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4 Security & Safety Stocks to Consider on Promising Industry Trends
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The Zacks Security and Safety Services industry is poised to gain from the solid demand for products and solutions, driven by growing awareness about the security and safety of people and infrastructure. Increased demand for cybersecurity products is also benefiting many participants within the industry.
Enhanced research and development efforts, backed by government support, augur well for the industry’s near-term prospects. Companies like Allegion plc (ALLE - Free Report) , ADT Inc. (ADT - Free Report) , Life360, Inc. (LIF - Free Report) and Alarm.com Holdings, Inc. (ALRM - Free Report) are a few industry participants that are expected to capitalize on the opportunities.
Industry Description
The Zacks Security and Safety Services industry comprises firms that provide sophisticated and interactive security solutions and related services, which are meant to be used for residential, commercial and institutional purposes. A few industry players develop electrical weapons for personal defense and military, federal, law enforcement and private security. Some of the companies provide solutions for the recovery of stolen vehicles, wireless communication devices, equipment for the safety of facility infrastructure and employees and products for detecting hazards. A few players provide a variety of services to automobile owners and insurance companies. The industry serves customers from various end markets, including manufacturing, electronics, hospitality, education, construction, telecommunications, aerospace and medical.
3 Security & Safety Services Industry Trends in Focus
Healthy Demand for Security and Safety Services: Growing instances of terrorism and criminal activities, coupled with concerns related to the ever-increasing fraudulent activities, are driving demand for security and safety services. To enhance the safety and surveillance of people or assets, governments, commercial operations, communities and other establishments across the world are rapidly deploying IP-based cameras. This is acting as a key growth driver for the industry. With growing urbanization, the increasing requirement to ensure the safety and security of infrastructure at offices, factories and residential buildings is aiding industry participants. Also, with rising instances of hacking, the industry is seeing higher demand for Internet security products and services like firewalls, intrusion detection systems and intrusion prevention systems. People’s preference for purchasing products through e-commerce platforms has also opened up opportunities for industry players.
Other Favorable Trends: Increases in budgets and funds from governments have invited several big players to make significant investments in the research and development of advanced products and services. Government and law enforcement agencies in the United States and Canada are directly working with industry participants to strengthen the security infrastructure of smart cities. This has been helping the industry players to come up with enhanced products and solutions, thereby catering to the needs of customers.
High Debt Levels: Industry participants constantly focus on innovation, product upgrades and the development of new products to cater to the changing customer needs and stay competitive, making steady investments necessary. While this augurs well for the industry’s long-term growth, hefty investments in research and development often leave companies with highly leveraged balance sheets. The industry’s long-term debt/capital ratio is currently 0.62, higher than 0.28 of the Zacks S&P 500 composite index.
Zacks Industry Rank Indicates Bright Prospects
The Zacks Security and Safety Services industry, housed within the broader Industrial Products sector, currently carries a Zacks Industry Rank #60. This rank places it in the top 25% of 244 Zacks industries.
The group’s Zacks Industry Rank, which is the average of the Zacks Rank of all the member stocks, indicates robust near-term prospects. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than two to one.
The industry’s positioning in the top 50% of the Zacks-Ranked industries is a result of the solid earnings outlook for the constituent companies in aggregate. Looking at the aggregate earnings estimate revisions, it appears that analysts are putting more faith in this group's earnings growth potential. The industry’s earnings estimates for 2025 have increased 1.9% over the past year.
We will present a few stocks from the industry that you may want to consider for your portfolio. But before that, it is worth taking a look at the industry’s shareholder returns and its current valuation first.
Industry Outperforms Sector & Underperforms S&P 500
The Zacks Security and Safety Services industry has outperformed the broader Industrial Products sector and underperformed the S&P 500 composite index in the past year.
Over this period, the industry has moved up 15.7% compared with the S&P 500 Index’s and the sector’s increase of 20.3% and 13.8%, respectively.
One-Year Price Performance
Industry's Current Valuation
On the basis of forward P/E (F12M), which is a commonly used multiple for valuing security and safety services stocks, the industry is currently trading at 17.31X compared with the S&P 500’s and the sector’s 22.69X and 19.79X, respectively.
Over the past five years, the industry has traded as high as 21.79X, as low as 14.05X and at the median of 17.18X, as the chart below shows:
Price-to-Earnings Ratio vs SP500
Price-to-Earnings Ratio vs Sector
4 Security and Safety Services Stocks to Keep a Tab on
Life360: Based in San Mateo, CA, the company is engaged in offering location tracking, safety features and emergency services through its app. It also offers tile hardware devices to track lost items. The company is poised to gain from growth in subscribers, driven by improved retention rate and an increased number of monthly active user (MAU). Also, Life360’s investments in new business strategies bode well.
