ADT INC (ADT) Stock Fundamental Analysis
NYSE:ADT - New York Stock Exchange, Inc. - US00090Q1031 - Common Stock - Currency: USD
ADT gets a fundamental rating of 5 out of 10. The analysis compared the fundamentals against 71 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 scores decently on growth, while it is valued quite cheap. This could make an interesting combination.
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
ADT's Return On Assets of 3.47% is fine compared to the rest of the industry. ADT outperforms 63.38% of its industry peers.
Looking at the Return On Equity, with a value of 15.20%, ADT is in the better half of the industry, outperforming 76.06% of the companies in the same industry.
With a decent Return On Invested Capital value of 6.34%, ADT is doing good in the industry, outperforming 74.65% of the companies in the same industry.
Measured over the past 3 years, the Average Return On Invested Capital for ADT is significantly below the industry average of 10.64%.
The last Return On Invested Capital (6.34%) for ADT is above the 3 year average (5.35%), which is a sign of increasing profitability.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 3.47% | ||
| ROE | 15.2% | ||
| ROIC | 6.34% |
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
ADT has a Profit Margin of 11.05%. This is in the better half of the industry: ADT outperforms 73.24% of its industry peers.
With an excellent Operating Margin value of 25.07%, ADT belongs to the best of the industry, outperforming 94.37% of the companies in the same industry.
ADT's Operating Margin has improved in the last couple of years.
ADT has a Gross Margin of 82.06%. This is amongst the best in the industry. ADT outperforms 94.37% of its industry peers.
In the last couple of years the Gross Margin of ADT has grown nicely.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 25.07% | ||
| PM (TTM) | 11.05% | ||
| GM | 82.06% |
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
ADT has a Return on Invested Capital (ROIC), which is just above the Cost of Capital (WACC), which means it is creating some value.
The number of shares outstanding for ADT has been reduced compared to 1 year ago.
The number of shares outstanding for ADT has been increased compared to 5 years ago.
Compared to 1 year ago, ADT has an improved debt to assets ratio.
2.2 Solvency
ADT has an Altman-Z score of 0.62. This is a bad value and indicates that ADT is not financially healthy and even has some risk of bankruptcy.
The Altman-Z score of ADT (0.62) is comparable to the rest of the industry.
The Debt to FCF ratio of ADT is 10.34, which is on the high side as it means it would take ADT, 10.34 years of fcf income to pay off all of its debts.
The Debt to FCF ratio of ADT (10.34) is better than 60.56% of its industry peers.
ADT has a Debt/Equity ratio of 2.10. This is a high value indicating a heavy dependency on external financing.
ADT has a Debt to Equity ratio of 2.10. This is in the lower half of the industry: ADT underperforms 70.42% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 2.1 | ||
| Debt/FCF | 10.34 | ||
| Altman-Z | 0.62 |
ROIC/WACC1.01
WACC6.28%
2.3 Liquidity
A Current Ratio of 0.77 indicates that ADT may have some problems paying its short term obligations.
The Current ratio of ADT (0.77) is worse than 66.20% of its industry peers.
ADT has a Quick Ratio of 0.77. This is a bad value and indicates that ADT is not financially healthy enough and could expect problems in meeting its short term obligations.
With a Quick ratio value of 0.60, ADT is not doing good in the industry: 73.24% of the companies in the same industry are doing better.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 0.77 | ||
| Quick Ratio | 0.6 |
3. Growth
3.1 Past
ADT shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 20.00%, which is quite impressive.
Measured over the past years, ADT shows a decrease in Earnings Per Share. The EPS has been decreasing by -7.53% on average per year.
ADT shows a decrease in Revenue. In the last year, the revenue decreased by -5.08%.
The Revenue has been decreasing by -0.90% on average over the past years.
EPS 1Y (TTM)20%
EPS 3Y93.99%
EPS 5Y-7.53%
EPS Q2Q%31.25%
Revenue 1Y (TTM)-5.08%
Revenue growth 3Y-2.64%
Revenue growth 5Y-0.9%
Sales Q2Q%4.8%
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 14.03% on average per year.
