ADT (ADT) versus The Competition Critical Review

ADT (NYSE:ADT) is one of 166 publicly-traded companies in the “Diversified Consumer Services” industry, but how does it compare to its peers? We will compare ADT to related businesses based on the strength of its dividends, valuation, earnings, analyst recommendations, profitability, institutional ownership and risk.

Dividends

ADT pays an annual dividend of $0.22 per share and has a dividend yield of 2.2%. ADT pays out 29.7% of its earnings in the form of a dividend. As a group, “Diversified Consumer Services” companies pay a dividend yield of 5.9% and pay out 36.4% of their earnings in the form of a dividend. ADT has increased its dividend for 1 consecutive years.

Analyst Ratings

This is a summary of current recommendations and price targets for ADT and its peers, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
ADT	0	5	2	0	2.29
ADT Competitors	1447	3454	5297	197	2.41

ADT currently has a consensus price target of $8.73, suggesting a potential downside of 11.77%. As a group, “Diversified Consumer Services” companies have a potential upside of 62.52%. Given ADT’s peers stronger consensus rating and higher possible upside, analysts clearly believe ADT has less favorable growth aspects than its peers.

Risk and Volatility

ADT has a beta of 0.95, meaning that its share price is 5% less volatile than the S&P 500. Comparatively, ADT’s peers have a beta of 0.51, meaning that their average share price is 49% less volatile than the S&P 500.

Profitability

This table compares ADT and its peers’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
ADT	11.85%	18.57%	4.30%
ADT Competitors	-3.87%	-29.68%	2.40%

Earnings and Valuation

This table compares ADT and its peers gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Net Income	Price/Earnings Ratio
ADT	$5.22 billion	$595.95 million	13.37
ADT Competitors	$3.24 billion	$219.39 million	15.41

ADT has higher revenue and earnings than its peers. ADT is trading at a lower price-to-earnings ratio than its peers, indicating that it is currently more affordable than other companies in its industry.

Insider & Institutional Ownership

87.2% of ADT shares are held by institutional investors. Comparatively, 48.4% of shares of all “Diversified Consumer Services” companies are held by institutional investors. 3.0% of ADT shares are held by company insiders. Comparatively, 19.8% of shares of all “Diversified Consumer Services” companies are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Summary

ADT beats its peers on 8 of the 15 factors compared.

ADT Company Profile

ADT Inc. provides professionally monitored security, automation and smart-home services to residential customers and businesses in the United States. Its offerings include intrusion detection, video surveillance, fire and life-safety systems, and remote monitoring and control through connected devices and mobile apps. The company also serves commercial customers with security solutions such as access control, video surveillance and fire protection. ADT provides installation, maintenance and monitoring services, with offerings tailored to homes, small businesses and larger organizations.