Yahoo Finance The ADT Inc. (NYSE:ADT) First-Quarter Results Are Out And Analysts Have Published New Forecasts
ADT Inc. (NYSE:ADT) just released its latest first-quarter results and things are looking bullish. Results overall were solid, with revenues arriving 2.6% better than analyst forecasts at US$1.3b. Higher revenues also resulted in substantially lower statutory losses which, at US$0.06 per share, were 2.6% smaller than the analysts expected. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.
View our latest analysis for ADT
Following the recent earnings report, the consensus from six analysts covering ADT is for revenues of US$5.19b in 2021, implying a discernible 2.4% decline in sales compared to the last 12 months. Losses are predicted to fall substantially, shrinking 51% to US$0.40. Before this latest report, the consensus had been expecting revenues of US$5.18b and US$0.41 per share in losses. So there seems to have been a moderate uplift in analyst sentiment with the latest consensus release, given the upgrade to loss per share forecasts for this year.
The average price target held steady at US$11.92, seeming to indicate that business is performing in line with expectations. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. Currently, the most bullish analyst values ADT at US$21.00 per share, while the most bearish prices it at US$8.00. We would probably assign less value to the analyst forecasts in this situation, because such a wide range of estimates could imply that the future of this business is difficult to value accurately. As a result it might not be a great idea to make decisions based on the consensus price target, which is after all just an average of this wide range of estimates.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the ADT's past performance and to peers in the same industry. These estimates imply that sales are expected to slow, with a forecast annualised revenue decline of 3.1% by the end of 2021. This indicates a significant reduction from annual growth of 8.1% over the last three years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 7.2% annually for the foreseeable future. It's pretty clear that ADT's revenues are expected to perform substantially worse than the wider industry.
The Bottom Line
The most important thing to take away is that the analysts reconfirmed their loss per share estimates for next year. On the plus side, there were no major changes to revenue estimates; although forecasts imply revenues will perform worse than the wider industry. The consensus price target held steady at US$11.92, with the latest estimates not enough to have an impact on their price targets.
With that in mind, we wouldn't be too quick to come to a conclusion on ADT. Long-term earnings power is much more important than next year's profits. We have forecasts for ADT going out to 2025, and you can see them free on our platform here.
You still need to take note of risks, for example - ADT has 3 warning signs we think you should be aware of.
This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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