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• Wondering if Arlo Technologies stock could be a hidden gem or already fully priced? Let’s take a closer look at what the numbers and recent developments suggest about its value.

• In the last year, Arlo shares are up 29.2% and have surged 32.2% year-to-date, but experienced a recent 25.0% drop in the past month. This was followed by an 8.9% bump just this week.

• Most of these moves came as investors reacted to industry-wide conversations around smart home technology, along with recent news highlighting Arlo’s product collaboration with major retailers and some analyst upgrades. These events raised expectations for longer-term growth, even as volatility keeps short-term risk in play.

• Currently, Arlo scores a 3 out of 6 on our valuation checklist. This means it’s undervalued in three key areas. We will dive into what these valuation methods actually tell us, and at the end, I’ll share an even smarter way to interpret Arlo’s value story.

Find out why Arlo Technologies’s 29.2% return over the last year is lagging behind its peers.

The Discounted Cash Flow (DCF) model estimates what a company is worth by projecting its future cash flows and discounting them back to today’s value. This approach helps investors determine whether the current share price is justified based on what the business is expected to generate in the future.

For Arlo Technologies, the latest figures show it generated $59.98 million in Free Cash Flow over the last twelve months. Looking ahead, analysts expect its Free Cash Flow to continue growing, starting with $70.23 million in 2026 and reaching an extrapolated $125.52 million by 2035. While direct forecasts from analysts only cover the next five years, Simply Wall St extends these projections further by using industry and company growth rates.

Using this DCF method, Arlo’s intrinsic value is calculated at $16.66 per share. With Arlo’s stock currently trading at approximately a 13.0% discount to this calculated value, the implication is that shares may be undervalued based on the cash flow outlook.

Result: UNDERVALUED

Our Discounted Cash Flow (DCF) analysis suggests Arlo Technologies is undervalued by 13.0%. Track this in your watchlist or portfolio, or discover 920 more undervalued stocks based on cash flows.

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Arlo Technologies.

The price-to-sales (P/S) ratio is a widely used valuation metric, especially for technology companies like Arlo Technologies, where earnings may be volatile but sales growth remains robust. By comparing a company’s market capitalization to its total revenue, the P/S ratio offers insights into how the market values each dollar of sales. This can be a useful tool for assessing both growing and turnaround businesses.

What counts as a “normal” or “fair” P/S ratio depends on expectations for future growth and the level of risk facing the company. Higher growth prospects and lower risk often justify a higher multiple, while slower growers or higher-risk firms warrant lower ratios.

Currently, Arlo Technologies has a P/S ratio of 3.02x. This compares to the average P/S multiple of its industry peers at 4.71x, and the broader Electronic industry average of 2.42x. These benchmarks give context, but do not adjust for Arlo’s specific factors such as its unique growth profile, profit margin, or risk level.

Simply Wall St’s proprietary “Fair Ratio” estimates a company’s justified multiple by considering not just industry and peer comparisons, but also company-specific details such as expected growth, profitability, market cap, and risk exposure. This deeper analysis suggests Arlo’s fair P/S ratio is 2.13x, which may be a better reflection of the actual value investors might assign given all relevant factors.

Since Arlo’s P/S ratio of 3.02x is noticeably higher than its Fair Ratio of 2.13x, the stock appears somewhat overvalued using this metric, even though it trades below the peer average.

Result: OVERVALUED

PS ratios tell one story, but what if the real opportunity lies elsewhere? Discover 1443 companies where insiders are betting big on explosive growth.

Earlier we mentioned that there is an even better way to understand valuation, so let’s introduce you to Narratives. A Narrative is simply your personal story or perspective on a company, combining your take on its future revenue, earnings, margins, and risks to generate your own fair value for the stock, instead of just relying on analyst numbers or traditional valuation ratios.

On Simply Wall St’s Community page, investors use Narratives to link what they believe about a business (like Arlo’s growth potential, competition, or product launches) to specific financial forecasts, and then to a fair value estimate. This hands-on approach turns financial data into an easy-to-follow story and helps you decide if Arlo fits your investment goals by letting you directly compare your Narrative’s Fair Value to the stock’s market price.

Narratives update dynamically as new earnings reports or news becomes available, so your view stays fresh and relevant. For example, one Arlo Technologies Narrative expects strong subscriber growth, new partnerships, and margin expansion, supporting a bullish price target of $26.00, while a more cautious investor factors in competition and risks and places fair value closer to $22.00. With Narratives, you can tailor your decisions to what you believe, using the same powerful, accessible tools trusted by millions of investors.

Do you think there’s more to the story for Arlo Technologies? Head over to our Community to see what others are saying!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Companies discussed in this article include ARLO.

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