Arlo Technologies, Inc. (NYSE: ARLO)

Sector: Industrials Industry: Building Products & Equipment CIK: 0001736946
Market Cap 1.25 Bn
P/B 9.70
P/E 291.50
P/S 2.46
ROIC (Qtr) -3.37
Div Yield % 0.00
Rev 1y % (Qtr) 1.35
Total Debt (Qtr) 7.21 Mn
Debt/Equity (Qtr) 0.06
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About

Arlo Technologies, Inc. (ARLO), a prominent player in the home and business security industry, is revolutionizing the way people protect their valuables through its advanced security services. The company's primary business activities encompass the provision of a globally scalable cloud platform, sophisticated monitoring and analytics capabilities, and acclaimed app-controlled devices that collectively create a personalized security ecosystem. Arlo's revenue is predominantly derived from the sale of smart security devices. These include a range...

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Investment thesis

Bull case

  • Strong operating cash flow of 65.62M provides robust 9.10x coverage of total debt 7.21M, indicating excellent debt servicing capability and financial flexibility.
  • Strong tangible asset base of 339.83M provides 47.13x coverage of total debt 7.21M, indicating robust asset backing and low credit risk.
  • Tangible assets of 339.83M provide exceptional 8.48x coverage of deferred revenue 40.07M, showing strong service capability backing.
  • Robust free cash flow of 54.55M exceeds capital expenditure of 11.07M by 4.93x, indicating strong organic growth funding capability.
  • Robust tangible asset base of 339.83M provides 3.80x coverage of working capital 89.50M, indicating strong operational backing.

Bear case

  • Operating cash flow of 65.62M barely covers its investment activities of (30.82M), with a coverage ratio of -2.13, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • Investment activities of (30.82M) provide weak support for R&D spending of 68.06M, which is -0.45x, suggesting potentially insufficient investment in innovation relative to other capital deployment.
  • The company's operating cash flow of 65.62M shows concerning coverage of stock compensation expenses of 59.63M, with a 1.10 ratio indicating potential earnings quality issues.
  • Operating earnings of 4.83M show weak coverage of depreciation charges of 3.39M, with a 1.43 ratio indicating high capital intensity and potential reinvestment needs.
  • Retained earnings of (388.80M) provide limited buffer against comprehensive income items of 35000, which is -11108.66x, indicating elevated exposure to market risks.

Consolidation Items Breakdown of Revenue (2024)

Product and Service Breakdown of Revenue (2024)

Peer comparison

Companies in the Building Products & Equipment
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 TT Trane Technologies plc 104.89 Bn 35.94 4.92 4.62 Bn
2 JCI Johnson Controls International plc 91.64 Bn 26.98 3.82 9.71 Bn
3 CARR CARRIER GLOBAL Corp 56.66 Bn 38.18 2.61 12.25 Bn
4 LII Lennox International Inc 19.91 Bn 24.71 3.83 1.77 Bn
5 CSL Carlisle Companies Inc 17.50 Bn 23.63 3.49 2.88 Bn
6 MAS Masco Corp /De/ 15.94 Bn 19.68 2.11 3.17 Bn
7 OC Owens Corning 13.83 Bn 13.90 1.63 5.61 Bn
8 WMS Advanced Drainage Systems, Inc. 13.26 Bn 28.18 4.44 1.45 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 3.42 2.00
EV to Cash from Ops. EV/CFO 18.27 13.48
EV to Debt EV to Debt 166.31 10.94
EV to EBIT EV/EBIT 248.00 24.16
EV to EBITDA EV/EBITDA -934.61 -11.14
EV to Free Cash Flow [EV/FCF] EV/FCF 21.98 46.78
EV to Market Cap EV to Market Cap 0.96 1.12
EV to Revenue EV/Rev 2.35 2.81
Price to Book Value [P/B] P/B 9.70 4.24
Price to Earnings [P/E] P/E 291.50 47.40
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Dividend Coverage Ratio 0.00 0.80
Dividend Payout Ratio % Div Payout % (Qtr) 0.00 11.22
Dividend per Basic Share Div per Share (Qtr) 0.00 0.71
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 0.00 10.90
Interest Coverage Interest Coverage 0.00 111.58
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) -450.57 -24.93
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) 6.60 61.26
Dividend Growth (1y) % Dividend Growth (1y) % 0.00 1.67
EBIAT Growth (1y) % EBIAT 1y % (Qtr) 117.24 -186.82
EBITDA Growth (1y) % EBITDA 1y % (Qtr) 95.08 -57.93
EBIT Growth (1y) % EBIT 1y % (Qtr) 120.27 -102.26
EBT Growth (1y) % EBT 1y % (Qtr) 120.27 -299.15
EPS Growth (1y) % EPS 1y % (Qtr) 116.00 -598.34
FCF Growth (1y) % FCF 1y % (Qtr) 7.90 89.70
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) 11.66 -3.62
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 1.45 0.88
Cash Payout Ratio Cash Payout (Qtr) 0.00 0.13
Cash Ratio Cash Ratio (Qtr) 0.41 1.57
Current Ratio Curr Ratio (Qtr) 1.42 3.42
Debt to Equity Ratio Debt/Equity (Qtr) 0.06 0.79
Interest Cover Ratio Interest Cover Ratio 0.00 111.58
Times Interest Earned Times Interest Earned 0.00 111.58
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 1.60 3.54
EBIT Margin % EBIT Margin % (Qtr) 0.95 1.23
EBT Margin % EBT Margin % (Qtr) 0.95 -1.76
Gross Margin % Gross Margin % (Qtr) 41.60 28.65
Net Profit Margin % Net Margin % (Qtr) 0.80 -3.80