Resideo
REZI
$20.03
-7.01%
Resideo Technologies, Inc. is a global manufacturer and distributor of sensing and control products for residential and commercial markets, including HVAC controls, security systems, and fire safety solutions. As a spin-off from Honeywell, it holds a strong market position in the smart home and building automation space, leveraging its established brand and distribution network. The current investor narrative revolves around the company's strategic separation of its ADI distribution business, which is expected to unlock value and improve margins, but recent weak guidance and a sharp stock drop have raised concerns about near-term growth and execution. The company is also under scrutiny for its operational performance and ability to navigate a challenging macroeconomic environment.…
REZI
Resideo
$20.03
Related headlines
Investment Opinion: Should I buy REZI Today?
Based on the analysis, I rate REZI as a Hold. The stock is trading at a significant discount to its historical valuation and analyst targets, but the weak guidance and operational challenges create uncertainty. The consensus recommendation is 'Buy' with an average target of $39.25, implying 91.5% upside, but this optimism is not reflected in the stock's recent performance, suggesting the market is skeptical of the company's ability to execute.
Sign up to view all
REZI 12-Month Price Forecast
The AI assessment is neutral with medium confidence. The stock is deeply undervalued on a PS basis, but the negative free cash flow and high leverage pose significant risks. The potential for the ADI spin-off to unlock value is a key positive, but execution risk is high. If the company can improve free cash flow and execute the spin-off successfully, the stock could re-rate significantly. However, if guidance remains weak and cash burn continues, the downside is limited but real. The stance would upgrade to bullish if free cash flow turns positive and revenue growth accelerates above 10%, and downgrade to bearish if the spin-off fails or debt levels increase materially.
Wall Street consensus
Most Wall Street analysts maintain a constructive view on Resideo's 12-month outlook, with a consensus price target around $34.25 and implied upside of +71.0% versus the current price.
Average Target
$34.25
0 analysts
Implied Upside
+71.0%
vs. current price
Analyst Count
—
covering this stock
Price Range
$27 - $45
Analyst target range
Analyst coverage is limited with only 4 analysts, and the consensus recommendation is 'Buy' with a mean rating of 1.75. The average target price is $39.25, implying a significant upside of 91.5% from the current price of $20.50. The target range is wide, from a low of $27.00 to a high of $55.00, indicating high uncertainty. The high target of $55 suggests expectations of a successful ADI spin-off and margin expansion, while the low target of $27 may reflect concerns about execution and market conditions. Recent institutional actions show Morgan Stanley maintaining an Overweight rating, but JP Morgan has a Neutral stance, and the stock has seen a sharp decline after weak guidance, suggesting mixed sentiment.
Bulls vs Bears: REZI Investment Factors
The bull case for REZI rests on deep valuation discounts, analyst optimism, and the potential for the ADI spin-off to unlock value. However, the bear case is equally compelling, with weak guidance, negative free cash flow, and high leverage creating significant near-term risks. Currently, the bearish evidence is stronger, as the stock's sharp decline and operational challenges overshadow the potential upside. The most critical tension is whether the ADI spin-off and margin expansion can materialize quickly enough to offset the cash burn and debt burden. If the spin-off succeeds and margins improve, the stock could re-rate significantly; if not, the downside to the 52-week low of $18.59 is only -9.3%, but further losses are possible if guidance remains weak.
Bullish
- Deep value at 0.49x PS: REZI trades at a trailing PS ratio of 0.49x, far below the industry average of ~1.5x and its own historical range of 1.5x-3.3x over the past two years. This suggests the market is pricing in significant deterioration, but also offers a potential margin of safety if the company executes on its turnaround.
- Analyst targets imply 91% upside: With an average analyst target of $39.25 and a high target of $55.00, the stock is trading at $20.50, implying a potential upside of 91.5% to the average and 168% to the high. Even the low target of $27.00 represents a 31.7% upside, indicating that analysts see substantial value.
- Revenue growth accelerating: Q1 2026 revenue grew 8.02% YoY to $1.912 billion, up from $1.895 billion in Q4 2025 and $1.864 billion in Q3 2025. This sequential acceleration suggests improving demand for HVAC and security products, which could drive earnings recovery.
- Strategic ADI spin-off potential: The planned separation of the ADI distribution business is expected to unlock value and improve margins. Alta Fox's $44 million investment (10% of AUM) signals confidence in this strategy, and the stock previously surged 66% on such news, indicating strong shareholder support.
Bearish
- Weak guidance triggers 21% drop: Q2 2026 earnings beat was overshadowed by weak full-year guidance, causing a 21% stock drop. This indicates management's outlook is below expectations, and the market is skeptical of near-term growth, leading to a sharp de-rating.
