Home automation and security solutions provider Resideo Technologies (NYSE: REZI) announced better-than-expected revenue in Q2 CY2026, with sales up 2% year on year to $1.98 billion. On the other hand, next quarter’s revenue guidance of $717.5 million was less impressive, coming in 63.4% below analysts’ estimates. Its non-GAAP profit of $0.83 per share was 23% above analysts’ consensus estimates.

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"Resideo's second quarter consolidated results were strong, reporting record high revenue and financial results that were above the high-end of the outlook range for all our key financial metrics. The Products and Solutions segment had another standout quarter with year-over-year revenue growth and the thirteenth consecutive quarter of year-over-year gross margin expansion," said Tom Surran, Resideo's President and CEO.

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

Reviewing a company’s long-term sales performance reveals insights into its 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 tepid 5.8% compounded annual growth rate. This fell short of our benchmark for the industrials sector and is a tough starting point for our analysis.

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 11.4% over the last two years is above its five-year trend, suggesting its demand recently accelerated.

We can better understand the company’s revenue dynamics by analyzing its most important segments, ADI Global Distribution and Products & Solutions, which are 64.9% and 35.1% of revenue. Over the last two years, Resideo’s ADI Global Distribution revenue (wholesale distribution of 450k+ products) averaged 15.9% year-on-year growth while its Products & Solutions revenue (branded offerings) averaged 4.3% growth.

This quarter, Resideo reported modest year-on-year revenue growth of 2% but beat Wall Street’s estimates by 2.3%. Company management is currently guiding for a 61.5% year-on-year decline in sales next quarter.

Looking further ahead, sell-side analysts expect revenue to grow 3.5% over the next 12 months, a deceleration versus the last two years. This projection is underwhelming and suggests 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 8.4%, higher than the broader industrials sector.

Looking at the trend in its profitability, Resideo’s operating margin decreased by 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.

In Q2, Resideo generated an operating margin profit margin of 6.6%, down 2.5 percentage points year on year. Since Resideo’s operating margin decreased more than its gross margin, we can assume it was less efficient because expenses such as marketing, R&D, and administrative overhead increased.

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 5.8% 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 declined by 4 percentage points over the last five years. Its share count also grew by 3.8%, 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 more recent period because it can provide insight into an emerging theme or development for the business.

For Resideo, its two-year annual EPS growth of 20.4% was higher than its five-year trend. This acceleration made it one of the faster-growing industrials companies in recent history.

In Q2, Resideo reported adjusted EPS of $0.83, up from $0.66 in the same quarter last year. This print easily cleared analysts’ estimates, and shareholders should be content with the results. Over the next 12 months, Wall Street expects Resideo’s full-year EPS to shrink by 3.1% from $2.87 to $2.78.

Key Takeaways from Resideo’s Q2 Results

We were impressed by how significantly Resideo blew past analysts’ EBITDA expectations this quarter. We were also glad its EPS outperformed Wall Street’s estimates. On the other hand, its full-year revenue guidance missed and its full-year EBITDA guidance fell short of Wall Street’s estimates. Overall, this was a softer quarter. The stock remained flat at $25.90 immediately following the results.

Is Resideo an attractive investment opportunity at the current price? 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).