ADT Inc

ADT Inc is assigned a 5-star quantitative star rating, illustrating our stance that this share class offers a compelling opportunity for investors. The stock currently trades at a 29% discount to our quantitative fair value estimate of $8.79 per share; however, some caution is warranted due to this estimate's medium uncertainty rating.

The firm's valuation metrics bolster our estimated fair value. A company's valuation metrics provide insights into the market's expectations for its future growth and profitability. For example, the firm's enterprise value to EBITDA ratio of 4.6 lies in the bottom 10% compared with peers globally. Relative to the company's EBITDA, the enterprise value of the business is low, which contributes to our view that shares are undervalued.

The firm's profitability is an additional encouraging factor. Highly profitable companies are often more resilient in recessions and are likely to generate stronger future cash flows for shareholders. The firm's earnings yield of 14.9%, for example, ranks in the top 10% compared with peers globally. This suggests that it is generating substantial earnings relative to its share price, which further promotes our favorable price/fair value ratio.

This company lacks a competitive advantage, receiving a quantitative economic moat rating of none. Additionally, the firm's moderate financial health score suggests it is acceptably positioned against adverse economic circumstances.