What Happened?
Shares of home automation and security solutions provider Resideo Technologies (NYSE:REZI) jumped 15.6% in the morning session after the company announced a trio of significant strategic updates, including the planned spin-off of its ADI Global Distribution business, a settlement of its long-term payment obligations with Honeywell, and an optimistic outlook for its second-quarter financial results. The series of announcements included a plan to separate its ADI Global Distribution business into an independent, publicly traded company via a tax-free spin-off. This move was designed to unlock shareholder value and provide greater strategic flexibility for both entities. Additionally, Resideo reached a definitive agreement with Honeywell to make a one-time cash payment of $1.59 billion, which terminated all future annual payment obligations of up to $140 million. This settled a long-standing financial overhang for the company. Capping off the positive news, Resideo also stated that it expected its second-quarter 2025 financial results for revenue, adjusted EBITDA, and adjusted earnings per share to finish above the high-end of its previously issued guidance, signaling strong underlying business performance.
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What Is The Market Telling Us
Resideo’s shares are quite volatile and have had 15 moves greater than 5% over the last year. But moves this big are rare even for Resideo and indicate this news significantly impacted the market’s perception of the business.
The previous big move we wrote about was 13 days ago when the stock gained 4% on the news that the second quarter (2025) earnings season got off to a strong start.
Quarterly earnings reports released during the week exceeded Wall Street's expectations, fueling investor confidence. Around 50 S&P 500 components reported, with 88% of those exceeding analysts' expectations, FactSet data revealed. Investors were also encouraged by several positive reports that painted a picture of a resilient consumer. One key report revealed that shoppers increased their spending at U.S. retailers more than economists had anticipated. Precisely, retail sales increased 0.6% from May, surpassing the 0.2% estimate. This robust consumer spending is a crucial pillar supporting the economy.
Adding to the positive sentiment, the latest data on unemployment claims showed a decrease in the number of workers applying for benefits, signaling that layoffs remain limited and the job market is steady. This combination of strong earnings reports, retail sales, and a solid labor market suggests the economy is navigating challenges successfully.
Resideo is up 28.1% since the beginning of the year, and at $29.18 per share, has set a new 52-week high. Investors who bought $1,000 worth of Resideo’s shares 5 years ago would now be looking at an investment worth $2,154.
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