ALARMFORCE INDUSTRIES $10.54 (Toronto symbol AF; TSINetwork Rating: Speculative) (1-800- 267-2001; www.alarmforce.com; Shares outstanding: 12.2 million; Market cap: $128.6 million; Dividend yield: 0.9%) sells twoway voice alarm systems and monitoring services in Canada and increasingly in the U.S. It’s also adding to its prospects with its VideoRelay system, which it launched in October 2011.
In the three months ended January 31, 2013, AlarmForce’s sales rose 9.1%, to $11.9 million from $10.9 million a year earlier. Earnings almost doubled, to $1.4 million, or $0.11 a share, from $699,000, or $0.06.
AlarmForce’s revenue rose along with its subscriber base. Earnings were sharply higher because the company spent a lot less on marketing than in the yearearlier quarter, when it increased its advertising spending as it expanded into the U.S.
The company’s U.S. customer base jumped 24.1% in the latest quarter, to 29,400 from 23,700 a year earlier. In Canada, AlarmForce now has 106,200 subscribers, up 2.6% from 103,500 a year earlier. Of those customers, 2,400 in Canada and 1,500 in the U.S. have added the company’s VideoRelay system.
AlarmForce’s outlook is positive, and it has lots of potential to grow by offering new services like Video- Relay, which lets subscribers watch their homes through computers and smartphones.
However, the company’s ongoing VideoRelay rollout and U.S. expansion will require considerable capital investment.
AlarmForce is a hold.
