ADT INC (ADT) Stock Fundamental Analysis
USA - New York Stock Exchange - NYSE:ADT - US00090Q1031 - Common Stock
8.03 USD
-0.19 (-2.31%)
8.029 USD
0 (-0.01%)
Overall ADT gets a fundamental rating of 5 out of 10. We evaluated ADT against 76 industry peers in the Diversified Consumer Services industry. While ADT belongs to the best of the industry regarding profitability, there are concerns on its financial health. ADT may be a bit undervalued, certainly considering the very reasonable score on growth
1. Profitability
1.1 Basic Checks
- In the past year ADT was profitable.
- ADT had a positive operating cash flow in the past year.
- In multiple years ADT reported negative net income over the last 5 years.
- In the past 5 years ADT always reported a positive cash flow from operatings.
1.2 Ratios
- With a decent Return On Assets value of 4.01%, ADT is doing good in the industry, outperforming 61.84% of the companies in the same industry.
- The Return On Equity of ADT (17.51%) is better than 80.26% of its industry peers.
- ADT's Return On Invested Capital of 6.65% is fine compared to the rest of the industry. ADT outperforms 67.11% of its industry peers.
- ADT had an Average Return On Invested Capital over the past 3 years of 5.35%. This is below the industry average of 10.15%.
- The last Return On Invested Capital (6.65%) for ADT is above the 3 year average (5.35%), which is a sign of increasing profitability.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 4.01% | ||
| ROE | 17.51% | ||
| ROIC | 6.65% |
ROA(3y)2.26%
ROA(5y)0.17%
ROE(3y)9.77%
ROE(5y)-0.4%
ROIC(3y)5.35%
ROIC(5y)3.49%
1.3 Margins
- With a decent Profit Margin value of 12.53%, ADT is doing good in the industry, outperforming 75.00% of the companies in the same industry.
- ADT has a better Operating Margin (25.25%) than 94.74% of its industry peers.
- In the last couple of years the Operating Margin of ADT has grown nicely.
- ADT has a better Gross Margin (80.92%) than 94.74% of its industry peers.
- ADT's Gross Margin has improved in the last couple of years.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 25.25% | ||
| PM (TTM) | 12.53% | ||
| GM | 80.92% |
OM growth 3Y192.77%
OM growth 5Y30.57%
PM growth 3YN/A
PM growth 5YN/A
GM growth 3Y5.32%
GM growth 5Y2.56%
2. Health
2.1 Basic Checks
- The Return on Invested Capital (ROIC) is below the Cost of Capital (WACC), so ADT is destroying value.
- Compared to 1 year ago, ADT has less shares outstanding
- ADT has more shares outstanding than it did 5 years ago.
- The debt/assets ratio for ADT has been reduced compared to a year ago.
2.2 Solvency
- Based on the Altman-Z score of 0.61, we must say that ADT is in the distress zone and has some risk of bankruptcy.
- ADT has a Altman-Z score of 0.61. This is comparable to the rest of the industry: ADT outperforms 42.11% of its industry peers.
- The Debt to FCF ratio of ADT is 9.92, which is on the high side as it means it would take ADT, 9.92 years of fcf income to pay off all of its debts.
- Looking at the Debt to FCF ratio, with a value of 9.92, ADT is in the better half of the industry, outperforming 64.47% of the companies in the same industry.
- A Debt/Equity ratio of 1.99 is on the high side and indicates that ADT has dependencies on debt financing.
- ADT's Debt to Equity ratio of 1.99 is on the low side compared to the rest of the industry. ADT is outperformed by 69.74% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 1.99 | ||
| Debt/FCF | 9.92 | ||
| Altman-Z | 0.61 |
ROIC/WACC0.94
WACC7.09%
2.3 Liquidity
- A Current Ratio of 0.67 indicates that ADT may have some problems paying its short term obligations.
- ADT's Current ratio of 0.67 is on the low side compared to the rest of the industry. ADT is outperformed by 76.32% of its industry peers.
- ADT has a Quick Ratio of 0.67. This is a bad value and indicates that ADT is not financially healthy enough and could expect problems in meeting its short term obligations.
- ADT's Quick ratio of 0.54 is on the low side compared to the rest of the industry. ADT is outperformed by 78.95% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 0.67 | ||
| Quick Ratio | 0.54 |
3. Growth
3.1 Past
- The Earnings Per Share has grown by an nice 11.54% over the past year.
- The Earnings Per Share has been decreasing by -7.53% on average over the past years.
