ADT Inc

We initiated a position in ADT Inc, a provider of security and smart home services to residential and small business customers in the U.S. While the Fund is overweight the Consumer Discretionary sector, ADT ranks high on earnings and cash flow — our most important valuation measures. ADT pays a 2.6% dividend, which is slightly above average in our stock-ranking universe. Performance over the trailing five- to seven-year period has been below average, which is also a positive indicator. Overall, the stock ranks in the top 5% in our universe, which led to the second quarter purchase.

ADT, Inc. (ADT) also traded higher on solid earnings results. Despite the challenging macro backdrop, the company is demonstrating pricing power, a historically low attrition rate and growing free cash flow generation. Notably, ADT continues to improve its balance sheet through significant debt reduction. Management expects to maintain this momentum into 2025 with strong cash flow growth as well as a new share repurchase plan. With ADT’s industry-leading brand and national presence, coupled with its Google and State Farm strategic partnerships, the company is well-positioned to be a prime beneficiary of growing demand for smart home technologies, including fully monitored residential security.

ADT, Inc. is demonstrating pricing power, a historically low attrition rate, and growing free cash flow generation. The company continues to improve its balance sheet through significant debt reduction. Management expects to maintain this momentum into 2025 with strong cash flow growth as well as a new share repurchase plan. With ADT’s industry-leading brand and national presence, coupled with its Google and State Farm strategic partnerships, the company is well-positioned to be a prime beneficiary of growing demand for smart home technologies, including fully monitored residential security.