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Time to Invest in the Security and Safety Services Industry?
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The Security and Safety Services industry broadly encompasses a wide range of services designed to protect people and property from harm. These services can include:
Physical security: This includes services such as guarding, patrolling and access control.
Cybersecurity: This includes services such as intrusion detection, vulnerability assessment, and data protection.
Fire protection: This includes services such as fire alarm monitoring, fire suppression and fire prevention.
Risk management: This includes services such as risk assessment, insurance and crisis management.
The Zacks Security and Safety Services industry provides sophisticated and interactive security solutions and related services for residential, commercial and institutional purposes. Some of the players also develop electrical weapons for personal defense, as well as military, federal, law enforcement and private security. Other services include stolen vehicle recovery, wireless communication devices, equipment for facility safety, services to automobile owners and insurance companies, and products for detecting hazards.
Sentiments around the industry started turning toward the end of 2022, as the pandemic-related cutback worked itself through. Current optimism is very likely tied to the increased likelihood of a soft landing. Still, there is also a compelling long-tern story tied to:
Increased crime rates: Fraud is becoming increasingly sophisticated and spreading from the physical to the digital world. This is leading to increased demand for security and safety services in many parts of the world.
Growing concern about terrorism: This is leading to increased demand for security and safety services from both businesses and governments around the world.
Advances in technology: While technology is increasing the range of attacks on identities, systems, and processes, advances in technology are also bringing and innovative solutions. Since it is unthinkable to operate without technology today, this is basically expanding the scope of the market. Technological tools being used today include
Big Data: It can be used to identify patterns of criminal activity, to predict where crimes are likely to occur, thus utilizing security resources more effectively.
New technology: For example, drones can be used to patrol areas, facial recognition technology to identify suspects, and artificial intelligence to automate security tasks.
Cybersecurity: Services, such as intrusion detection, vulnerability assessment and data protection.
Integrated Security Solutions: Because of the increased complexity of security needs, businesses and governments are increasingly looking for integrated security solutions that combine physical security, cybersecurity and fire protection for a comprehensive level of protection.
As a consequence of their central role in facilitating smooth operation, both governments and commercial establishments generate somewhat inelastic demand for security and safety. There are also policy mandates from the government in certain areas.
Therefore, this is expense that can be postponed but not cancelled, except when any solution is replaced with better technology or solutions. Data Bridge Market Research estimates that the global public safety and security market will grow at a CAGR of 11.98% between 2022 and 2029 to touch $1.003 trillion at the end of the forecast period. Therefore, the potential for growth is substantial.
However, because of the rapid evolution of the market and the changing needs of customers, the market is extremely competitive and contracts are generally won by the one that is most innovative. This pushes market players to make significant investments in R&D and acquisitions to build the product pipeline and expand the geographical presence. As a result, many are saddled with sizeable debt balances.
With that as the backdrop, here are a few stocks positioned for success:
Based in Cranberry Township, Pennsylvania MSA develops, manufactures and supplies safety products and software to protect people and facility infrastructures in the oil, gas, petrochemical, fire service, construction, industrial manufacturing applications, heating, ventilation, air conditioning and refrigeration, utilities, military, and mining industries. MSA’s core product offerings include permanently installed fixed gas and flame detection instruments, breathing apparatus products, industrial head protection products, firefighter helmets and protective apparel, and fall protection equipment. The company also offers air-purifying respirators, eye and face protection products, ballistic helmets, and gas masks.
The Zacks Rank #1 (Strong Buy) stock beat estimates by 30.8% in the last quarter. Analysts raised their 2023 estimates by 49 cents on average (8.9%) and 2024 estimates by 53 cents (8.6%). Current estimates represent 10.4% revenue growth and 6.2% earnings growth for 2023 and 5.3% revenue growth and 11.8% earnings growth for 2024.
Axon develops, manufactures and sells conducted energy devices (CEDs) under the TASER brand. In addition to CEDs, Axon offers hardware and cloud-based software solutions for law enforcement agencies to capture, store, manage, share and analyze digital evidence, including video. The company's product portfolio includes TASER devices, body cameras, in-car systems, digital evidence management software and related accessories.
Zacks #1 ranked Axon beat the Zacks Consensus Estimate by 91.3% in the last quarter, after which the 2023 estimate increased 36 cents (13.0%) and the 2024 estimate increased 9 cents (2.5%). Analysts are currently looking for 22.2% revenue growth and 42.9% earnings growth in 2023 followed by 18.1% revenue growth and 16.2% earnings growth in 2022.
Dublin, Ireland-based Allegion manufactures and sells mechanical and electronic security products and solutions. Their product offerings include door controls, locks, access control systems, time and attendance systems, and other related products. The company also provides services such as inspection, maintenance, repair and locksmith services. Allegion serves various sectors including commercial, institutional and residential facilities.
Zacks #2 (Buy) ranked Allegion beat analyst estimates by 17.0% in the March quarter. In the last 30 days, its 2023 and 2024 estimates jumped 26 cents (4.1%) and 15 cents (2.2%). Allegion is expected to grow its revenues by 12.4% in 2023 and 2.4% in 2024. Earnings are expected to grow 16.3% and 5.1%, respectively.
One-Month Price Performance
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Time to Invest in the Security and Safety Services Industry?
