Arlo Technologies Inc. Common Stock (ARLO)

FairStock Score: 41/100 — MIXED

Key Financials

Strengths

• Generates $69 million in annual free cash flow (4.5% yield on market cap)
• Strong Piotroski F-Score of 7/9 indicating robust financial health across profitability, leverage, and efficiency metrics
• Solid return on equity of 13.1% above cost of capital
• Conservative balance sheet with debt-to-equity of just 0.07, providing financial flexibility
• Altman Z-Score of 4.1 confirms minimal bankruptcy risk and strong solvency

Concerns

• Trades significantly above Graham Number ($2) with negative 628% margin of safety—limited downside protection

AI Analysis

Arlo Technologies Inc. Common Stock is a micro-cap industrials company valued at $1.5 billion. The business generates $529 million in annual revenue with a 1.1% net margin and $69 million in free cash flow. From a quality standpoint, Arlo shows solid Piotroski F-Score of 7/9 and healthy Altman Z-Score of 4.1. On valuation, the stock is commanding a steep 101.2x multiple, with trades far above its Graham Number ($2) with no margin of safety. Growth dynamics show revenue growing at 16.2% and profit growth of 218.6%. Our composite FairStock Score of 41/100 reflects below-average fundamentals overall. Investors should weigh the business quality against the current price and their own margin of safety requirements.

Bull Case

Arlo's 16% revenue growth trajectory could accelerate as it captures additional market share in the industrials sector. With $69 million in annual free cash flow (4.5% yield), management has ample capital for buybacks, dividends, or accretive acquisitions.

Bear Case

At 101x earnings, any growth disappointment triggers rapid multiple compression—a 20% earnings miss plus multiple contraction to 20x implies 40%+ downside. Regulatory changes, input cost inflation, or demand normalization represent underappreciated risks that could materially impact forward estimates.

Data from SEC filings. AI analysis is for educational purposes only — not investment advice. Scoring methodology · Disclaimer