Is There Now An Opportunity In Alarm.com Holdings, Inc. (NASDAQ:ALRM)?

Alarm.com Holdings, Inc. (NASDAQ:ALRM), is not the largest company out there, but it saw significant share price movement during recent months on the NASDAQGS, rising to highs of US$71.19 and falling to the lows of US$52.26. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether Alarm.com Holdings' current trading price of US$53.33 reflective of the actual value of the mid-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Alarm.com Holdings’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

Check out our latest analysis for Alarm.com Holdings

What's The Opportunity In Alarm.com Holdings?

According to our valuation model, Alarm.com Holdings seems to be fairly priced at around 11% below our intrinsic value, which means if you buy Alarm.com Holdings today, you’d be paying a reasonable price for it. And if you believe that the stock is really worth $60.23, then there’s not much of an upside to gain from mispricing. What's more, Alarm.com Holdings’s share price may be more stable over time (relative to the market), as indicated by its low beta.

What does the future of Alarm.com Holdings look like?

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. With profit expected to grow by a double-digit 11% over the next couple of years, the outlook is positive for Alarm.com Holdings. It looks like higher cash flow is on the cards for the stock, which should feed into a higher share valuation.

What This Means For You

Are you a shareholder? It seems like the market has already priced in ALRM’s positive outlook, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the track record of its management team. Have these factors changed since the last time you looked at the stock? Will you have enough conviction to buy should the price fluctuates below the true value?

Are you a potential investor? If you’ve been keeping an eye on ALRM, now may not be the most optimal time to buy, given it is trading around its fair value. However, the positive outlook is encouraging for the company, which means it’s worth further examining other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.

Keep in mind, when it comes to analysing a stock it's worth noting the risks involved. While conducting our analysis, we found that Alarm.com Holdings has 1 warning sign and it would be unwise to ignore it.

If you are no longer interested in Alarm.com Holdings, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

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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.