ALARMFORCE INDUSTRIES $10.75 (Toronto symbol AF; TSINetwork Rating: Speculative) (1-800- 267-2001; www.alarmforce.com; Shares outstanding: 12.0 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.
In the quarter ended October 31, 2013, the company’s sales rose 10.8%, to $12.6 million from $11.4 million a year earlier. It earned $2.6 million, or $0.21 a share, up sharply from $708,539, or $0.06.
AlarmForce’s revenue rose along with its subscriber base. Earnings were sharply higher because it spent a lot less on marketing than a year ago, in the wake of the launch of its VideoRelay system. This service lets subscribers watch their homes through computers and smartphones. AlarmForce now has 6,600 VideoRelay subscribers, with 3,800 in Canada and 2,800 in the U.S.
U.S. jumps, but Canada lags
The company’s U.S. customer base jumped 18.7%, to 33,600 from 28,300 a year ago. In Canada, Alarm- Force now has 107,600 subscribers, up just 1.7% from 105,800. That’s partly because new competitors are entering the Canadian market, including Rogers Communications’ Smart Home Monitoring service.
AlarmForce’s outlook is positive. In addition, the U.S. dollar seems likely to keep rising. That would boost the amount that the company’s U.S. operations contribute to its earnings.
However, the marketing of new services and its U.S. expansion still require considerable capital investment.
AlarmForce is a hold.
