We Might See A Profit From ADT Inc. (NYSE:ADT) Soon
With the business potentially at an important milestone, we thought we'd take a closer look at ADT Inc.'s (NYSE:ADT) future prospects. ADT Inc. provides security, automation, and smart home solutions to consumer and business customers in the United States. The US$8.1b market-cap company’s loss lessened since it announced a US$341m loss in the full financial year, compared to the latest trailing-twelve-month loss of US$37m, as it approaches breakeven. As path to profitability is the topic on ADT's investors mind, we've decided to gauge market sentiment. Below we will provide a high-level summary of the industry analysts’ expectations for the company.
Check out our latest analysis for ADT
Consensus from 5 of the American Consumer Services analysts is that ADT is on the verge of breakeven. They anticipate the company to incur a final loss in 2022, before generating positive profits of US$397m in 2023. The company is therefore projected to breakeven around a year from now or less! We calculated the rate at which the company must grow to meet the consensus forecasts predicting breakeven within 12 months. It turns out an average annual growth rate of 81% is expected, which signals high confidence from analysts. Should the business grow at a slower rate, it will become profitable at a later date than expected.
We're not going to go through company-specific developments for ADT given that this is a high-level summary, though, take into account that generally a high forecast growth rate is not unusual for a company that is currently undergoing an investment period.
Before we wrap up, there’s one issue worth mentioning. ADT currently has a debt-to-equity ratio of over 2x. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, which in this case, the company has significantly overshot. A higher level of debt requires more stringent capital management which increases the risk in investing in the loss-making company.
There are too many aspects of ADT to cover in one brief article, but the key fundamentals for the company can all be found in one place – ADT's company page on Simply Wall St. We've also compiled a list of relevant aspects you should further research:
Valuation: What is ADT worth today? Has the future growth potential already been factored into the price? The intrinsic value infographic in our free research report helps visualize whether ADT is currently mispriced by the market.
Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on ADT’s board and the CEO’s background.
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.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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