ADT is expected to show a small growth in Revenue. In the coming years, the Revenue will grow by 4.57% yearly.
EPS Next Y16.52%
EPS Next 2Y13.73%
EPS Next 3Y14.03%
EPS Next 5YN/A
Revenue Next Year5.19%
Revenue Next 2Y4.76%
Revenue Next 3Y4.57%
Revenue Next 5YN/A
3.3 Evolution
The EPS growth rate is accelerating: in the next years the growth will be better than in the last years.
When comparing the Revenue growth rate of the last years to the growth rate of the upcoming years, we see that the growth is accelerating.
4. Valuation
4.1 Price/Earnings Ratio
ADT is valuated reasonably with a Price/Earnings ratio of 10.86.
ADT's Price/Earnings ratio is rather cheap when compared to the industry. ADT is cheaper than 90.14% of the companies in the same industry.
The average S&P500 Price/Earnings ratio is at 27.45. ADT is valued rather cheaply when compared to this.
The Price/Forward Earnings ratio is 8.97, which indicates a very decent valuation of ADT.
Based on the Price/Forward Earnings ratio, ADT is valued cheaply inside the industry as 95.77% 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 21.90.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 10.86 | ||
| Fwd PE | 8.97 |
4.2 Price Multiples
88.73% of the companies in the same industry are more expensive than ADT, based on the Enterprise Value to EBITDA ratio.
Based on the Price/Free Cash Flow ratio, ADT is valued cheaply inside the industry as 92.96% of the companies are valued more expensively.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 9.37 | ||
| EV/EBITDA | 5.74 |
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.
ADT has a very decent profitability rating, which may justify a higher PE ratio.
A more expensive valuation may be justified as ADT's earnings are expected to grow with 14.03% in the coming years.
PEG (NY)0.66
PEG (5Y)N/A
EPS Next 2Y13.73%
EPS Next 3Y14.03%
5. Dividend
5.1 Amount
ADT has a Yearly Dividend Yield of 2.62%. Purely for dividend investing, there may be better candidates out there.
Compared to an average industry Dividend Yield of 4.09, ADT pays a better dividend. On top of this ADT pays more dividend than 94.37% of the companies listed in the same industry.
Compared to an average S&P500 Dividend Yield of 2.42, ADT has a dividend comparable with the average S&P500 company.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.62% |
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
36.19% of the earnings are spent on dividend by ADT. This is a low number and sustainable payout ratio.
DP36.19%
EPS Next 2Y13.73%
EPS Next 3Y14.03%
8.47
+0.2 (+2.42%)
Chartmill FA Rating
GICS SectorConsumer Discretionary
GICS IndustryGroupConsumer Services
GICS IndustryDiversified Consumer Services
Earnings (Last)
Earnings (Next)
Inst Owners69.71%
Inst Owner Change-4.17%
Ins Owners1.38%
Ins Owner Change8.58%
Market Cap7.09B
Analysts75.56
Price Target9.42 (11.22%)
Short Float %4.86%
Short Ratio1.33
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.62% |
