ALRM Should I Buy
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Alarm.com Holdings Inc (ALRM) is not a strong buy for a beginner, long-term investor at this time. Despite positive revenue growth and better-than-expected earnings, the bearish technical indicators, insider selling, and negative analyst sentiment suggest caution. The stock's recent post-market price increase may not be sustainable given the broader concerns about the software sector and competitive pressures from AI proliferation.
The technical indicators are bearish. The MACD is below 0 and negatively contracting, the RSI is neutral at 31.694, and the moving averages are in a bearish alignment (SMA_200 > SMA_20 > SMA_5). The stock is trading near resistance levels (R1: 48.044) but has weak support at 45.072. Overall, the trend suggests limited upward momentum.
Q4 Non-GAAP EPS of $0.72 exceeded expectations by $0.
Revenue for SaaS and licenses grew 9.2% YoY, and GAAP net income rose 14.53% YoY.
Hedge funds are increasing their positions, with buying up 571.25% over the last quarter.
Insiders are selling heavily, with a 3427.23% increase in selling activity over the last month.
JPMorgan downgraded the stock to Underweight and reduced the price target to $40, citing concerns about the software sector's defensibility amid AI proliferation.
Gross margin dropped significantly (-933.66% YoY) in Q4 2025.
In Q4 2025, Alarm.com reported revenue of $261.7 million, an 8.0% YoY increase. SaaS and license revenue for 2025 grew 9.2% YoY to $689.4 million. Net income increased 14.53% YoY to $131.6 million, and EPS rose 8.93% YoY to 0.61. However, gross margin dropped significantly (-933.66% YoY).
JPMorgan downgraded the stock to Underweight and reduced the price target from $55 to $40, citing concerns about the software sector's underperformance and competitive pressures from AI proliferation.
