Home automation and security solutions provider Resideo Technologies (NYSE: REZI) reported Q4 CY2025 results exceeding the market’s revenue expectations, with sales up 2% year on year to $1.90 billion. On top of that, next quarter’s revenue guidance ($1.88 billion at the midpoint) was surprisingly good and 4.6% above what analysts were expecting. Its non-GAAP profit of $0.50 per share was 4.5% below analysts’ consensus estimates.

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Company Overview

Resideo Technologies, Inc. (NYSE: REZI) is a manufacturer and distributor of technology-driven products and solutions for home comfort, energy management, water management, and safety and security.

Revenue Growth

A company’s long-term sales performance can indicate its overall quality. Any business can have short-term success, but a top-tier one grows for years. Over the last five years, Resideo grew its sales at a decent 8.1% compounded annual growth rate. Its growth was slightly above the average industrials company and shows its offerings resonate with customers.

Long-term growth is the most important, but within industrials, a half-decade historical view may miss new industry trends or demand cycles. Resideo’s annualized revenue growth of 9.4% over the last two years is above its five-year trend, suggesting its demand recently accelerated.

Resideo also breaks out the revenue for its most important segments, ADI Global Distribution and Products & Solutions, which are 62.4% and 37.6% of revenue. Over the last two years, Resideo’s ADI Global Distribution revenue (wholesale distribution of 450k+ products) averaged 20.6% year-on-year growth while its Products & Solutions revenue (branded offerings) averaged 3.5% growth.

This quarter, Resideo reported modest year-on-year revenue growth of 2% but beat Wall Street’s estimates by 1.2%. Company management is currently guiding for a 6.1% year-on-year increase in sales next quarter.

Looking further ahead, sell-side analysts expect revenue to grow 3.8% over the next 12 months, a deceleration versus the last two years. This projection doesn't excite us and indicates its products and services will see some demand headwinds.

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Operating Margin

Resideo has done a decent job managing its cost base over the last five years. The company has produced an average operating margin of 8.7%, higher than the broader industrials sector.

Analyzing the trend in its profitability, Resideo’s operating margin decreased by 1.4 percentage points over the last five years. This raises questions about the company’s expense base because its revenue growth should have given it leverage on its fixed costs, resulting in better economies of scale and profitability.

This quarter, Resideo generated an operating margin profit margin of 7.4%, in line with the same quarter last year. This indicates the company’s cost structure has recently been stable.

Earnings Per Share

We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.

Resideo’s flat EPS over the last five years was below its 8.1% annualized revenue growth. This tells us the company became less profitable on a per-share basis as it expanded.

Diving into the nuances of Resideo’s earnings can give us a better understanding of its performance. As we mentioned earlier, Resideo’s operating margin was flat this quarter but declined by 1.4 percentage points over the last five years. Its share count also grew by 15.3%, meaning the company not only became less efficient with its operating expenses but also diluted its shareholders.

Like with revenue, we analyze EPS over a shorter period to see if we are missing a change in the business.

For Resideo, its two-year annual EPS growth of 28.6% was higher than its five-year trend. This acceleration made it one of the faster-growing industrials companies in recent history.

In Q4, Resideo reported adjusted EPS of $0.50, down from $0.59 in the same quarter last year. This print missed analysts’ estimates. Over the next 12 months, Wall Street expects Resideo’s full-year EPS of $2.68 to grow 13.4%.

Key Takeaways from Resideo’s Q4 Results

We were impressed by Resideo’s optimistic full-year EBITDA guidance, which blew past analysts’ expectations. We were also glad its EPS guidance for next quarter exceeded Wall Street’s estimates. Revenue and EBITDA in the quarter also beat. Overall, we think this was a solid quarter with many areas of upside. The stock traded up 11.1% to $39.70 immediately after reporting.

Resideo put up rock-solid earnings, but one quarter doesn’t necessarily make the stock a buy. Let’s see if this is a good investment. The latest quarter does matter, but not nearly as much as longer-term fundamentals and valuation, when deciding if the stock is a buy. We cover that in our actionable full research report which you can read here (it’s free).