Does ADT Inc’s (NYSE:ADT) Earnings Growth Make It An Outperformer?
Measuring ADT Inc’s (NYSE:ADT) track record of past performance is an insightful exercise for investors. It enables us to reflect on whether the company has met or exceed expectations, which is a powerful signal for future performance. Below, I will assess ADT’s recent performance announced on 30 September 2017 and compare these figures to its historical trend and industry movements. View our latest analysis for ADT
How Did ADT’s Recent Performance Stack Up Against Its Past?
I prefer to use data from the most recent 12 months, which annualizes the most recent half-year data, or in some cases, the latest annual report is already the most recent financial year data. This blend enables me to analyze different stocks on a similar basis, using the most relevant data points. For ADT, its latest trailing-twelve-month earnings is -$380.5M, which compared to the prior year’s level, has become less negative. Given that these values may be somewhat nearsighted, I’ve estimated an annualized five-year figure for ADT’s net income, which stands at -$312.2M. This shows that, ADT has historically performed better than recently, while it seems like earnings are now heading back towards to right direction again.
We can further assess ADT’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the last five years ADT’s top-line has risen by 59.42% on average, signalling that the company is in a high-growth phase with expenses shooting ahead of revenues, leading to annual losses. Looking at growth from a sector-level, the US commercial services industry has been growing, albeit, at a subdued single-digit rate of 6.67% over the prior twelve months, and 8.88% over the last five years. This means despite the fact that ADT is presently loss-making, it may have been aided by industry tailwinds, moving earnings in the right direction.
What does this mean?
ADT’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. With companies that are currently loss-making, it is always hard to predict what will occur going forward, and when. The most insightful step is to examine company-specific issues ADT may be facing and whether management guidance has dependably been met in the past. I recommend you continue to research ADT to get a better picture of the stock by looking at:
1. Financial Health: Is ADT’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.
2. Valuation: What is ADT worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether ADT is currently mispriced by the market.
3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
NB: Figures in this article are calculated using data from the trailing twelve months from 30 September 2017. This may not be consistent with full year annual report figures.
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.
