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GuruFocus Financial Strength Rank measures how strong a company’s financial situation is. It is based on these factors

1. The debt burden that the company has as measured by its Interest coverage (current year).
2. Debt to revenue ratio. The lower, the better
3. Altman Z-score.

A company ranks high with financial strength is likely to withstand any business slowdowns and recessions.

Financial Strength : 5/10

vs
industry
vs
history
Cash to Debt 0.02
ADT's Cash to Debt is ranked lower than
68% of the 238 Companies
in the Global Security & Protection Services industry.

( Industry Median: 0.39 vs. ADT: 0.02 )
ADT' s 10-Year Cash to Debt Range
Min: 0.02   Max: No Debt
Current: 0.02

Equity to Asset 0.33
ADT's Equity to Asset is ranked lower than
53% of the 240 Companies
in the Global Security & Protection Services industry.

( Industry Median: 0.44 vs. ADT: 0.33 )
ADT' s 10-Year Equity to Asset Range
Min: 0.33   Max: 0.56
Current: 0.33

0.33
0.56
Interest Coverage 6.23
ADT's Interest Coverage is ranked higher than
53% of the 173 Companies
in the Global Security & Protection Services industry.

( Industry Median: 9.92 vs. ADT: 6.23 )
ADT' s 10-Year Interest Coverage Range
Min: 6.23   Max: 7.76
Current: 6.23

6.23
7.76
Z-Score: 1.02
GuruFocus Profitability Rank ranks how profitable a company is and how likely the company’s business will stay that way. It is based on these factors:

1. Operating Margin
2. Trend of the Operating Margin (5-year average). The company with an uptrend profit margin has a higher rank.
••3. Consistency of the profitability
4. Piotroski F-Score
5. Predictability Rank•

The maximum rank is 10. A rank of 7 or higher means a higher profitability and may stay that way. A rank of 3 or lower indicates that the company has had trouble to make a profit.

Profitability Rank is not directly related to the Financial Strength Rank. But if a company is consistently profitable, its financial strength will be stronger.

Profitability & Growth : 4/10

vs
industry
vs
history
Operating margin (%) 22.21
ADT's Operating margin (%) is ranked higher than
88% of the 239 Companies
in the Global Security & Protection Services industry.

( Industry Median: 7.86 vs. ADT: 22.21 )
ADT' s 10-Year Operating margin (%) Range
Min: 22.21   Max: 22.37
Current: 22.21

22.21
22.37
Net-margin (%) 12.72
ADT's Net-margin (%) is ranked higher than
85% of the 239 Companies
in the Global Security & Protection Services industry.

( Industry Median: 4.73 vs. ADT: 12.72 )
ADT' s 10-Year Net-margin (%) Range
Min: 12.09   Max: 12.72
Current: 12.72

12.09
12.72
ROE (%) 9.74
ADT's ROE (%) is ranked higher than
74% of the 239 Companies
in the Global Security & Protection Services industry.

( Industry Median: 8.11 vs. ADT: 9.74 )
ADT' s 10-Year ROE (%) Range
Min: 7.19   Max: 9.74
Current: 9.74

7.19
9.74
ROA (%) 4.25
ADT's ROA (%) is ranked higher than
74% of the 244 Companies
in the Global Security & Protection Services industry.

( Industry Median: 3.08 vs. ADT: 4.25 )
ADT' s 10-Year ROA (%) Range
Min: 4.25   Max: 4.3
Current: 4.25

4.25
4.3
ROC (Joel Greenblatt) (%) 312.77
ADT's ROC (Joel Greenblatt) (%) is ranked higher than
97% of the 241 Companies
in the Global Security & Protection Services industry.

( Industry Median: 11.41 vs. ADT: 312.77 )
ADT' s 10-Year ROC (Joel Greenblatt) (%) Range
Min: 312.77   Max: 402.91
Current: 312.77

312.77
402.91
» ADT's 10-Y Financials

Financials


Revenue & Net Income
Cash & Debt
Oprt. Cash Flow & Free Cash Flow

» Details

Guru Trades

Q1 2013

ADT Guru Trades in Q1 2013

Pioneer Investments 42,511 sh (New)
Louis Moore Bacon 110,000 sh (New)
Paul Tudor Jones 18,000 sh (+80%)
Mario Gabelli 783,460 sh (+13.57%)
John Keeley 251,137 sh (+4.89%)
George Soros 575,000 sh (unchged)
John Burbank Sold Out
James Barrow Sold Out
Dodge & Cox 6,731,608 sh (-1.16%)
Julian Robertson 312,300 sh (-39.88%)
Jean-Marie Eveillard 801,975 sh (-47.45%)
Steven Cohen 97,239 sh (-65.74%)
» More
Q2 2013

