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ADT (NYSE:ADT) Q3 2020 Earnings Prep

in EARNINGS/INVESTING IDEAS by

ADT Inc. (NYSE:ADT) is scheduled to report Q3 earnings results after markets close for trading on November 5, 2020.

The company is expected to report earnings of $0.15/share on revenue of $1.254 billion. The consensus earnings per share (EPS) of $0.15/share is based on a poll of 7 analysts and represents a growth in eps of 843.0% over the same quarter last year, when the company reported earnings of -$0.02/share.

The revenue forecast of $1.254 billion based on a poll of 6 analysts implies a year-over-year (YoY) decline in revenue of −3.6%. Last year the company reported $1.301 billion in revenue for the quarter.

Expected to report EPS of $0.15/share for Q3, 2020
Metric Expected Prior Year YoY Change
Revenue $1,253.56 $1,301.00 −3.6%
EPS $0.15 -$0.02 −843.0%

Earnings Call Trends

Historically, management has exceeded analyst expectations 2 out of the last 6 tracked quarters, missed 3 quarters, and met expectations 1 quarter.

What are your expectations from ADT Inc. for earnings this quarter? Let us know in the comments!

Analyst Expected vs. Reported EPS
Quarter Expected Reported Surprise Result
Q2, 2020 $0.29 -$0.07 −124.0% Missed
Q1, 2020 $0.19 -$0.09 −147.9% Missed
Q4, 2019 $0.23 $0.31 30.3% Beat
Q3, 2019 $0.21 -$0.02 −109.7% Missed
Q4, 2018 $0.12 $0.13 9.7% Beat
Q3, 2018 $0.26 $0.26 0% Met

In the following table, we summarize the company’s stock price movements after earnings releases. The “Price Day Prior” column shows the closing stock price on the day before the earnings report, and the “Price Next Day” column shows the stock price at the end of the trading day after the earnings report. After the last earnings report for the period ending June 30, 2020, the stock price reacted by falling −5.9%.

Stock Price Performance After Earnings
Report Date Price Day Prior Price Next Day Change % Result
August 5, 2020 $12.77 $12.02 −5.9% Decline
May 7, 2020 $5.53 $5.65 2.2% Increase
March 5, 2020 $6.77 $5.92 −12.6% Decline
November 12, 2019 $7.73 $8.35 8.0% Increase

The other question to consider is one of earnings manipulation. There is a lot of pressure on management each quarter to deliver on earnings expectations. The Beneish M-Score is a statistical model that provides some insight into whether the company might be manipulating earnings. With a Beneish M-Score of −3.06, the model suggests that the company is not likely to be an earnings manipulator. A value of −3.06 implies a 0.1% chance of earnings manipulation.

Fundamentals And Technical Analysis

ADT Inc. is currently trading at $7.05/share, down −1.5% for the day. The company is trading at approximately 41.1% of its 52-week high of $17.21/share. The company’s stock price is down −41.3% since the last earnings report and down −5.6% over the previous week. The company’s 14 Day Relative Price Index (RSI) of 13.67 suggests the company is trading in technically oversold territory. The RSI is considered overbought when above 70 and oversold when below 30.


NYSE:ADT Stock Price Chart
Source: Finbox

The current share price implies a price-to-earnings (P/E) multiple of −8.09 and a forward P/E multiple of 6.40.

ADT Inc.’s current share price also implies a price-to-book (P/B) multiple of 1.91. The following table summarizes some other key fundamental ratios:

Data as of October 28, 2020
Metric Value
Last Reported Fiscal Period Key FY2020.Q2
Period End Date June 30, 2020
Stock Price (Current) $7.05
P/E Ratio −8.1x
P/E Ratio (Fwd) 6.4x
PEG Ratio 0.4
Total Debt / Total Capital 65.2%
Levered Free Cash Flow $986.8 million
EV / EBITDA 7.1x

Finbox

ADT Inc. is a mid-cap stock with a market capitalization of $5.447 billion and a total enterprise value of $15.612 billion. The company operates in the Industrials sector and the Commercial Services & Supplies industry.

ADT Inc. provides security and automation solutions for homes and businesses in the United States and Canada. It provides a range of fire detection, fire suppression, video surveillance, and access control systems to residential, commercial, and multi-site customers. The company 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. It also provides interactive solutions that allow customers to use their smart phones, tablets, and laptops to arm and disarm their security systems, adjust lighting or thermostat levels, view real-time video of their premises, and program customizable schedules for the management of a range of smart home products. In addition, the company offers professional monitoring of third-party devices by enabling other companies to integrate solutions into its monitoring and billing platform. It provides its products under the ADT, ADT Pulse, Protection 1, ADT Commercial, and Blue by ADT names. As of December 31, 2019, ADT Inc. operated through a network of approximately 200 sales and service offices, 9 underwriter laboratories listed monitoring centers, 13 customer and field support locations, two national sales call centers, and two regional distribution centers. 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.

Expertise: financial modeling, mergers & acquisitions. Andy is also a founder at finbox.io, where he’s focused on building tools that make it faster and easier for investors to do investment research. Andy’s background is in investment banking where he led the analysis on over 50 board advisory engagements involving mergers and acquisitions, fairness opinions and solvency opinions. Some of his board advisory highlights: - Sears Holdings Corp.’s $620 mm spin-off via rights offering of Sears Outlet, Hometown Stores and Sears Hardware Stores. - Cerberus Capital Management’s $3.3 bn acquisition of SUPERVALU Inc.’s New Albertsons, Inc. assets. Andy can be reached at andy@finbox.io or at +1 (516) 778-6257.

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