The Zacks Consensus Estimate for LIF’s 2025 earnings has been revised upward by 20.8% in the past 30 days. This Zacks Rank #1 (Strong Buy) stock has surged 117.2% in the past year. You can see the complete list of today’s Zacks #1 Rank stocks here.
Price and Consensus: LIF
Allegion: The Dublin, Ireland-based company is a leading provider of mechanical and electronic security products, including doors and door systems, electronic security products and biometric and mobile access control systems. It is well-positioned to benefit from strength in its Allegion Americas segment, driven by an increase in demand for non-residential products across end markets like education, hospitality and retail. An increase in demand for electronic security products, driven by the growing awareness about the security and safety of people and infrastructure, is expected to drive ALLE’s performance in the quarters ahead.
In the past 30 days, estimates for this Zacks Rank #1 company’s earnings have increased 3.2% for 2025. Allegion’s shares have gained 27.1% in the past year.
Price and Consensus: ALLE
ADT: Based in Boca Raton, FL, the company offers security and smart home solutions, including smart security cameras, burglar & life safety alarms and smart home automation systems to residential customers and small businesses. ADT is gaining from strength in the Monitoring and related services (M&S) business, driven by increase in average prices. Also, the company’s strategic initiatives, innovation and operational excellence bode well.
The Zacks Consensus Estimate for ADT’s 2025 earnings has increased 7.9% in the past 30 days. Shares of the Zacks Rank #1 company have gained 17.4% in a year.
Price and Consensus: ADT
Alarm.com: Based in Tysons, VA, the company is engaged in providing Internet of Things and solutions for multi-family, residential and small businesses in North America and globally. The company is benefiting from strong momentum in the software as a service and license businesses. Also, Alarm’s expansion into advanced AI-powered solutions and a favorable product mix is likely to be beneficial moving ahead.
In the past 30 days, estimates for ALRM’s earnings have remained steady for 2025. This Zacks Rank #3 (Hold) company reported better-than-expected results in each of the last four quarters, the average earnings surprise being 425%.
Price and Consensus: ALRM
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4 Security & Safety Stocks to Consider on Promising Industry Trends
The Zacks Security and Safety Services industry is poised to gain from the solid demand for products and solutions, driven by growing awareness about the security and safety of people and infrastructure. Increased demand for cybersecurity products is also benefiting many participants within the industry.
Enhanced research and development efforts, backed by government support, augur well for the industry’s near-term prospects. Companies like Allegion plc (ALLE - Free Report) , ADT Inc. (ADT - Free Report) , Life360, Inc. (LIF - Free Report) and Alarm.com Holdings, Inc. (ALRM - Free Report) are a few industry participants that are expected to capitalize on the opportunities.
Industry Description
The Zacks Security and Safety Services industry comprises firms that provide sophisticated and interactive security solutions and related services, which are meant to be used for residential, commercial and institutional purposes. A few industry players develop electrical weapons for personal defense and military, federal, law enforcement and private security. Some of the companies provide solutions for the recovery of stolen vehicles, wireless communication devices, equipment for the safety of facility infrastructure and employees and products for detecting hazards. A few players provide a variety of services to automobile owners and insurance companies. The industry serves customers from various end markets, including manufacturing, electronics, hospitality, education, construction, telecommunications, aerospace and medical.
3 Security & Safety Services Industry Trends in Focus
Healthy Demand for Security and Safety Services: Growing instances of terrorism and criminal activities, coupled with concerns related to the ever-increasing fraudulent activities, are driving demand for security and safety services. To enhance the safety and surveillance of people or assets, governments, commercial operations, communities and other establishments across the world are rapidly deploying IP-based cameras. This is acting as a key growth driver for the industry. With growing urbanization, the increasing requirement to ensure the safety and security of infrastructure at offices, factories and residential buildings is aiding industry participants. Also, with rising instances of hacking, the industry is seeing higher demand for Internet security products and services like firewalls, intrusion detection systems and intrusion prevention systems. People’s preference for purchasing products through e-commerce platforms has also opened up opportunities for industry players.
Other Favorable Trends: Increases in budgets and funds from governments have invited several big players to make significant investments in the research and development of advanced products and services. Government and law enforcement agencies in the United States and Canada are directly working with industry participants to strengthen the security infrastructure of smart cities. This has been helping the industry players to come up with enhanced products and solutions, thereby catering to the needs of customers.
