Analyzing Gaotu Techedu (NYSE:GOTU) & ADT (NYSE:ADT)

ADT (NYSE:ADT) and Gaotu Techedu (NYSE:GOTU) are both consumer discretionary companies, but which is the superior business? We will compare the two businesses based on the strength of their analyst recommendations, earnings, dividends, risk, institutional ownership, profitability and valuation.

Institutional and Insider Ownership

87.2% of ADT shares are owned by institutional investors. Comparatively, 48.4% of Gaotu Techedu shares are owned by institutional investors. 3.0% of ADT shares are owned by company insiders. Comparatively, 44.9% of Gaotu Techedu shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Volatility and Risk

ADT has a beta of 1.02, indicating that its stock price is 2% more volatile than the S&P 500. Comparatively, Gaotu Techedu has a beta of 0.73, indicating that its stock price is 27% less volatile than the S&P 500.

Earnings & Valuation

This table compares ADT and Gaotu Techedu”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
ADT	$5.13 billion	0.91	$595.95 million	$0.71	8.96
Gaotu Techedu	$6.62 billion	0.09	-$46.23 million	($0.21)	-11.55

ADT has higher earnings, but lower revenue than Gaotu Techedu. Gaotu Techedu is trading at a lower price-to-earnings ratio than ADT, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares ADT and Gaotu Techedu’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
ADT	11.85%	18.99%	4.40%
Gaotu Techedu	-5.00%	-26.89%	-5.73%

Analyst Recommendations

This is a breakdown of current ratings and price targets for ADT and Gaotu Techedu, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
ADT	1	4	2	0	2.14
Gaotu Techedu	1	0	0	0	1.00

ADT presently has a consensus target price of $8.23, indicating a potential upside of 29.30%. Given ADT’s stronger consensus rating and higher possible upside, analysts plainly believe ADT is more favorable than Gaotu Techedu.

Summary

ADT beats Gaotu Techedu on 12 of the 14 factors compared between the two stocks.

About ADT

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.

About Gaotu Techedu

Gaotu Techedu Inc., a technology-driven education company, provides learning services, educational content, and digitalized learning products in the People's Republic of China. The company offers traditional online academic subject tutoring services that covers academic subjects, such as mathematics, English, Chinese, physics, chemistry, biology, history, geography, and political science for students; non-academic tutoring services; personal interest courses comprising chess learning, family relationships and education, humanities, and science courses; and professional courses primarily for college students and adults preparing for professional qualification exams, such as teacher's qualification, Chartered Financial Analyst designation, Certified Public Accountant designation, and other exams. It also offers admission courses for admission tests and interviews, including national-post graduate entrance examination, civil service examinations, and others; foreign language courses; overseas study related services; and courses to prepare and pass certain language exams for study abroad, such as IELTS and TOEFL. In addition, the company designs and develops course outlines, interactive courseware, practice exercises, and lesson notes; publishes reference books comprising Chinese dictionary, dictionary of idioms, and past exam questions for the college entrance examination; and develops, expands, and upgrades education-centric digital products and solutions, as well as learning apps. Further, it offers books and digitalized auxiliary learning tools, such as smart devices and translation pens; and online tutoring services. The company was formerly known as GSX Techedu Inc. and changed its name to Gaotu Techedu Inc. in June 2021. Gaotu Techedu Inc. was incorporated in 2014 and is headquartered in Beijing, China.