Resideo Technologies, Inc. (NYSE: REZI)

Sector: Industrials Industry: Industrial Distribution CIK: 0001740332
Market Cap 5.43 Bn
P/B 1.96
P/E -7.83
P/S 0.73
ROIC (Qtr) 14.25
Div Yield % 0.00
Rev 1y % (Qtr) 1.97
Total Debt (Qtr) 3.17 Bn
Debt/Equity (Qtr) 1.14
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About

Resideo Technologies, Inc., often recognized by its stock symbol RSDI, operates in the technology-driven products and solutions industry. This company has established itself as a leading manufacturer and developer, serving over 150 million homes worldwide. Resideo's operations span across two primary segments: Products and Solutions, and ADI Global Distribution. The Products and Solutions segment is renowned for offering a wide range of products that cater to temperature and humidity control, thermal and combustion solutions, water and indoor air...

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Investment thesis

Bull case

  • Strong free cash flow of (1.33B) provides 444.67x coverage of acquisition spending (3M), indicating disciplined M&A strategy.
  • Tangible assets of 3.95B provide robust 6.64x coverage of other current liabilities 595M, indicating strong asset backing.
  • Tangible assets of 3.95B provide robust 2.42x coverage of current liabilities 1.63B, showing strong asset backing.
  • Strong R&D investment of 162M at 1.60x of capex 101M shows balanced investment in innovation and infrastructure.

Bear case

  • With cash reserves of 345M against inventory of 1.33B, the 0.26 cash-to-inventory ratio suggests potential liquidity risks if inventory turnover slows, particularly concerning given current supply chain volatilities.
  • Investment activities of (102M) provide weak support for R&D spending of 162M, which is -0.63x, suggesting potentially insufficient investment in innovation relative to other capital deployment.
  • Cash reserves of 345M provide limited coverage of acquisition spending of (3M), which is -115x, suggesting aggressive expansion might strain liquidity if market conditions deteriorate.
  • The company's operating cash flow of (1.23B) shows concerning coverage of stock compensation expenses of 58M, with a -21.26 ratio indicating potential earnings quality issues.
  • Free cash flow of (1.33B) provides weak coverage of capital expenditures of 101M, with a -13.21 ratio suggesting additional external financing needs for growth initiatives.

Segments Breakdown of Revenue (2024)

Concentration Risk Type Breakdown of Revenue (2024)

Peer comparison

Companies in the Industrial Distribution
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 GWW W.W. Grainger, Inc. 79.03 Bn 100.02 8.17 2.72 Bn
2 FAST Fastenal Co 53.26 Bn 103.14 13.77 0.44 Bn
3 FERG Ferguson Enterprises Inc. /DE/ 51.30 Bn 26.23 1.65 6.02 Bn
4 WCC Wesco International Inc 14.66 Bn 22.69 0.62 6.53 Bn
5 WSO Watsco Inc 14.11 Bn 154.32 4.58 0.46 Bn
6 POOL Pool Corp 12.34 Bn 638.65 8.05 1.39 Bn
7 CNM Core & Main, Inc. 10.88 Bn 25.02 1.40 2.43 Bn
8 AIT Applied Industrial Technologies Inc 10.79 Bn 28.81 2.41 0.57 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 1.01 2.41
EV to Cash from Ops. EV/CFO -6.72 40.73
EV to Debt EV to Debt 2.61 16.40
EV to EBIT EV/EBIT -18.16 18.05
EV to EBITDA EV/EBITDA 10.33 36.64
EV to Free Cash Flow [EV/FCF] EV/FCF -6.21 77.53
EV to Market Cap EV to Market Cap 1.53 1.51
EV to Revenue EV/Rev 1.11 2.64
Price to Book Value [P/B] P/B 1.96 8.70
Price to Earnings [P/E] P/E -7.83 55.05
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Div Coverage (Qtr) -13.08 49.20
Dividend Payout Ratio % Div Payout % (Qtr) 0.00 22.67
Dividend per Basic Share Div per Share (Qtr) 0.00 1.88
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 0.00 41.28
Interest Coverage Int. cover (Qtr) -4.07 35.27
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) -13.48 -47.49
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) -35.03 77.69
Dividend Growth (1y) % Dividend Growth (1y) % 0.00 6.21
EBIAT Growth (1y) % EBIAT 1y % (Qtr) -334.37 -84.41
EBITDA Growth (1y) % EBITDA 1y % (Qtr) 23.77 -13.74
EBIT Growth (1y) % EBIT 1y % (Qtr) -231.41 -33.83
EBT Growth (1y) % EBT 1y % (Qtr) -305.05 -41.73
EPS Growth (1y) % EPS 1y % (Qtr) -518.92 -109.80
FCF Growth (1y) % FCF 1y % (Qtr) -421.45 -14.68
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) 20.74 1.31
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.91 1.45
Cash Payout Ratio Cash Payout (Qtr) 0.00 0.20
Cash Ratio Cash Ratio (Qtr) 0.21 0.34
Current Ratio Curr Ratio (Qtr) 1.88 2.47
Debt to Equity Ratio Debt/Equity (Qtr) 1.14 0.88
Interest Cover Ratio Int Coverage (Qtr) -4.07 35.27
Times Interest Earned Times Interest Earned (Qtr) -4.07 35.27
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) -3.60 7.33
EBIT Margin % EBIT Margin % (Qtr) -6.13 5.34
EBT Margin % EBT Margin % (Qtr) -7.64 4.29
Gross Margin % Gross Margin % (Qtr) 29.10 28.45
Net Profit Margin % Net Margin % (Qtr) -9.30 2.59