Shares of Resideo Technologies (NYSE:REZI) jumped 25% on Thursday morning after the smart-home technology manufacturer reported a better-than-expected quarter. The stock has underperformed since being spun off of Honeywell International in 2018, but investors are feeling bullish about Resideo today.
Before markets opened on Thursday, Resideo reported third-quarter earnings of $0.60 per share on revenue of $1.36 billion, significantly above Wall Street's consensus estimate for $0.05 per share in earnings on sales of $1.15 billion. Revenue was up 10% year over year.
Resideo, a maker of climate control, camera, and security products for homes and businesses, saw strong demand for its residential products coupled with the benefit of ongoing cost-cutting. CEO Jay Geldmacher said Resideo is benefiting from its close ties with professional installers and contractors, helping its products be the go-to choice for homeowners who hire experts to update their home equipment.
"In the third quarter we delivered meaningful sequential and year-over-year revenue and profitability expansion across the business," Geldmacher said in a press release. "While we are closely monitoring our operations and supply chain for impacts related to the COVID-19 pandemic, we are encouraged by the strong demand trends we are seeing across our end markets as we close out 2020." The company also made a previously deferred $35 million payment to Honeywell, getting out from arrears with its former parent.
As Geldmacher noted, the pandemic continues to create some uncertainty. But Resideo said it expects fourth-quarter revenue in the range of $1.36 billion to $1.41 billion, and operating profit in the range of $130 million to $140 million. That implies growth over the $1.36 billion in sales and $131 million operating profit in the third quarter.
Even after this morning's jump, the stock is still down 50% since the spinoff, but it is now up more than 200% since bottoming out during the early days of the pandemic. It's taken awhile for Resideo to get its house in order as an independent, but investors are increasingly buying into the progress that the company has made.