Driven by the increasing penetration of value-added services, expect the trend of rising Average Revenue Per User (ARPU) to continue at AlarmForce (AlarmForce Stock Quote, Chart, News: TSX:AF), says Industrial Alliance Securities analyst Steve Li.
Tomorrow, after market close, AlarmForce will report its Q1, 2015 results. Li thinks the company will generate EBITDA of $4.1-million on revenue of $13.4-million in the first quarter, a topline that would be a 3% bump over last year’s Q1.
The analyst thinks services such as AlarmCare, AlarmForceConnect, VideoRelay and CellWave will continue to drive the company’s ARPU. Li thinks ARPU will reach $30.63 in Q1, 2015, up from $30.40 in the same period last year.
Li speculates that the improving numbers could make AlarmForce a takeout candidate.
“As previously mentioned, the value of an alarm company for a strategic buyer is based on a multiple of EV/RMR and EV/Subscriber, and the trends for the RMR and the number of subscribers. Clearly, AlarmForce can be attractive to a suitor given its lower multiple; AF trades at 27.6× EV/RMR and 777.5× EV/Subs, comparatively to 53.6× EV/RMR and 2,214.4× EV/Subs for ADT and 59.1× EV/RMR and 2,461.3× EV/Subs for Ascent Capital Group (the holding Company for Monitronics International),” said Li.
In a research update to clients today, Li maintained his “Strong Buy” rating and one year target of $14.50 on AlarmForce, implying a return of 44% at the time of publication.
We Hate Paywalls Too!
At Cantech Letter we prize independent journalism like you do. And we don't care for paywalls and popups and all that noise That's why we need your support. If you value getting your daily information from the experts, won't you help us? No donation is too small.