REZI

We rate RESIDEO TECHNOLOGIES, INC. (REZI) as a Hold with a composite score of 53.0/100 at a current price of $39.77. The stock presents a mixed quantitative picture — neither compelling enough to warrant new accumulation nor weak enough to justify selling for existing holders. Our factors are split, and the overall profile suggests patience is warranted.

The rating is primarily driven by strength in momentum (76th percentile) and value (53th percentile), which together account for the majority of the composite score. Offsetting weakness in investment (32th percentile) and stability (37th percentile) tempers our overall conviction. We assign a No Moat rating (37/100), Very High uncertainty, and Poor capital allocation.

Key items to watch: balance sheet deleveraging progress; the path to profitability. Any material change in these dynamics could warrant a reassessment of our rating. The moat trend is stable, which suggests the competitive landscape is stable for now.

RESIDEO TECHNOLOGIES, INC. holds a mid-tier position (#30 of 50) within the Wholesale Trade sector, based on our composite quantitative scoring across quality, value, momentum, and stability factors. The composite score of 53.0/100 places it at rank #1531 in our full 7,333-stock universe. At $6.1B in market capitalization, RESIDEO TECHNOLOGIES, INC. is a mid-cap player in the Wholesale Trade space, which limits certain scale advantages but may allow for more agile strategic execution.

The near-term outlook is constructive, with revenue growing at 17% and momentum in the 76th percentile confirming positive market sentiment and institutional accumulation. The combination of strong top-line growth and favorable price dynamics suggests the company is executing well on its growth strategy. Investment factor at the 32th percentile indicates reinvestment patterns that investors should monitor for sustainability.

The margin cascade tells an important story: gross margins of 29% (+6.7pp vs sector) narrow to operating margins of 8% (+4.7pp vs sector) and net margins of -8.2%, yielding a gross-to-net conversion rate of -28%. The significant margin erosion from gross to net suggests elevated operating expenses, high interest costs, or other structural drags that warrant monitoring.

At a current price of $39.77, RESIDEO TECHNOLOGIES, INC. is trading near fair value based on current fundamentals. Our value factor score of 53/100 reflects a composite assessment across multiple valuation metrics including price-to-earnings, price-to-book, EV/EBITDA, and price-to-sales ratios relative to both sector peers and the broader market. Valuation metrics are mixed, with no strong signal of mispricing in either direction.

The stock currently trades at a P/E of 39.3x (a 106% premium to the sector median of 19.1x), EV/EBITDA of 11.1x (at a premium), P/B of 2.0x, P/S of 0.7x. The above-sector P/E multiple suggests the market is pricing in superior growth or quality, which our analysis finds only partially justified by current fundamentals.

We assign a Very High uncertainty rating to RESIDEO TECHNOLOGIES, INC.. The stock exhibits multiple compounding risk factors: elevated market sensitivity (beta of 1.50), significant leverage (117% debt-to-equity), current negative profitability (net margin -8.2%). The extreme uncertainty around future cash flows makes precise valuation difficult, and the range of outcomes is exceptionally wide. Only investors with high risk tolerance and extended time horizons should consider this name.

Specific risk factors that inform our assessment include: elevated market sensitivity (beta of 1.50); significant leverage (117% debt-to-equity); current negative profitability (net margin -8.2%); below-average price stability (37th percentile). Each of these factors independently widens the distribution of potential outcomes, and in combination they create a risk profile that demands careful position sizing. The stability factor at the 37th percentile and quality factor at the 41th percentile provide a quantitative summary of the overall risk landscape.

We identify limited risk mitigants at this time, which contributes to our very high uncertainty assessment. Investors should monitor for improvement in balance sheet metrics, margin stability, and business predictability that could warrant a downgrade in our risk assessment over time.

We rate RESIDEO TECHNOLOGIES, INC.'s capital allocation as Poor. Key concerns include low returns on equity (-23.2%), negative profitability, weak asset returns (ROA -7.8%). Exemplary capital allocators generate ROE above 20% and maintain conservative leverage — RESIDEO TECHNOLOGIES, INC. significantly underperforms these benchmarks, raising questions about management's ability to create shareholder value.

Investors should scrutinize management's reinvestment decisions and balance sheet trajectory before committing capital. Poor capital allocation often compounds over time: overlevered balance sheets limit strategic flexibility, while low returns on capital destroy shareholder value. We would need to see sustained improvement in profitability metrics and balance sheet discipline before considering an upgrade.

In summary, RESIDEO TECHNOLOGIES, INC. receives a Hold rating with a composite score of 53.0/100 (rank #1531 of 7,333). Our quantitative framework assigns a No Moat (37/100, trend: stable), Very High uncertainty, and Poor capital allocation. The average factor score across quality, value, momentum, stability, and investment is 48/100.

Our analysis supports a neutral stance on RESIDEO TECHNOLOGIES, INC.. While the quantitative profile is not weak enough to warrant selling, it lacks the multi-factor strength required for a buy recommendation. Existing holders should maintain positions and monitor for catalysts — either fundamental improvement or valuation compression — that would shift the risk-reward balance.