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Bear of the Day: Resideo Technologies (REZI)
Taking a closer look at Resideo Technologies' (REZI - Free Report) ) stock reveals why its lands a Zacks Rank #5 (Strong Sell) and the Bear of the Day.
Resideo provides security solutions primarily in residential environments and is part of the top-rated Zacks Security and Safety Services Industry which is in the top 23% of over 250 Zacks industries.
However, Resideo appears to be losing its footing in the competitive industry which hosts a number of highly-ranked stocks at the moment including Axon Enterprise (AXON - Free Report) ), Lakeland Industries (LAKE - Free Report) ), and MSA Safety (MSA - Free Report) ) which all sport a Zacks Rank #1 (Strong Buy).
Declining Earnings Estimates
There are a number of stocks in the Zacks Security and Safety Services Industry that are seeing rising earnings estimates but Resideo’s have started to decline.
Over the last 60 days Resideo‘s fiscal 2023 and FY24 EPS estimates are down -5% and -6% respectively.
Considering the broader business environment is strong, this is cause for concern and indicates there are better options to choose from such as Axon, Lakeland, and MSA Safety.
Image Source: Zacks Investment Research
Stalling EPS Growth
With Resideo’s stock trading at $17, earnings are now expected to be virtually flat this year but rise 13% in FY24 at $2.17 per share. Still, the trend in declining earnings estimate revisions is alarming and points to more downside risk ahead in Resideo stock.
Digging a little deeper, Resideo’s bottom line has stalled in recent years since the company went public in October 2018.
Earnings of $2.47 per share in 2018 are still the highest since the company went public and this year’s EPS projections of $1.91 a share would still represent a -30% decrease over the last six years.
Image Source: Zacks Investment Research
Bottom Line
While Resideo stock is up +7% year to date it’s still down -32% since going public in 2018 and investors may want to stay on the sidelines for now with earnings estimates declining.
There are better options in the top-rated Zacks Security and Safety Services Industry at the moment and should be better opportunities to potentially invest in Resideo stock in the future.