ADT Guru Trades in Q2 2013

Dodge & Cox 20,110,537 sh (+198.75%)
Louis Moore Bacon 300,000 sh (+172.73%)
Mario Gabelli 890,402 sh (+13.65%)
George Soros 575,000 sh (unchged)
Julian Robertson Sold Out
Pioneer Investments Sold Out
John Keeley 250,417 sh (-0.29%)
Paul Tudor Jones 14,300 sh (-20.56%)
Steven Cohen 33,865 sh (-65.17%)
Jean-Marie Eveillard 750 sh (-99.91%)
» More
Q3 2013

ADT Guru Trades in Q3 2013

Larry Robbins 2,024,452 sh (New)
Steven Cohen 115,548 sh (+241.2%)
Dodge & Cox 26,114,603 sh (+29.86%)
Mario Gabelli 1,025,226 sh (+15.14%)
John Keeley 262,607 sh (+4.87%)
George Soros 575,000 sh (unchged)
Jean-Marie Eveillard 750 sh (unchged)
Louis Moore Bacon Sold Out
Paul Tudor Jones 5,800 sh (-59.44%)
» More
Q4 2013

ADT Guru Trades in Q4 2013

Wallace Weitz 375,000 sh (New)
Paul Tudor Jones 15,400 sh (+165.52%)
Larry Robbins 5,090,297 sh (+151.44%)
Dodge & Cox 28,008,568 sh (+7.25%)
Mario Gabelli 1,068,167 sh (+4.19%)
John Keeley 273,492 sh (+4.14%)
Jean-Marie Eveillard 750 sh (unchged)
Louis Moore Bacon 250,000 sh (unchged)
George Soros Sold Out
Steven Cohen 21,974 sh (-80.98%)
» More
» Details

Insider Trades

Latest Guru Trades with ADT

GuruDate Trades Impact to Portfolio Price Range * (?) Current Price Change from Average Current Shares
Wallace Weitz 2013-12-31 New Buy0.51%$38.8 - $44.01 $ 29.94-27%375000
George Soros 2013-12-31 Sold Out 0.26%$38.8 - $44.01 $ 29.94-27%0
Dodge & Cox 2013-09-30 Add 29.86%0.28%$39.11 - $43.86 $ 29.94-27%26114603
Julian Robertson 2013-06-30 Sold Out 2.1%$38.77 - $48 $ 29.94-30%0
Dodge & Cox 2013-06-30 Add 198.75%0.63%$38.77 - $48 $ 29.94-30%20110537
Jean-Marie Eveillard 2013-06-30 Reduce -99.91%0.13%$38.77 - $48 $ 29.94-30%750
Julian Robertson 2013-03-31 Reduce -39.88%1.71%$46 - $49.73 $ 29.94-37%312300
John Burbank 2013-03-31 Sold Out 1.3%$46 - $49.73 $ 29.94-37%0
Jean-Marie Eveillard 2013-03-31 Reduce -47.45%0.12%$46 - $49.73 $ 29.94-37%801975
James Barrow 2013-03-31 Sold Out 0.02%$46 - $49.73 $ 29.94-37%0
Premium More recent guru trades are included for Premium Members only!!
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Guru Investment Theses on The ADT Corporation

Weitz Funds' Analyst Corner - A Perspective on the ADT Corporation - Feb 03, 2014

By Drew Weitz



The ADT Corporation (ADT) is the leading provider of monitored home security service in the United States and Canada. The company possesses the strongest brand in the security industry, evidenced by its 6.5 million residential and small business customers – more than five times the number of its next largest competitor. In addition to traditional alarm monitoring, ADT is expanding its offerings to include interactive services (e.g. remote arm/disarm) and home automation services (e.g. climate/lighting control, physical lock/unlock of doors) for an incremental fee. The company was spun-off from Tyco International (TYC) in September 2012.



