Resideo Technologies, Inc. (REZI): what the price assumes

boothcheck covers Resideo Technologies, Inc. (REZI) but does not put one priced-in number on it: here the defensible answer is the evidence rather than a point estimate. boothcheck publishes no house fair value, target price, or buy/sell rating. Narrative composed 2026-06-28.

Generated: 2026-08-10 · Exported: 2026-08-12 · Source: https://boothcheck.com/report/REZI

Headline

FieldValue
TickerREZI
CompanyResideo Technologies, Inc.
Current price$26.24/sh
CompositionProducts and Solutions - Safety and Security 13% / Products and Solutions - Air 11% / Products and Solutions - Energy 8% / Products and Solutions - Water 4% / ADI Global Distribution - Americas 56% / ADI Global Distribution - International 8%

What The Price Assumes (Inversion)

The assumption today's price embeds, recovered by inverting the valuation.

FieldValue
Inversion basiswhole-company
Operating margin (value-band context)4.5%
Operating margin today7.5%
Margin compression (value-band)-3.0pp
Multiple paid12x operating income

The operating-margin figure is value-band context at year 12: derived from the framework's value band, a separate calculation — not part of the priced-in solve.

The price sits below what even a 5%/yr operating-profit decline would warrant; the inversion reports a bound, not a solved growth path.

Solve inputs: computed at a 7.4% cost of capital with 4% terminal growth over a 5-year stage.

Reconcile: at the x-ray's 9.3% required return this reads ~1.7%/yr; the models below use their own rates.

How unusual the bet is: within-range (limited comparison data)

ReferenceValue
vs own history-0.52σ
implied end-window share0%

Valuation X-Ray

The price is supported by earnings-power and relative-multiple and growth-DCF value, while asset-based lands below the price. A value/asset-supported name, not a pure growth bet.

How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.

FamilyMedian price/FVModelsReads
Asset1.51x3expensive
Earnings0.90x1justifies
Relative0.21x3justifies
Growth1.18x1expensive

Families that justify the price: Earnings, Relative, Growth Families that call it expensive: Asset

The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 5.3%); the inversion above states its own rate.

Per-Model Detail (n=8)

ModelFamilyFVPrice/FVApplicableMethodology
DCF Perpetual GrowthGrowth$0.00—noNegative/zero FCF — equity value floored at $0
DCF Exit MultipleGrowth$0.00—noNegative/zero FCF or EBITDA — equity value floored at $0
Relative ValuationRelative$125.700.21xyesP/S fallback (negative EPS): Sector P/S 2.5x × TTM revenue — excluded from consensus
Simple DDMGrowth——no—
Two-Stage DDMGrowth——no—
Simple Excess ReturnAsset$19.301.36xyesReference only (book value floor): BV/sh $19.30, ROE negative
Two-Stage Excess ReturnAsset$17.371.51xyesReference only (book value with convergence): BV/sh $19.30, ROE converges to ke
Discounted Future Market CapGrowth$22.211.18xyesRev $7.6B, growth 9% (input: historical growth; tapered), Terminal P/S: 0.4x / 0.5x / 0.6x (bear / base = today's held flat / bull, cap 8x)
Peter Lynch Fair ValueRelative$0.00—noNegative/zero EPS — earnings-based value floored at $0
Margin TrajectoryGrowth——no—
Earnings Power ValueEarnings$29.270.90xyesNormalized EBIT (5y avg op income, one-time charges added back) $0.58B × (1−31%) / WACC 5.3% → EPV (no growth)
Residual IncomeAsset——no—
Graham NumberAsset——no—
EV/EBITDA RelativeRelative$28.720.91xyesEBITDA $0.62B × sector EV/EBITDA 12.0x
FCF YieldEarnings——no—
SBC-Adj FCF YieldEarnings——no—
Ben Graham FormulaEarnings——no—
ROIC-Justified P/BAsset$4.236.20xyesBV $19.30 × (ROIC 1.2% / WACC 5.3%)
P/Sales SectorRelative$125.700.21xyesRevenue $7.61B × sector P/S 2.5x
PEG Fair ValueRelative——no—
Earnings YieldEarnings——no—
Funds From Operations MultipleRelative——no—
Clinical Phase NPVGrowth——no—
MertonAsset——no—
V5 Mechanical———no—

Solvency

FieldValue
Net debt$2.8b
Net debt / NOPAT (after-tax)7.04x
Net debt / operating income (pre-tax)4.87x
Interest coverage3.6x
Share count CAGR (dilution)1.0%
Burning cashyes

Bullet Takeaways

Resideo trades at $31.90 with the price held up by relative-multiple and growth-DCF value while the asset methods say expensive. The implied growth baked into the price is slightly negative, so the market is paying for a business it expects to barely grow as-is.

The defining event is structural: Resideo is splitting in two, spinning off its ADI Global Distribution arm tax-free in the second half of 2026, leaving a higher-margin Products and Solutions company behind. The Form 10 is filed.

The balance sheet is the swing factor. Resideo carries roughly $2.8 billion of net debt against interest coverage near 3.6 times, and the company recently terminated a costly legacy Honeywell agreement. How the debt and Honeywell liabilities are allocated across the two companies will shape what each is worth.

Bull Case

Start with the balance sheet, because the moves on it reveal what management actually believes. Resideo carries roughly $2.8 billion of net debt, and rather than sit on it, the company is reshaping the entire enterprise: it is spinning off ADI Global Distribution as a separate public company in the second half of 2026 and it has terminated a costly legacy reimbursement agreement with Honeywell that for years siphoned cash to its former parent. Ending the Honeywell payment stream and separating the two businesses are the actions of a management team confident it can unlock value that the conglomerate structure has buried. A company that takes hard, irreversible structural steps is signaling it believes the parts are worth more than the whole.

