ADT Inc. (NYSE:ADT) shareholders might be concerned after seeing the share price drop 17% in the last month. Looking on the brighter side, the stock is actually up over twelve months. But to be blunt its return of 12% fall short of what you could have got from an index fund (around 30%).
Given that ADT didn't make a profit in the last twelve months, we'll focus on revenue growth to form a quick view of its business development. Shareholders of unprofitable companies usually expect strong revenue growth. That's because it's hard to be confident a company will be sustainable if revenue growth is negligible, and it never makes a profit.
ADT grew its revenue by 11% last year. That's not a very high growth rate considering it doesn't make profits. Over that time the share price gained a very modest 12%. It might be worth thinking about how long it will take the company to turn a profit.
The company's revenue and earnings (over time) are depicted in the image below (click to see the exact numbers).
This free interactive report on ADT's balance sheet strength is a great place to start, if you want to investigate the stock further.
What About Dividends?
When looking at investment returns, it is important to consider the difference between total shareholder return (TSR) and share price return. The TSR incorporates the value of any spin-offs or discounted capital raisings, along with any dividends, based on the assumption that the dividends are reinvested. So for companies that pay a generous dividend, the TSR is often a lot higher than the share price return. We note that for ADT the TSR over the last year was 24%, which is better than the share price return mentioned above. This is largely a result of its dividend payments!
A Different Perspective
We're happy to report that ADT are up 24% over the year (even including dividends) . While it's always nice to make a profit on the stock market, we do note that the TSR was no better than the broader market return of about 30%. You might want to assess this data-rich visualization of its earnings, revenue and cash flow.
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of companies we expect will grow earnings.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.
If you spot an error that warrants correction, please contact the editor at email@example.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.
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