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Bull of the Day: Alarm.com (ALRM)

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Alarm.com (ALRM - Free Report) is a Zacks Rank #1 (Strong Buy) that sports a D for Value and an A for Growth. I like that sort of divergence on the growth scores. I also see a 13% short interest position. So this stock fits well with where I have been having success lately.

Earnings History 

I see a great history here with four consecutive beats of the Zacks Consensus Estimate. The most recent beat was 11 cents, or 44% ahead of the estimate. On average the ALRM has topped the Zacks Consensus Estimate by 27% over the last four reports.

We like to see a good earnings history like this because it tells us that management knows how to guide the analysts to a beatable number.

Estimate Revisions 

I know this is a Zacks Rank #1 (Strong Buy) and that usually means that we get a lot of positive earnings estimate revisions, but that doesn’t seem to be the case here. I see a few moves higher, like the 2018 number moving from $1.21 to $1.28 but that really seems to be it.

I have come across this a lot lately as analysts, it seems, are not willing to stick their necks out on the line lately. The recent downturn in the market might have more than a few analysts gun shy about hiking numbers.

Valuation 

I see a nearly 41x forward earnings multiple, and we get a number that high because the topline is showing strong growth of 24% on an annual basis. The Zacks System does not show a price to book multiple so we move on to the price to sales multiple of 6.8x. That is pretty high and part of the reason this is a low Value Style Score stock.

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