The Attraction of Subscription Businesses



As investors, we are qualitatively drawn to businesses that are leaders in their industries and possess strong competitive advantages. Quantitatively, we also look for companies that consistently generate strong, predictable and growing streams of cash beyond what is needed to reinvest in the business. Subscription models, characterized by customers (often under contract) that pay on regular intervals, often provide such predictability. Our investments in pay TV companies are examples of the marriage of these two traits. We believe that ADT, too, fits this bill. As described above, it is the undisputed heavyweight of the industry with the most trusted brand and scale that drives lower costs than competitors. New customers sign an initial three-year contract and pay monthly for service, creating a business with roughly 90% recurring revenue and highly visible cash flows. Thanks to their large subscriber base, the cash generated is more than sufficient to purchase equipment for new installations and compensate third-party authoriz ed dealers for accounts generated. Lastly, these predictable cash flows support ADT's ability to prudently issue debt. Excess cash and debt capital allow management plenty of flexibility to play offense.



Customers are Taking ADT's Pulse



For years, industry growth has been slow and steady, if somewhat unexciting. Thanks to the proliferation of Internet- connected consumer devices, however, the company is enjoying a renaissance. ADT's interactive and home automation service, dubbed Pulse, allows customers to remotely control lighting, adjust thermostats, monitor security cameras, or lock and unlock their doors in addition to simply arming or disarming a security system. Consumer response to the product has been strong: although only 8% of ADT subscribers have Pulse today, nearly one-third of new sales include the additional functionality (and higher price tag). Furthermore, the company estimates that roughly 20% of the installed base has interest in upgrading to automation services. Pulse's 25% higher monthly fee and positive impact on retention more than offset the increased equipment and installation costs. Adoption by new customers and upgrades by existing subscribers will drive the mix of Pulse accounts higher over time, providing a multi-year earnings benefit to ADT.



Attractive Opportunities Attract Competition



No strangers to the benefits of subscription businesses themselves, pay TV and telecom companies have entered the market, looking to bundle home security and automation services with their video, broadband and telephony offerings. Their entrance is coincident with a period of elevated account attrition for the company, raising warning signs for investors and sending ADT's shares lower. New competitors, however, do not appear to be the culprit for ADT's higher attrition. Indeed, results for the last 12 months indicate that ADT has gained market share, while the modest gains made by pay TV and telecom companies have been at the expense of small, subscale firms. Instead, higher turnover in the housing market has led to greater account termination as subscribers change residences. ADT hopes to turn this challenge into an opportunity to both follow the old subscriber to their new address and sell service to the new occupant of the former premises. Furthermore, the company has taken steps to improve the long-term value of new subscribers, including tightening credit standards and optimizing its third-party dealer network by eliminating those not committed to following ADT's Pulse strategy. In the short run, these actions have a negative impact on attrition by reducing the number of new customers available to offset losses. However, we believe this will be more than offset by a greater lifetime value of the prospective subscriber base.



What Matters Most is Value per Share



Investors initially cheered ADT's separation from Tyco, bidding its shares up from the high $30s to over $50 in short order. However, as attrition rose and new customer growth fell below expectations, shareholders sold just as quickly. Despite these disappointments, in its first 16 months as a public company, ADT will have used its excess cash flow and balance sheet capacity to buy in nearly 20% of its own equity at reasonable prices, thereby driving a substantial increase in business value per share . Going forward, the pace of capital returns will likely diminish as management looks to prioritize investment in the growth of its business. Indeed, the specter of cable and telecom competition combined with the need to invest in new home automation services may drive a wave of consolidation of smaller players that lack the scale to keep up. At the right prices, we would expect (and encourage) ADT to participate, driving additional business value growth.



With the stock back in the high $30s, the recent growth in ADT's business value per share makes today's valuation a more attractive buying opportunity than a year ago. Compared with our current estimation of ADT's business value in the low $50s, we believe the company's shares represented an attractive investment for our shareholders



Check out Wallace Weitz latest stock trades

Investment Guru John Keeley Comments on ADT Corp - Mar 26, 2013

During the fourth quarter, ADT Corporation (ADT) proved to be the top performing position in the fund. Shares of the producer of electronics security debuted strongly after being spun-off from Tyco last year. The company climbed over 29 percent and added 56 basis points during the quarter. Although we believe the company can do well regardless of the housing environment, the stock was clearly boosted by improvement and continued momentum in the housing market.

From Keeley Funds' fourth quarter 2012 investor letter.