Yearly Dividend0.2
Dividend Growth(5Y)-23%
DP36.19%
Div Incr Years1
Div Non Decr Years4
Ex-Date
Surprises & Revisions
EPS beat(2)2
Avg EPS beat(2)7.32%
Min EPS beat(2)5.33%
Max EPS beat(2)9.32%
EPS beat(4)3
Avg EPS beat(4)7.22%
Min EPS beat(4)-1.57%
Max EPS beat(4)15.8%
EPS beat(8)7
Avg EPS beat(8)135.81%
EPS beat(12)9
Avg EPS beat(12)86.38%
EPS beat(16)9
Avg EPS beat(16)37.94%
Revenue beat(2)2
Avg Revenue beat(2)1%
Min Revenue beat(2)0.88%
Max Revenue beat(2)1.12%
Revenue beat(4)3
Avg Revenue beat(4)0.31%
Min Revenue beat(4)-1.39%
Max Revenue beat(4)1.12%
Revenue beat(8)4
Avg Revenue beat(8)-5.15%
Revenue beat(12)5
Avg Revenue beat(12)-8.3%
Revenue beat(16)8
Avg Revenue beat(16)-5.96%
PT rev (1m)0%
PT rev (3m)6.21%
EPS NQ rev (1m)0%
EPS NQ rev (3m)0.33%
EPS NY rev (1m)0%
EPS NY rev (3m)2.24%
Revenue NQ rev (1m)0%
Revenue NQ rev (3m)1.42%
Revenue NY rev (1m)0.06%
Revenue NY rev (3m)0.6%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 10.86 | ||
| Fwd PE | 8.97 | ||
| P/S | 1.42 | ||
| P/FCF | 9.37 | ||
| P/OCF | 3.56 | ||
| P/B | 1.96 | ||
| P/tB | N/A | ||
| EV/EBITDA | 5.74 |
EPS(TTM)0.78
EY9.21%
EPS(NY)0.94
Fwd EY11.15%
FCF(TTM)0.9
FCFY10.67%
OCF(TTM)2.38
OCFY28.05%
SpS5.95
BVpS4.32
TBVpS-7.28
PEG (NY)0.66
PEG (5Y)N/A
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 3.47% | ||
| ROE | 15.2% | ||
| ROCE | 8.48% | ||
| ROIC | 6.34% | ||
| ROICexc | 6.34% | ||
| ROICexgc | 18.65% | ||
| OM | 25.07% | ||
| PM (TTM) | 11.05% | ||
| GM | 82.06% | ||
| FCFM | 15.19% |
ROA(3y)2.26%
ROA(5y)0.17%
ROE(3y)9.77%
ROE(5y)-0.4%
ROIC(3y)5.35%
ROIC(5y)3.49%
ROICexc(3y)5.39%
ROICexc(5y)3.51%
ROICexgc(3y)17.14%
ROICexgc(5y)11.43%
ROCE(3y)7.17%
ROCE(5y)4.67%
ROICexcg growth 3Y161.56%
ROICexcg growth 5Y19.28%
ROICexc growth 3Y188.1%
ROICexc growth 5Y29.78%
OM growth 3Y192.77%
OM growth 5Y30.57%
PM growth 3YN/A
PM growth 5YN/A
GM growth 3Y5.32%
GM growth 5Y2.56%
F-Score6
Asset Turnover0.31
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 2.1 | ||
| Debt/FCF | 10.34 | ||
| Debt/EBITDA | 2.93 | ||
| Cap/Depr | 91.25% | ||
| Cap/Sales | 24.75% | ||
| Interest Coverage | 250 | ||
| Cash Conversion | 76.52% | ||
| Profit Quality | 137.51% | ||
| Current Ratio | 0.77 | ||
| Quick Ratio | 0.6 | ||
| Altman-Z | 0.62 |
F-Score6
WACC6.28%
ROIC/WACC1.01
Cap/Depr(3y)95.22%
Cap/Depr(5y)83.19%
Cap/Sales(3y)26.65%
Cap/Sales(5y)25.38%
Profit Quality(3y)148.75%
Profit Quality(5y)N/A
High Growth Momentum
Growth
EPS 1Y (TTM)20%
EPS 3Y93.99%
EPS 5Y-7.53%
EPS Q2Q%31.25%
EPS Next Y16.52%
EPS Next 2Y13.73%
EPS Next 3Y14.03%
EPS Next 5YN/A
Revenue 1Y (TTM)-5.08%
Revenue growth 3Y-2.64%
Revenue growth 5Y-0.9%
Sales Q2Q%4.8%
Revenue Next Year5.19%
Revenue Next 2Y4.76%
Revenue Next 3Y4.57%
Revenue Next 5YN/A
EBIT growth 1Y5.69%
EBIT growth 3Y185.05%
EBIT growth 5Y29.39%
EBIT Next Year118.16%
EBIT Next 3Y34.09%
EBIT Next 5Y25.29%
FCF growth 1Y78.13%
FCF growth 3Y76.31%
FCF growth 5Y4.03%
OCF growth 1Y5.37%
OCF growth 3Y4.54%
OCF growth 5Y0.13%