The Security and Safety Services industry broadly encompasses a wide range of services designed to protect people and property from harm. These services can include:
Physical security: This includes services such as guarding, patrolling and access control.
Cybersecurity: This includes services such as intrusion detection, vulnerability assessment, and data protection.
Fire protection: This includes services such as fire alarm monitoring, fire suppression and fire prevention.
Risk management: This includes services such as risk assessment, insurance and crisis management.
The Zacks Security and Safety Services industry provides sophisticated and interactive security solutions and related services for residential, commercial and institutional purposes. Some of the players also develop electrical weapons for personal defense, as well as military, federal, law enforcement and private security. Other services include stolen vehicle recovery, wireless communication devices, equipment for facility safety, services to automobile owners and insurance companies, and products for detecting hazards.
Sentiments around the industry started turning toward the end of 2022, as the pandemic-related cutback worked itself through. Current optimism is very likely tied to the increased likelihood of a soft landing. Still, there is also a compelling long-tern story tied to:
Increased crime rates: Fraud is becoming increasingly sophisticated and spreading from the physical to the digital world. This is leading to increased demand for security and safety services in many parts of the world.
Growing concern about terrorism: This is leading to increased demand for security and safety services from both businesses and governments around the world.
Advances in technology: While technology is increasing the range of attacks on identities, systems, and processes, advances in technology are also bringing and innovative solutions. Since it is unthinkable to operate without technology today, this is basically expanding the scope of the market. Technological tools being used today include
Big Data: It can be used to identify patterns of criminal activity, to predict where crimes are likely to occur, thus utilizing security resources more effectively.
New technology: For example, drones can be used to patrol areas, facial recognition technology to identify suspects, and artificial intelligence to automate security tasks.
Cybersecurity: Services, such as intrusion detection, vulnerability assessment and data protection.
Integrated Security Solutions: Because of the increased complexity of security needs, businesses and governments are increasingly looking for integrated security solutions that combine physical security, cybersecurity and fire protection for a comprehensive level of protection.
As a consequence of their central role in facilitating smooth operation, both governments and commercial establishments generate somewhat inelastic demand for security and safety. There are also policy mandates from the government in certain areas.
Therefore, this is expense that can be postponed but not cancelled, except when any solution is replaced with better technology or solutions. Data Bridge Market Research estimates that the global public safety and security market will grow at a CAGR of 11.98% between 2022 and 2029 to touch $1.003 trillion at the end of the forecast period. Therefore, the potential for growth is substantial.
However, because of the rapid evolution of the market and the changing needs of customers, the market is extremely competitive and contracts are generally won by the one that is most innovative. This pushes market players to make significant investments in R&D and acquisitions to build the product pipeline and expand the geographical presence. As a result, many are saddled with sizeable debt balances.
With that as the backdrop, here are a few stocks positioned for success:
MSA Safety Inc. (MSA - Free Report)
Based in Cranberry Township, Pennsylvania MSA develops, manufactures and supplies safety products and software to protect people and facility infrastructures in the oil, gas, petrochemical, fire service, construction, industrial manufacturing applications, heating, ventilation, air conditioning and refrigeration, utilities, military, and mining industries. MSA’s core product offerings include permanently installed fixed gas and flame detection instruments, breathing apparatus products, industrial head protection products, firefighter helmets and protective apparel, and fall protection equipment. The company also offers air-purifying respirators, eye and face protection products, ballistic helmets, and gas masks.
The Zacks Rank #1 (Strong Buy) stock beat estimates by 30.8% in the last quarter. Analysts raised their 2023 estimates by 49 cents on average (8.9%) and 2024 estimates by 53 cents (8.6%). Current estimates represent 10.4% revenue growth and 6.2% earnings growth for 2023 and 5.3% revenue growth and 11.8% earnings growth for 2024.
Axon Enterprise, Inc. (AXON - Free Report)
Axon develops, manufactures and sells conducted energy devices (CEDs) under the TASER brand. In addition to CEDs, Axon offers hardware and cloud-based software solutions for law enforcement agencies to capture, store, manage, share and analyze digital evidence, including video. The company's product portfolio includes TASER devices, body cameras, in-car systems, digital evidence management software and related accessories.
Zacks #1 ranked Axon beat the Zacks Consensus Estimate by 91.3% in the last quarter, after which the 2023 estimate increased 36 cents (13.0%) and the 2024 estimate increased 9 cents (2.5%). Analysts are currently looking for 22.2% revenue growth and 42.9% earnings growth in 2023 followed by 18.1% revenue growth and 16.2% earnings growth in 2022.
Allegion plc (ALLE - Free Report)
Dublin, Ireland-based Allegion manufactures and sells mechanical and electronic security products and solutions. Their product offerings include door controls, locks, access control systems, time and attendance systems, and other related products. The company also provides services such as inspection, maintenance, repair and locksmith services. Allegion serves various sectors including commercial, institutional and residential facilities.
Zacks #2 (Buy) ranked Allegion beat analyst estimates by 17.0% in the March quarter. In the last 30 days, its 2023 and 2024 estimates jumped 26 cents (4.1%) and 15 cents (2.2%). Allegion is expected to grow its revenues by 12.4% in 2023 and 2.4% in 2024. Earnings are expected to grow 16.3% and 5.1%, respectively.
One-Month Price Performance
Image Source: Zacks Investment Research