Check out John Keeley latest stock trades

Top Ranked Articles about The ADT Corporation

Weitz Funds' Analyst Corner - A Perspective on the ADT Corporation
By Drew Weitz Read more...
Top-Returning Manager Larry Robbins' Stocks at 52-Week Lows
The market may have soared, but the average hedge fund returned only 7.4% in 2013. Meanwhile, Larry Robbins (Trades, Portfolio)’ Glenview Capital did multiple laps around them, with his $1.8 billion Glenview Capital Opportunity Fund return more than 100% over the year, to become the top-performing hedge fund.   Read more...

Ratios

vs
industry
vs
history
P/E(ttm) 16.10
ADT's P/E(ttm) is ranked higher than
64% of the 206 Companies
in the Global Security & Protection Services industry.

( Industry Median: 17.90 vs. ADT: 16.10 )
ADT' s 10-Year P/E(ttm) Range
Min: 15.34   Max: 28.43
Current: 16.1

15.34
28.43
P/B 1.90
ADT's P/B is ranked higher than
53% of the 236 Companies
in the Global Security & Protection Services industry.

( Industry Median: 1.80 vs. ADT: 1.90 )
ADT' s 10-Year P/B Range
Min: 1.61   Max: 2.55
Current: 1.9

1.61
2.55
P/S 1.92
ADT's P/S is ranked lower than
62% of the 244 Companies
in the Global Security & Protection Services industry.

( Industry Median: 1.13 vs. ADT: 1.92 )
ADT' s 10-Year P/S Range
Min: 1.8   Max: 3.55
Current: 1.92

1.8
3.55
PFCF 7.30
ADT's PFCF is ranked higher than
87% of the 124 Companies
in the Global Security & Protection Services industry.

( Industry Median: 19.03 vs. ADT: 7.30 )
ADT' s 10-Year PFCF Range
Min: 6.77   Max: 10.5
Current: 7.3

6.77
10.5
EV-to-EBIT 14.10
ADT's EV-to-EBIT is ranked higher than
65% of the 217 Companies
in the Global Security & Protection Services industry.

( Industry Median: 14.90 vs. ADT: 14.10 )
ADT' s 10-Year EV-to-EBIT Range
Min: 13.9   Max: 19.6
Current: 14.1

13.9
19.6

Dividend & Buy Back

vs
industry
vs
history
Dividend Yield 1.92
ADT's Dividend Yield is ranked higher than
53% of the 156 Companies
in the Global Security & Protection Services industry.

( Industry Median: 1.93 vs. ADT: 1.92 )
ADT' s 10-Year Dividend Yield Range
Min: 0.26   Max: 1.78
Current: 1.92

0.26
1.78
Dividend Payout 0.27
ADT's Dividend Payout is ranked higher than
66% of the 138 Companies
in the Global Security & Protection Services industry.

( Industry Median: 0.35 vs. ADT: 0.27 )
ADT' s 10-Year Dividend Payout Range
Min: 0.24   Max: 0.32
Current: 0.27

0.24
0.32
Yield on cost (5-Year) 1.90
ADT's Yield on cost (5-Year) is ranked lower than
51% of the 158 Companies
in the Global Security & Protection Services industry.

( Industry Median: 2.18 vs. ADT: 1.90 )
ADT' s 10-Year Yield on cost (5-Year) Range
Min: 0.26   Max: 1.78
Current: 1.9

0.26
1.78

Valuation & Return

vs
industry
vs
history
Price/Median PS Value 0.70
ADT's Price/Median PS Value is ranked higher than
96% of the 233 Companies
in the Global Security & Protection Services industry.

( Industry Median: 1.10 vs. ADT: 0.70 )
ADT' s 10-Year Price/Median PS Value Range
Min: 0.9   Max: 1.22
Current: 0.7

0.9
1.22
Earnings Yield (Greenblatt) 7.10
ADT's Earnings Yield (Greenblatt) is ranked higher than
66% of the 227 Companies
in the Global Security & Protection Services industry.

( Industry Median: 6.80 vs. ADT: 7.10 )
ADT' s 10-Year Earnings Yield (Greenblatt) Range
Min: 5.1   Max: 7.2
Current: 7.1

5.1
7.2

Business Description

Industry: Consulting & Outsourcing » Security & Protection Services
Compare: » details
Traded in other countries:ADT.Germany
ADT Corporation is a provider of electronic security, interactive home and business automation and related monitoring services. The Company currently serves more than six million customers.

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Danos
ReplyDanos - 1 month ago
any chance you can add a tab on gurufocus that includes most recent ceo letters to shareholders

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