ADT (ADT) & Its Competitors Critical Analysis

ADT (NYSE:ADT) is one of 166 publicly-traded companies in the “Diversified Consumer Services” industry, but how does it contrast to its peers? We will compare ADT to related companies based on the strength of its valuation, dividends, analyst recommendations, risk, earnings, institutional ownership and profitability.

Dividends

ADT pays an annual dividend of $0.22 per share and has a dividend yield of 2.2%. ADT pays out 29.7% of its earnings in the form of a dividend. As a group, “Diversified Consumer Services” companies pay a dividend yield of 5.9% and pay out 36.4% of their earnings in the form of a dividend. ADT has raised its dividend for 1 consecutive years.

Insider & Institutional Ownership

87.2% of ADT shares are owned by institutional investors. Comparatively, 49.0% of shares of all “Diversified Consumer Services” companies are owned by institutional investors. 3.0% of ADT shares are owned by company insiders. Comparatively, 19.5% of shares of all “Diversified Consumer Services” companies are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Analyst Ratings

This is a breakdown of recent recommendations for ADT and its peers, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
ADT	0	5	2	0	2.29
ADT Competitors	1445	3450	5292	197	2.41

ADT presently has a consensus price target of $8.73, indicating a potential downside of 11.51%. As a group, “Diversified Consumer Services” companies have a potential upside of 62.50%. Given ADT’s peers stronger consensus rating and higher probable upside, analysts clearly believe ADT has less favorable growth aspects than its peers.

Valuation and Earnings

This table compares ADT and its peers top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Net Income	Price/Earnings Ratio
ADT	$5.13 billion	$595.95 million	13.33
ADT Competitors	$3.62 billion	$219.39 million	15.20

ADT has higher revenue and earnings than its peers. ADT is trading at a lower price-to-earnings ratio than its peers, indicating that it is currently more affordable than other companies in its industry.

Risk & Volatility

ADT has a beta of 0.95, suggesting that its share price is 5% less volatile than the S&P 500. Comparatively, ADT’s peers have a beta of 0.51, suggesting that their average share price is 49% less volatile than the S&P 500.

Profitability

This table compares ADT and its peers’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
ADT	11.85%	18.57%	4.30%
ADT Competitors	-3.89%	-28.73%	2.35%

Summary

ADT beats its peers on 8 of the 15 factors compared.

ADT Company Profile

ADT Inc. provides security, interactive, and smart home solutions to residential and small business customers in the United States. It operates through two segments, Consumer and Small Business, and Solar. The company provides burglar and life safety alarms, smart security cameras, smart home automation systems, and video surveillance systems. It primarily offers security designed to detect intrusion, control access, sense movement, smoke, fire, carbon monoxide, flooding, temperature, and other environmental conditions and hazards; and address personal medical emergencies, such as injuries or unanticipated falls. The company also provides automation and smart home solutions that allow customers to use their smart phones, smart phone application, or touchscreen panels in their homes to arm and disarm their security systems; record and view real-time video; and creates customized and automated schedules for connected devices; programs systems to react to defined events; integrates system with third-party connected devices, such as cameras, lights, thermostats, appliances, and garage doors, as well as offers monitoring and maintenance services. In addition, the company offers energy storage solutions, energy efficiency upgrades, and roofing services. It offers its products under the ADT, ADT Pulse, ADT+, and ADT Commercial brand names. The company was formerly known as Prime Security Services Parent, Inc. and changed its name to ADT Inc. in September 2017. ADT Inc. was founded in 1874 and is headquartered in Boca Raton, Florida.