ADT INC (ADT) Stock Fundamental Analysis
NYSE:ADT - New York Stock Exchange, Inc. - US00090Q1031 - Common Stock - Currency: USD
Overall ADT gets a fundamental rating of 5 out of 10. We evaluated ADT 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 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.
The reported net income has been mixed in the past 5 years: ADT reported negative net income in multiple years.
ADT had a positive operating cash flow in each of the past 5 years.
1.2 Ratios
The Return On Assets of ADT (3.90%) is better than 61.97% of its industry peers.
ADT's Return On Equity of 17.01% is amongst the best of the industry. ADT outperforms 81.69% of its industry peers.
Looking at the Return On Invested Capital, with a value of 7.00%, ADT is in the better half of the industry, outperforming 74.65% of the companies in the same industry.
ADT had an Average Return On Invested Capital over the past 3 years of 5.35%. This is below the industry average of 10.25%.
The last Return On Invested Capital (7.00%) for ADT is above the 3 year average (5.35%), which is a sign of increasing profitability.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 3.9% | ||
| ROE | 17.01% | ||
| ROIC | 7% |
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's Profit Margin of 12.31% is fine compared to the rest of the industry. ADT outperforms 73.24% of its industry peers.
With an excellent Operating Margin value of 25.77%, ADT belongs to the best of the industry, outperforming 95.77% of the companies in the same industry.
In the last couple of years the Operating Margin of ADT has grown nicely.
With an excellent Gross Margin value of 81.28%, ADT belongs to the best of the industry, outperforming 95.77% of the companies in the same industry.
ADT's Gross Margin has improved in the last couple of years.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 25.77% | ||
| PM (TTM) | 12.31% | ||
| GM | 81.28% |
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 below the Cost of Capital (WACC), which means it is destroying value.
The number of shares outstanding for ADT has been reduced compared to 1 year ago.
Compared to 5 years ago, ADT has more shares outstanding
Compared to 1 year ago, ADT has an improved debt to assets ratio.
2.2 Solvency
ADT has an Altman-Z score of 0.59. This is a bad value and indicates that ADT is not financially healthy and even has some risk of bankruptcy.
Looking at the Altman-Z score, with a value of 0.59, ADT is in line with its industry, outperforming 42.25% of the companies in the same industry.
ADT has a debt to FCF ratio of 10.80. This is a negative value and a sign of low solvency as ADT would need 10.80 years to pay back of all of its debts.
ADT has a Debt to FCF ratio of 10.80. This is in the better half of the industry: ADT outperforms 61.97% of its industry peers.
ADT has a Debt/Equity ratio of 1.84. This is a high value indicating a heavy dependency on external financing.
The Debt to Equity ratio of ADT (1.84) is worse than 73.24% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 1.84 | ||
| Debt/FCF | 10.8 | ||
| Altman-Z | 0.59 |
ROIC/WACC0.86
WACC8.1%
2.3 Liquidity
ADT has a Current Ratio of 0.46. 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 has a Current ratio of 0.46. This is amonst the worse of the industry: ADT underperforms 84.51% of its industry peers.
ADT has a Quick Ratio of 0.46. 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 0.37, ADT is not doing good in the industry: 85.92% of the companies in the same industry are doing better.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 0.46 | ||
| Quick Ratio | 0.37 |
3. Growth
3.1 Past
ADT shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 27.27%, 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.
Looking at the last year, ADT shows a small growth in Revenue. The Revenue has grown by 4.22% in the last year.
The Revenue has been decreasing by -0.90% on average over the past years.
EPS 1Y (TTM)27.27%
EPS 3Y93.99%
EPS 5Y-7.53%
EPS Q2Q%35.29%
Revenue 1Y (TTM)4.22%
Revenue growth 3Y-2.64%
Revenue growth 5Y-0.9%
Sales Q2Q%6.8%
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.
The Revenue is expected to grow by 4.65% on average over the next years.
EPS Next Y16.52%
EPS Next 2Y13.73%
EPS Next 3Y14.03%
EPS Next 5YN/A
Revenue Next Year5.45%
Revenue Next 2Y4.87%
Revenue Next 3Y4.65%
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.
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
The Price/Earnings ratio is 10.38, which indicates a very decent valuation of ADT.
87.32% of the companies in the same industry are more expensive than ADT, based on the Price/Earnings ratio.
Compared to an average S&P500 Price/Earnings ratio of 26.84, ADT is valued rather cheaply.
A Price/Forward Earnings ratio of 9.24 indicates a reasonable valuation of ADT.
90.14% of the companies in the same industry are more expensive than ADT, based on the Price/Forward Earnings ratio.
ADT's Price/Forward Earnings ratio indicates a rather cheap valuation when compared to the S&P500 average which is at 34.94.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 10.38 | ||
| Fwd PE | 9.24 |
4.2 Price Multiples
Based on the Enterprise Value to EBITDA ratio, ADT is valued cheaper than 87.32% of the companies in the same industry.
92.96% of the companies in the same industry are more expensive than ADT, based on the Price/Free Cash Flow ratio.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 10.01 | ||
| EV/EBITDA | 5.69 |
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 14.03% in the coming years.
