Critical Analysis: Roblox (NYSE:RBLX) and Alarm.com (NASDAQ:ALRM)

Roblox (NYSE:RBLXGet Rating) and Alarm.com (NASDAQ:ALRMGet Rating) are both consumer discretionary companies, but which is the better investment? We will contrast the two companies based on the strength of their profitability, institutional ownership, analyst recommendations, risk, valuation, earnings and dividends.

Analyst Ratings

This is a breakdown of current ratings and recommmendations for Roblox and Alarm.com, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Roblox 1 7 8 0 2.44
Alarm.com 0 2 3 1 2.83

Roblox presently has a consensus target price of $51.56, indicating a potential upside of 62.10%. Alarm.com has a consensus target price of $89.60, indicating a potential upside of 36.92%. Given Roblox’s higher probable upside, analysts clearly believe Roblox is more favorable than Alarm.com.

Valuation & Earnings

This table compares Roblox and Alarm.com’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Roblox $1.92 billion 8.98 -$491.65 million ($0.90) -35.34
Alarm.com $748.97 million 4.38 $51.17 million $0.90 72.71

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

Insider & Institutional Ownership

68.0% of Roblox shares are owned by institutional investors. Comparatively, 91.8% of Alarm.com shares are owned by institutional investors. 28.2% of Roblox shares are owned by insiders. Comparatively, 6.7% of Alarm.com shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.

Profitability

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

Net Margins Return on Equity Return on Assets
Roblox -25.01% -89.70% -13.25%
Alarm.com 5.95% 11.71% 5.73%

Volatility & Risk

Roblox has a beta of 2.29, suggesting that its stock price is 129% more volatile than the S&P 500. Comparatively, Alarm.com has a beta of 1.21, suggesting that its stock price is 21% more volatile than the S&P 500.

Summary

Alarm.com beats Roblox on 9 of the 15 factors compared between the two stocks.

About Roblox (Get Rating)

Roblox Corporation develops and operates an online entertainment platform. The company offers Roblox Studio, a free toolset that allows developers and creators to build, publish, and operate 3D experiences, and other content; Roblox Client, an application that allows users to explore 3D digital world; Roblox Education for learning experiences; and Roblox Cloud, which provides services and infrastructure that power the human co-experience platform. It serves customers in the United States, the United Kingdom, Canada, Europe, China, the Asia-Pacific, and internationally. The company was incorporated in 2004 and is headquartered in San Mateo, California.

About Alarm.com (Get Rating)

Alarm.com Holdings, Inc. provides cloud-based solutions for smart residential and commercial properties in the United States and internationally. It operates in two segments, Alarm.com and Other. The company provides interactive security solutions to control and monitor their security systems, as well as connected security devices, including door locks, motion sensors, door locks, garage doors, Internet of Things, thermostats, and video cameras; and video monitoring solutions, such as video analytics, live streaming, video doorbell, video clips, video alerts, continuous high definition recording, and commercial video surveillance solutions. It also offers intelligent automation and energy management solutions comprising scenes button; smart thermostat schedules; responsive savings; precision comfort; energy usage monitoring; heating, ventilation, and air conditioning monitoring services; whole home water safety solutions; geo-services; and demand response programs. In addition, the company provides commercial solutions, such as daily safeguards, commercial grade video, energy savings, protection for valuables and inventory, temperature monitoring, multi-site management and access control, early identification, simple to use, professionally supported, and easy to maintain. Further, it offers service provider solutions, including a permission-based online portal that offers account management, sales, marketing, training, and support tools; sales, marketing, and training services; and home builder programs, as well as wellness solutions. The company serves residential and commercial subscribers. Alarm.com Holdings, Inc. was founded in 2000 and is based in Tysons, Virginia.

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