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Why Alarm.com’s Latest Earnings are Crucial for Investors
Alarm.com Holdings (ALRM) recently released its first-quarter earnings for 2026, showcasing impressive double-digit revenue growth, an earnings surprise, upgraded full-year guidance, innovative AI-driven video tools, and early warnings about hardware costs.
Explore our latest analysis for Alarm.com Holdings.
The stock experienced a 3.43% increase in share price over one day, and a 5.83% gain over the past week, indicating a short-term boost from the earnings surprise and upgraded guidance. However, the one-year total shareholder return of 15.02% and five-year total shareholder return of 41.44% reveal a concerning trend in longer-term momentum.
For those intrigued by Alarm.com’s focus on AI and IoT, it’s worthwhile to examine other emerging leaders in AI through our 60 profitable AI stocks that aren’t just burning cash
Trading at $47 against an analyst target of $58, Alarm.com presents a pivotal question: do the recent gains from AI and upgraded guidance indicate room for growth, or is the current stock price already reflective of future potential?
Current Valuation: 19% Undervalued
In comparison to Alarm.com’s last closing price of $47, the prevailing valuation narrative suggests a fair value of $58, based on a comprehensive analysis of earnings and cash flow, discounted at 9.85%.
The ongoing global expansion of connected devices and the rising popularity of smart homes, combined with Alarm.com’s focus on both residential and commercial markets (including international growth and energy/grid management), are expected to support new subscriber growth and boost recurring SaaS revenue over time.
Increased awareness around security and privacy, alongside the transition to cloud-based monitoring solutions, is further encouraging the adoption of advanced, AI-enabled video analytics and access control technologies. This trend is likely to enhance average revenue per user (ARPU) and improve margins, as consumers and businesses prioritize effective, integrated security measures.
Curious about the reasoning behind the $58 fair value? The narrative builds on consistent top-line growth, stronger margins, and projected earnings multiples that lag behind many of its software counterparts.
Conclusion: Fair Value of $58 (UNDERVALUED)
Explore the full narrative to comprehend the forecasts.
Nevertheless, this valuation might be at risk if tariffs on hardware result in unforeseen margin pressures, or if major tech rivals challenge pricing and retention strategies.