PEG (NY)0.63
PEG (5Y)N/A
EPS Next 2Y13.73%
EPS Next 3Y14.03%
5. Dividend
5.1 Amount
ADT has a Yearly Dividend Yield of 2.54%. Purely for dividend investing, there may be better candidates out there.
ADT's Dividend Yield is rather good when compared to the industry average which is at 3.57. ADT pays more dividend than 94.37% of the companies in the same industry.
Compared to an average S&P500 Dividend Yield of 2.36, ADT has a dividend comparable with the average S&P500 company.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.54% |
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 31.50% of its income as dividend. This is a sustainable payout ratio.
DP31.5%
EPS Next 2Y13.73%
EPS Next 3Y14.03%
8.72
-0.11 (-1.25%)
Chartmill FA Rating
GICS SectorConsumer Discretionary
GICS IndustryGroupConsumer Services
GICS IndustryDiversified Consumer Services
Earnings (Last)
Earnings (Next)
Inst Owners72.55%
Inst Owner Change-0.84%
Ins Owners1.32%
Ins Owner Change4.62%
Market Cap7.25B
Analysts75.56
Price Target9.57 (9.75%)
Short Float %3.17%
Short Ratio1.27
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.54% |
Yearly Dividend0.2
Dividend Growth(5Y)-23%
DP31.5%
Div Incr Years1
Div Non Decr Years4
Ex-Date
Surprises & Revisions
EPS beat(2)2
Avg EPS beat(2)11.59%
Min EPS beat(2)9.32%
Max EPS beat(2)13.86%
EPS beat(4)4
Avg EPS beat(4)11.08%
Min EPS beat(4)5.33%
Max EPS beat(4)15.8%
EPS beat(8)7
Avg EPS beat(8)115.18%
EPS beat(12)10
Avg EPS beat(12)93.1%
EPS beat(16)10
Avg EPS beat(16)40.77%
Revenue beat(2)1
Avg Revenue beat(2)0.36%
Min Revenue beat(2)-0.16%
Max Revenue beat(2)0.88%
Revenue beat(4)3
Avg Revenue beat(4)0.62%
Min Revenue beat(4)-0.16%
Max Revenue beat(4)1.12%
Revenue beat(8)4
Avg Revenue beat(8)-4.61%
Revenue beat(12)5
Avg Revenue beat(12)-5.34%
Revenue beat(16)7
Avg Revenue beat(16)-6.01%
PT rev (1m)1.52%
PT rev (3m)1.52%
EPS NQ rev (1m)0.37%
EPS NQ rev (3m)1.49%
EPS NY rev (1m)0%
EPS NY rev (3m)0%
Revenue NQ rev (1m)-0.38%
Revenue NQ rev (3m)-1.21%
Revenue NY rev (1m)0.25%
Revenue NY rev (3m)0.31%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 10.38 | ||
| Fwd PE | 9.24 | ||
| P/S | 1.43 | ||
| P/FCF | 10.01 | ||
| P/OCF | 3.65 | ||
| P/B | 1.98 | ||
| P/tB | N/A | ||
| EV/EBITDA | 5.69 |
EPS(TTM)0.84
EY9.63%
EPS(NY)0.94
Fwd EY10.83%
FCF(TTM)0.87
FCFY9.99%
OCF(TTM)2.39
OCFY27.43%
SpS6.09
BVpS4.4
TBVpS-7.36
PEG (NY)0.63
PEG (5Y)N/A
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 3.9% | ||
| ROE | 17.01% | ||
| ROCE | 9.36% | ||
| ROIC | 7% | ||
| ROICexc | 7.02% | ||
| ROICexgc | 23.78% | ||
| OM | 25.77% | ||
| PM (TTM) | 12.31% | ||
| GM | 81.28% | ||
| FCFM | 14.31% |
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 Turnover0.32
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 1.84 | ||
| Debt/FCF | 10.8 | ||
| Debt/EBITDA | 2.54 | ||
| Cap/Depr | 93.37% | ||
| Cap/Sales | 25% | ||
| Interest Coverage | 250 | ||
| Cash Conversion | 74.81% | ||
| Profit Quality | 116.28% | ||
| Current Ratio | 0.46 | ||
| Quick Ratio | 0.37 | ||
| Altman-Z | 0.59 |
F-Score6
WACC8.1%
ROIC/WACC0.86
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)27.27%
EPS 3Y93.99%
EPS 5Y-7.53%
EPS Q2Q%35.29%
EPS Next Y16.52%
EPS Next 2Y13.73%
EPS Next 3Y14.03%
EPS Next 5YN/A
Revenue 1Y (TTM)4.22%
Revenue growth 3Y-2.64%
Revenue growth 5Y-0.9%
Sales Q2Q%6.8%
Revenue Next Year5.45%
Revenue Next 2Y4.87%
Revenue Next 3Y4.65%
Revenue Next 5YN/A
EBIT growth 1Y13.89%
EBIT growth 3Y185.05%
EBIT growth 5Y29.39%
EBIT Next Year118%
EBIT Next 3Y34.23%
EBIT Next 5Y25.29%
FCF growth 1Y51.53%
FCF growth 3Y76.31%
FCF growth 5Y4.03%
OCF growth 1Y6.63%
OCF growth 3Y4.54%
OCF growth 5Y0.13%