- ADT shows a small growth in Revenue. In the last year, the Revenue has grown by 5.20%.
- Measured over the past years, ADT shows a decrease in Revenue. The Revenue has been decreasing by -0.90% on average per year.
EPS 1Y (TTM)11.54%
EPS 3Y93.99%
EPS 5Y-7.53%
EPS Q2Q%15%
Revenue 1Y (TTM)5.2%
Revenue growth 3Y-2.64%
Revenue growth 5Y-0.9%
Sales Q2Q%4.34%
3.2 Future
- Based on estimates for the next years, ADT will show a quite strong growth in Earnings Per Share. The EPS will grow by 13.34% on average per year.
- Based on estimates for the next years, ADT will show a small growth in Revenue. The Revenue will grow by 4.24% on average per year.
EPS Next Y22%
EPS Next 2Y14.39%
EPS Next 3Y13.34%
EPS Next 5YN/A
Revenue Next Year5.35%
Revenue Next 2Y4.47%
Revenue Next 3Y4.24%
Revenue Next 5YN/A
3.3 Evolution
- When comparing the EPS growth rate of the last years to the growth rate of the upcoming years, we see that the growth is accelerating.
- The Revenue growth rate is accelerating: in the next years the growth will be better than in the last years.
4. Valuation
4.1 Price/Earnings Ratio
- ADT is valuated reasonably with a Price/Earnings ratio of 9.23.
- Based on the Price/Earnings ratio, ADT is valued cheaply inside the industry as 84.21% of the companies are valued more expensively.
- Compared to an average S&P500 Price/Earnings ratio of 27.21, ADT is valued rather cheaply.
- A Price/Forward Earnings ratio of 8.41 indicates a reasonable valuation of ADT.
- Based on the Price/Forward Earnings ratio, ADT is valued cheaply inside the industry as 92.11% of the companies are valued more expensively.
- ADT's Price/Forward Earnings ratio indicates a rather cheap valuation when compared to the S&P500 average which is at 24.26.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 9.23 | ||
| Fwd PE | 8.41 |
4.2 Price Multiples
- ADT's Enterprise Value to EBITDA ratio is rather cheap when compared to the industry. ADT is cheaper than 85.53% of the companies in the same industry.
- ADT's Price/Free Cash Flow ratio is rather cheap when compared to the industry. ADT is cheaper than 96.05% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 8.37 | ||
| EV/EBITDA | 5.45 |
4.3 Compensation for Growth
- ADT's low PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates a rather cheap valuation of the company.
- The decent profitability rating of ADT may justify a higher PE ratio.
- A more expensive valuation may be justified as ADT's earnings are expected to grow with 13.34% in the coming years.
PEG (NY)0.42
PEG (5Y)N/A
EPS Next 2Y14.39%
EPS Next 3Y13.34%
5. Dividend
5.1 Amount
- ADT has a Yearly Dividend Yield of 2.66%. Purely for dividend investing, there may be better candidates out there.
- Compared to an average industry Dividend Yield of 0.36, ADT pays a better dividend. On top of this ADT pays more dividend than 94.74% of the companies listed in the same industry.
- ADT's Dividend Yield is a higher than the S&P500 average which is at 1.82.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.66% |
5.2 History
- The dividend of ADT decreases each year by -23.00%.
- ADT has been paying a dividend for at least 10 years, so it has a reliable track record.
- ADT has not decreased its dividend in the last 3 years.
Dividend Growth(5Y)-23%
Div Incr Years1
Div Non Decr Years4
5.3 Sustainability
- ADT pays out 29.94% of its income as dividend. This is a sustainable payout ratio.
DP29.94%
EPS Next 2Y14.39%
EPS Next 3Y13.34%
ADT INC / ADT FAQ
Can you provide the ChartMill fundamental rating for ADT INC?
ChartMill assigns a fundamental rating of 5 / 10 to ADT.
Can you provide the valuation status for ADT INC?
ChartMill assigns a valuation rating of 9 / 10 to ADT INC (ADT). This can be considered as Undervalued.
How profitable is ADT INC (ADT) stock?
ADT INC (ADT) has a profitability rating of 7 / 10.
How financially healthy is ADT INC?
The financial health rating of ADT INC (ADT) is 2 / 10.
How sustainable is the dividend of ADT INC (ADT) stock?
The dividend rating of ADT INC (ADT) is 5 / 10 and the dividend payout ratio is 29.94%.