Today's Pick: 👮‍♂️ ADT

💲 Business Model

ADT Inc. provides security, automation, and smart home solutions to consumer and business customers in the United States. It primarily offers monitored security and automation solutions, including the installation and monitoring of security and premises automation systems designed to detect intrusion, control access, sense movement, smoke, fire, carbon monoxide, flooding, temperature, and other environmental conditions and hazards; and address personal emergencies, such as injuries, medical emergencies, or incapacitation.

🚀 Growth Potential

• Expansion of ADT's smart home solutions

• Introduction of new alarm monitoring services

• Expansion of ADT's presence in 35 countries

• Development of new security and fire protection products

• Expansion of ADT's market share in the residential and small business sectors

⚖️ Intrinsic Value

ADT Inc. is currently trading at $6.48.

Best Case:

• 🟢 Intrinsic Value: $33.93 Undervalued by 81%

• 🟢 DCF Value: $46.37 Undervalued by 86%

• 🟢 Relative Value: $21.48 Undervalued by 70%

• 🟢 Wall Street Estimates: ADT is undervalued by 51% compared to the average analyst price target.

Best Case:

• 🟢 Intrinsic Value: $8.74 Undervalued by 26%

• 🔴 DCF Value: $0.13 Overvalued by 98%

• 🟢 Relative Value: $17.34 Undervalued by 63%

☎️ Earnings Call Q1 2023 (May 2, 2023):

• Total top line revenue grew 4%, with commercial delivering strong growth of 15%.

• Recurring monthly revenue balance was a record high of $378 million.

• Revenue payback now stands at a record low of two years.

• Gross attrition remained at a record 12.5%.

• Adjusted free cash flow, including interest rate swaps, increased by over $70 million year-over-year.

• Installation backlog remains steady at approximately $420 million.

• EBITDA margins exceeded 12% for the quarter.

• Customer retention rates are stellar and ending RMR continues to grow at a healthy rate.

• Launched initial product offering with State Farm.

📰 Recent News

[14 Jun 2023] ADT: The Turnaround Is on Track

Sentiment: 🟢 Positive

While no longer the undisputed dominate company in the industry it once was, ADT Inc. does offer security, fire protection, smart home solutions and other related alarm monitoring services in 35 countries. With roughly 25% of the market for residential and 13% for small business in the United States, it is not going anywhere.

[29 May 2023] ADT: Security Products Aiming To Give Safe Returns

Sentiment: 🟢 Positive

ADT, Inc. started the year strong with stable revenues and returns. Its financial positioning remains decent, but I am concerned about its sustainability. Macroeconomic headwinds are still intense, but opportunities are visible.

[24 May 2023] The Schall Law Firm Announces it is Investigating Claims Against ADT Inc.

Sentiment: 🔴 Negative

The Schall Law Firm, a national shareholder rights litigation firm, announces that it is investigating claims on behalf of investors of ADT Inc. for violations of securities laws. The investigation focuses on whether the Company issued false and/or misleading statements and/or failed to disclose information pertinent to investors.

[10 Jul 2023] ADT to restate some financial statements after accounting mistake

Sentiment: 🔴 Negative

ADT Inc. shares dropped 2% in the extended session Monday after the home-security and alarm-monitoring company said in a filing that it will have to restate some financial results. ADT found mistakes in the way it dealt with some impairment losses in the third quarter of last year and the first quarter of 2023 as it prepared its second-quarter financial statements, it said.