smart home adoption, coupled with Alarm.com's focus on both residential and commercial markets (including international growth and energy/grid management), is expected to drive new subscriber additions and increase recurring SaaS revenue over the long term. Heightened awareness around security, privacy, and the shift to cloud-based monitoring platforms is underpinning adoption of advanced, AI-powered video analytics and access control solutions, which supports ARPU expansion and margin uplift as consumers and businesses prioritize robust, integrated security.

Read the complete narrative.

This fair value projection is built on optimistic growth in software revenues and expanding margins. What exactly are the bold expectations for profits and recurring cash flows that drive this price target higher? Uncover the ambitious assumptions behind the narrative.

Result: Fair Value of $68.71 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, persistent supply chain challenges or slow subscriber growth in core markets could undermine the bullish outlook for Alarm.com Holdings.

Find out about the key risks to this Alarm.com Holdings narrative.

Build Your Own Alarm.com Holdings Narrative

If you see things differently, or are curious to draw your own conclusions from the data, you can craft a personal view in just a few minutes with Do it your way.

A good starting point is our analysis highlighting 5 key rewards investors are optimistic about regarding Alarm.com Holdings.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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