ADT Inc. Common Stock (ADT)

FairStock Score: 59/100 — STEADY

Key Financials

Strengths

• Generates $706 million in annual free cash flow (12.1% yield on market cap)
• Strong Piotroski F-Score of 7/9 indicating robust financial health across profitability, leverage, and efficiency metrics
• Solid return on equity of 15.8% above cost of capital
• Attractive 3.0% dividend yield providing steady income returns
• Established organization with 12,200 employees providing operational scale

Concerns

• High leverage at 2.06x debt-to-equity increases financial risk and interest expense burden
• Altman Z-Score of 0.2 places it in the financial distress zone—elevated bankruptcy risk

AI Analysis

ADT Inc. Common Stock is a small-cap industrials company valued at $5.8 billion. The business generates $5.1 billion in annual revenue with a 2.8% net margin and $706 million in free cash flow. From a quality standpoint, ADT shows solid Piotroski F-Score of 7/9 and distressed Altman Z-Score of 0.2 warrants caution. On valuation, the stock is attractively valued at 10.7x earnings, with a modest 14% margin of safety vs Graham Number. Growth dynamics show revenue growing at 1.3% and profit growth of -23.5%. The 3.0% dividend yield adds an income component for patient holders. Our composite FairStock Score of 59/100 reflects mixed fundamentals overall. Investors should weigh the business quality against the current price and their own margin of safety requirements.

Bull Case

The market underappreciates ADT's consistent 16% ROE at just 11x earnings—a re-rating toward sector peers could unlock 30-50% upside. With $706 million in annual free cash flow (12.1% yield), management has ample capital for buybacks, dividends, or accretive acquisitions.

Bear Case

Elevated leverage at 2.1x D/E means rising interest rates or revenue weakness could strain debt covenants and force asset sales at distressed prices. Regulatory changes, input cost inflation, or demand normalization represent underappreciated risks that could materially impact forward estimates.

Data from SEC filings. AI analysis is for educational purposes only — not investment advice. Scoring methodology · Disclaimer