"Smart home" tech specialist Resideo Technologies (REZI 3.54%) was quite a star on the stock market on Wednesday. Investors piled into its shares, lifting them by more than 14% that trading session. A well-received earnings report was the catalyst for the rally.
Two metrics, two different directions
Resideo unveiled its fourth quarter and full-year 2025 results just after market close on Tuesday. These showed that the company posted just under $1.9 billion in revenue for the quarter, which bettered the year-ago period's result by 2%. However, net income not under generally accepted accounting principles (GAAP) traveled in the other direction, falling to $78 million ($0.50 per share) from fourth quarter 2024's $89 million.
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Both results missed the average analyst estimates of $1.92 billion for revenue, and $0.77 per share for non-GAAP (adjusted) profitability.
Resideo's largest business, ADI, recorded a 1% slump during the quarter to $1.18 billion. Its other division, products and solutions, lifted revenue by 6% to $712 million. Management chalked up ADI's decline to softness in the video surveillance segment. It said that the products and solutions unit's growth came from demand for new offerings and "price realization," as the company phrased it.
NYSE: REZI
Key Data Points
Guidance saves the day
What saved Resideo in the eyes of investors was guidance. For the entirety of 2026, it believes it will take in $7.8 billion to $7.9 billion, easily topping the analyst consensus of under $7.7 billion. Ditto for adjusted net income, anticipated to fall between $3.00 and $3.20 per share; the average pundit projection is only $2.79.
Those figures are also well above the full-year 2025 numbers, which happened to be record highs for the company (revenue of almost $7.5 billion and adjusted earnings per share of $2.68). It's no wonder, then, that the market got so excited about Resideo's potential. But given the rather tepid trailing results, I'd personally prefer to wait and see how the company does over the next quarter or two before considering this stock for a buy.