- Negative free cash flow of -$1.34B: Trailing twelve-month free cash flow is -$1.338 billion, a severe cash burn that raises concerns about the company's ability to fund operations and reduce debt. This is a critical risk, as it limits financial flexibility and could lead to dilution or asset sales.
- High debt-to-equity of 1.11x: With a debt-to-equity ratio of 1.105, REZI carries significant leverage, which amplifies financial risk. Interest expenses of $47 million in Q1 2026 consume a large portion of operating income, and rising rates could further pressure earnings.
- Negative trailing EPS and net margin: Trailing EPS is -$0.14 and net margin is -7.05% due to a massive $825 million loss in Q2 2025. While Q1 2026 returned to profitability, the inconsistency highlights operational volatility and the risk of further write-downs or impairments.
REZI Technical Analysis
The stock is in a pronounced downtrend, with a 1-year price change of -35.76% and a 6-month change of -42.79%. Currently trading at $20.50, it is near the lower end of its 52-week range, at approximately 65% of the range (calculated as (20.50 - 18.59) / (31.52 - 18.59) = 0.65). This positioning suggests the stock is closer to its lows, indicating bearish momentum and potential value opportunity, but also risk of further decline if support fails. The stock has underperformed the S&P 500 significantly, with relative strength of -56.13% over the past year.
Beta
1.63
1.63x market volatility
Max Drawdown
-55.0%
Largest decline past year
52-Week Range
$19-$32
Price range past year
Annual Return
-37.5%
Cumulative gain past year
| Period | REZI Return | S&P 500 |
|---|---|---|
| 1m | -42.2% | +1.9% |
| 3m | -30.4% | +2.3% |
| 6m | -45.5% | +10.6% |
| 1y | -37.5% | +19.5% |
| ytd | -43.0% | +11.8% |
Bobby - Your AI Investment Partner
Get real-time data, AI-driven personalized investment analysis to make smarter investment decisions
REZI Fundamental Analysis
Revenue for the latest quarter (Q1 2026) was $1.912 billion, up 8.02% year-over-year, indicating modest growth. However, the multi-quarter trend shows fluctuating revenue, with Q4 2025 at $1.895 billion and Q3 2025 at $1.864 billion, suggesting a slight acceleration. The company's net income for Q1 2026 was $38 million, a sharp recovery from the -$825 million loss in Q2 2025, but still low relative to revenue. Gross margin stands at 27.2%, which is stable but below the industry average for communication equipment, indicating potential pricing pressure or cost inefficiencies. The company's profitability is inconsistent, with a net margin of 1.99% in Q1 2026, but the trailing twelve-month net margin is -7.05% due to the prior year's loss, highlighting ongoing volatility.
Quarterly Revenue
$1.9B
2026-04
Revenue YoY Growth
+8.0%
YoY Comparison
Gross Margin
27.2%
Latest Quarter
Free Cash Flow
$-1.3B
Last 12 Months
Revenue & Net Income Trends (2 Years)
Revenue Breakdown
Open an Account, get $2 TSLA now!
Valuation Analysis: Is REZI Overvalued?
Given the negative trailing EPS of -$0.14, the PE ratio is not meaningful, so I selected the price-to-sales (PS) ratio as the primary valuation metric. The trailing PS ratio is 0.49x, which is low, but the forward PE is 6.55x, implying the market expects a significant earnings recovery. The PS ratio of 0.49x is well below the industry average of approximately 1.5x, suggesting the stock is trading at a discount, but this may reflect the company's lower margins and operational risks. Historically, the stock's PS ratio has ranged from 1.5x to 3.3x over the past two years, so the current 0.49x is near historical lows, indicating either a deep value opportunity or a deterioration in fundamentals.
PE
-6.5x
Latest Quarter
vs. Historical
Low-End
5-Year PE Range 7x~28x
vs. Industry Avg
N/A
Industry PE ~N/A*
EV/EBITDA
-49.6x
Enterprise Value Multiple
Investment Risk Disclosure
Financial risks are substantial. The company's negative free cash flow of -$1.34 billion TTM indicates a severe cash burn, which could force asset sales or equity dilution. With a debt-to-equity ratio of 1.11x, interest expenses of $47 million in Q1 2026 consume a significant portion of operating income, and any rise in interest rates would further pressure earnings. The net margin of -7.05% TTM reflects the impact of a $825 million loss in Q2 2025, and while Q1 2026 returned to profitability, the volatility in earnings suggests a lack of stability. Additionally, the payout ratio is negative, indicating no dividend support for investors.