Comparing Alarm.com (NASDAQ:ALRM) & ADT (NYSE:ADT)

Alarm.com (NASDAQ:ALRM) and ADT (NYSE:ADT) are both mid-cap industrials companies, but which is the better stock? We will compare the two companies based on the strength of their risk, valuation, dividends, analyst recommendations, profitability, institutional ownership and earnings.

Volatility and Risk

Alarm.com has a beta of 1.06, suggesting that its share price is 6% more volatile than the S&P 500. Comparatively, ADT has a beta of 1, suggesting that its share price has a similar volatility profile to the S&P 500.

Profitability

This table compares Alarm.com and ADT’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Alarm.com	12.92%	14.26%	5.32%
ADT	12.52%	18.96%	4.38%

Valuation and Earnings

This table compares Alarm.com and ADT”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Alarm.com	$939.83 million	2.70	$124.12 million	$2.36	21.51
ADT	$4.90 billion	1.39	$501.05 million	$0.69	11.83

ADT has higher revenue and earnings than Alarm.com. ADT is trading at a lower price-to-earnings ratio than Alarm.com, indicating that it is currently the more affordable of the two stocks.

Analyst Ratings

This is a summary of recent ratings and recommmendations for Alarm.com and ADT, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Alarm.com	0	4	0	1	2.40
ADT	0	4	2	0	2.33

Alarm.com presently has a consensus price target of $64.67, indicating a potential upside of 27.37%. ADT has a consensus price target of $9.38, indicating a potential upside of 14.82%. Given Alarm.com’s stronger consensus rating and higher possible upside, research analysts clearly believe Alarm.com is more favorable than ADT.

Insider & Institutional Ownership

91.7% of Alarm.com shares are owned by institutional investors. Comparatively, 87.2% of ADT shares are owned by institutional investors. 5.6% of Alarm.com shares are owned by company insiders. Comparatively, 2.7% of ADT shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Summary

Alarm.com beats ADT on 11 of the 15 factors compared between the two stocks.

About Alarm.com

Alarm.com Holdings, Inc. provides various Internet of Things (IoT) and solutions for residential, multi-family, small business, and enterprise commercial markets in North America and internationally. The company operates through two segments, Alarm.com and Other. It offers solutions to control and monitor security systems, as well as to IoT devices, including door locks, garage doors, thermostats, and video cameras; and video monitoring and analytics solutions, such as video analytics, escalated events, video doorbells, intelligent integration, live streaming, secure cloud storage, and video alerts. The company also provides scenes, video analytics triggers, thermostat schedules, responsive savings, precision comfort, energy usage monitoring, places feature, whole home water safety, and solar monitoring solutions, as well as heating, ventilation, and air conditioning monitoring services. In addition, it offers demand response programs, commercial grade video, commercial video analytics, access control, cell connectors, enterprise dashboard and multi-site management, energy savings, protection for valuables and inventory, temperature monitoring, and daily safeguard solutions. Further, the company provides a permission-based online portal that provides account management, sales, marketing, training, and support tools; a unified interface that displays key operational and customer experience indicators, including technician performance, system reliability and customer engagement metrics; installation and support services; MobileTech Application and Remote Toolkit; video health reports; smart gateway; AI-powered enhancements to professional monitoring and false alarm reduction; Web services and business intelligence; sales, marketing, and training services; and home builder programs. Additionally, it offers electric utility grid and water management, indoor gunshot detection, and health and wellness and data-rich emergency response solutions. The company was founded in 2000 and is based in Tysons, Virginia.

About ADT

ADT Inc. provides security, interactive, and smart home solutions to residential and small business customers in the United States. It operates through two segments, Consumer and Small Business, and Solar. The company provides burglar and life safety alarms, smart security cameras, smart home automation systems, and video surveillance systems. It primarily offers security designed to detect intrusion, control access, sense movement, smoke, fire, carbon monoxide, flooding, temperature, and other environmental conditions and hazards; and address personal medical emergencies, such as injuries or unanticipated falls. The company also provides automation and smart home solutions that allow customers to use their smart phones, smart phone application, or touchscreen panels in their homes to arm and disarm their security systems; record and view real-time video; and creates customized and automated schedules for connected devices; programs systems to react to defined events; integrates system with third-party connected devices, such as cameras, lights, thermostats, appliances, and garage doors, as well as offers monitoring and maintenance services. In addition, the company offers energy storage solutions, energy efficiency upgrades, and roofing services. It offers its products under the ADT, ADT Pulse, ADT+, and ADT Commercial brand names. The company was formerly known as Prime Security Services Parent, Inc. and changed its name to ADT Inc. in September 2017. ADT Inc. was founded in 1874 and is headquartered in Boca Raton, Florida.