High Debt Levels: Industry participants constantly focus on innovation, product upgrades and the development of new products to cater to the changing customer needs and stay competitive, making steady investments necessary. While this augurs well for the industry’s long-term growth, hefty investments in research and development often leave companies with highly leveraged balance sheets. The industry’s long-term debt/capital ratio is currently 0.62, higher than 0.28 of the Zacks S&P 500 composite index.
Zacks Industry Rank Indicates Bright Prospects
The Zacks Security and Safety Services industry, housed within the broader Industrial Products sector, currently carries a Zacks Industry Rank #60. This rank places it in the top 25% of 244 Zacks industries.
The group’s Zacks Industry Rank, which is the average of the Zacks Rank of all the member stocks, indicates robust near-term prospects. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than two to one.
The industry’s positioning in the top 50% of the Zacks-Ranked industries is a result of the solid earnings outlook for the constituent companies in aggregate. Looking at the aggregate earnings estimate revisions, it appears that analysts are putting more faith in this group's earnings growth potential. The industry’s earnings estimates for 2025 have increased 1.9% over the past year.
We will present a few stocks from the industry that you may want to consider for your portfolio. But before that, it is worth taking a look at the industry’s shareholder returns and its current valuation first.
Industry Outperforms Sector & Underperforms S&P 500
The Zacks Security and Safety Services industry has outperformed the broader Industrial Products sector and underperformed the S&P 500 composite index in the past year.
Over this period, the industry has moved up 15.7% compared with the S&P 500 Index’s and the sector’s increase of 20.3% and 13.8%, respectively.
One-Year Price Performance
Industry's Current Valuation
On the basis of forward P/E (F12M), which is a commonly used multiple for valuing security and safety services stocks, the industry is currently trading at 17.31X compared with the S&P 500’s and the sector’s 22.69X and 19.79X, respectively.
Over the past five years, the industry has traded as high as 21.79X, as low as 14.05X and at the median of 17.18X, as the chart below shows:
Price-to-Earnings Ratio vs SP500
Price-to-Earnings Ratio vs Sector
4 Security and Safety Services Stocks to Keep a Tab on
Life360: Based in San Mateo, CA, the company is engaged in offering location tracking, safety features and emergency services through its app. It also offers tile hardware devices to track lost items. The company is poised to gain from growth in subscribers, driven by improved retention rate and an increased number of monthly active user (MAU). Also, Life360’s investments in new business strategies bode well.
The Zacks Consensus Estimate for LIF’s 2025 earnings has been revised upward by 20.8% in the past 30 days. This Zacks Rank #1 (Strong Buy) stock has surged 117.2% in the past year. You can see the complete list of today’s Zacks #1 Rank stocks here.
Price and Consensus: LIF
Allegion: The Dublin, Ireland-based company is a leading provider of mechanical and electronic security products, including doors and door systems, electronic security products and biometric and mobile access control systems. It is well-positioned to benefit from strength in its Allegion Americas segment, driven by an increase in demand for non-residential products across end markets like education, hospitality and retail. An increase in demand for electronic security products, driven by the growing awareness about the security and safety of people and infrastructure, is expected to drive ALLE’s performance in the quarters ahead.
In the past 30 days, estimates for this Zacks Rank #1 company’s earnings have increased 3.2% for 2025. Allegion’s shares have gained 27.1% in the past year.
Price and Consensus: ALLE
ADT: Based in Boca Raton, FL, the company offers security and smart home solutions, including smart security cameras, burglar & life safety alarms and smart home automation systems to residential customers and small businesses. ADT is gaining from strength in the Monitoring and related services (M&S) business, driven by increase in average prices. Also, the company’s strategic initiatives, innovation and operational excellence bode well.
The Zacks Consensus Estimate for ADT’s 2025 earnings has increased 7.9% in the past 30 days. Shares of the Zacks Rank #1 company have gained 17.4% in a year.
Price and Consensus: ADT
Alarm.com: Based in Tysons, VA, the company is engaged in providing Internet of Things and solutions for multi-family, residential and small businesses in North America and globally. The company is benefiting from strong momentum in the software as a service and license businesses. Also, Alarm’s expansion into advanced AI-powered solutions and a favorable product mix is likely to be beneficial moving ahead.
In the past 30 days, estimates for ALRM’s earnings have remained steady for 2025. This Zacks Rank #3 (Hold) company reported better-than-expected results in each of the last four quarters, the average earnings surprise being 425%.
Price and Consensus: ALRM