The operating results are recovering underneath that restructuring. First-quarter 2026 net revenue rose 8 percent to $1.91 billion on favorable pricing and mix, with adjusted EBITDA of $215 million and adjusted EPS of $0.65. Net income rose to $38 million from $6 million a year earlier, and diluted EPS swung to a positive $0.17 from a small loss, even after absorbing $24 million of ADI spin-off separation costs. Gross margin held near 28.8 percent. Strip out the one-time separation expense and the underlying business is growing revenue and expanding profitability, which is exactly what you want to see heading into a value-unlocking split.

The sum-of-the-parts logic is the core of the bull case. Today the market values Resideo as a single industrial entity, but the two businesses are very different: Products and Solutions is a higher-margin branded business spanning HVAC, safety, and security with the Honeywell Home brand, while ADI is a large, lower-margin but cash-generative distribution platform. Separated, each can be valued on its own merits and pursue its own capital allocation, and the relative-valuation method already lands far above the price because the distribution revenue is being valued at a single low multiple today.

Bear Case

The structural truth a holder has to face is that Resideo is a leveraged industrial whose stock barely works without the spin-off going right. The price embeds slightly negative implied growth, which is the market saying it does not expect the current business to grow on its own. The entire bull thesis rests on a corporate event, the ADI separation, that has not happened yet and that carries its own execution risk: separation costs already hit $24 million in the first quarter, income from operations actually fell to $102 million from $136 million as those costs and higher SG&A and R&D outweighed gross-profit gains, and a split can destroy as much value as it unlocks if the two companies end up sub-scale or saddled with stranded costs.

The leverage is the second hard fact. Resideo carries about $2.8 billion of net debt against roughly $3.2 billion gross, with interest coverage near 3.6 times. Splitting the company forces a decision about how that debt is divided, and a leveraged spin can leave one or both entities carrying more debt than its cash flow comfortably supports. On top of the financial debt sit legacy obligations: under the original Honeywell spin-off, Resideo assumed liabilities for hazardous-exposure and toxic-tort claims at specified Honeywell properties (FY2025 10-K, accession 0001740332-26-000005). Even with the reimbursement agreement terminated, environmental and indemnification tails do not simply disappear, and they complicate how cleanly the two businesses can be separated.

Third, the valuation is more fragile than the relative method suggests. That method lands near $122 only because it values ADI's large, low-margin distribution revenue at a sector price-to-sales multiple, which overstates the worth of thin-margin distribution dollars. The methods that capitalize actual earnings tell a soberer story: earnings-power value lands near $24.77, the two-stage excess-return near $16.97, and the blended X-ray central estimate sits near $18.85, well below the $31.90 price (June 28, 2026). The current operating margin is only 7.5 percent. If the spin-off disappoints, the integration of acquired businesses like Snap One drags, or the debt allocation leaves the remaining company stretched, the stock falls toward the high-teens-to-mid-$20s the earnings methods support rather than the analyst targets near $49.

Valuation

Resideo is valued as a single industrial today, but it is about to become two companies, and that pending split is the key to reading the methods. At $31.90 the price is justified by the relative-multiple and growth-DCF families while the asset-based methods say expensive, with a slightly negative implied growth rate that tells you the market expects little organic growth from the business as currently structured.

The methods diverge sharply, and the divergence is informative. The relative-valuation and price-to-sales methods land near $122.81, but that figure is distorted: it values ADI Global Distribution's large, low-margin revenue at a sector multiple, which overstates the worth of thin-margin distribution dollars. The methods that capitalize earnings are far more grounded: earnings-power value near $24.77, the discounted-future-market-cap near $27.01, EV/EBITDA relative near $28.06, and the two-stage excess-return near $16.97. The blended X-ray central estimate sits near $18.85, below the price.

The honest framing is that Resideo is roughly fairly valued on the methods that count, and the upside case rests almost entirely on the ADI spin-off unlocking a sum-of-the-parts premium: a higher-margin Products and Solutions company and a separately-valued distribution business could each command a better multiple apart than together. The risk is the mirror image: the earnings methods near $17 to $28 are the floor if the split disappoints or the debt allocation leaves the pieces stretched. The number to weigh is the operating margin of 7.5 percent and the $2.8 billion debt load, because the spin only creates value if both resulting companies can carry their share and earn a better multiple on their own.

Catalysts

First-quarter 2026 results, reported in mid-May, beat the company's own expectations. Net revenue rose 8.0 percent year over year to $1.91 billion on favorable pricing, mix, extra selling days, and modest volume growth, with adjusted EBITDA of $215 million and adjusted EPS of $0.65. Net income rose to $38 million from $6 million a year earlier, and diluted EPS improved to a positive $0.17 from a small loss. Income from operations fell to $102 million from $136 million, however, as higher SG&A, R&D, restructuring, and $24 million of ADI spin-off separation costs outweighed gross-profit gains. Gross margin held near 28.8 percent.

The defining catalyst is the ADI Global Distribution spin-off, expected between mid-third and mid-fourth quarter of 2026, with the Form 10 already filed. The split will create two independent public companies: Products and Solutions, the higher-margin branded business, and ADI, the distribution platform. Management also highlighted the termination of a costly legacy Honeywell reimbursement agreement and continued product innovation across HVAC, safety, and security.

Near-term catalysts to watch: the timing and terms of the ADI spin-off, especially how debt and legacy Honeywell liabilities are allocated between the two companies, the level of stranded or separation costs, the integration of acquired businesses, and whether each entity earns a re-rating once separated. Management targets mid-single-digit revenue growth for 2026, and analyst sentiment is a Moderate Buy with price targets near $49.

Peer Cohorts (Per Segment, With Filing Citations)

Core business (reported)

Methodology Note

Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.

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