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ADT: The Latest Moves Are Adding Value

Aug. 04, 2020 12:32 PM ETADT Inc. (ADT) StockDLTR, GOOG, JCI2 Comments
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Dividend Power


  • ADT and Google just announced a major partnership that will enhance ADT's residential security and monitoring business.
  • ADT is also growing organically and through M&A in the commercial security market. ADT, recently, partnered with Dollar Tree to provide services.
  • The stock price soared in response to the Google and ADT announcement.
  • ADT is still very leveraged and it is not yet profitable.

ADT Inc. (NYSE:ADT) is a stock that I have written articles about several times over the past couple of years. As my readers know, I have been bullish in my articles. But to be frank, it has been a volatile stock to hold, and that is why I viewed it as a special situation stock. Today, Alphabet (GOOG) (GOOGL) announced a $450 million investment to acquire a 6.6% stake in ADT. The deal is expected to close in Q3 2020. The stock price soared over 80% pre-market in response. This deal will arguably strengthen ADT's market leadership position in home security. But besides the Google partnership, ADT has made several other strategic moves that are adding value. Granted, the company is very leveraged and is not profitable at the moment. That said, I still like ADT. The company has been able to move forward, expand into the commercial security market, and grow the top line despite high leverage. I view the stock as a long-term buy.


Overview of ADT

ADT's focus is on providing residential and commercial security and other monitoring services in the U.S. Note that the Canadian operations were divested. The company traces its roots to 1874. ADT's services include monitoring for security, fire and smoke, medical alert, access control, flooding, video, cybersecurity, and home automation. ADT is widely known and has high name recognition. Today, in the residential security monitoring market, ADT is reportedly five times the size of the next largest competitor and has an estimated 30% market share.

ADT was spun out of Johnson Controls International plc (JCI) in 2012. But this was only the residential business. JCI retained the commercial business. ADT was acquired by Apollo Global Management, LLC (APO) in 2016 and merged with Protection One and Alarm Security Group

This article was written by

Dividend Power profile picture
I am a self-taught individual investor and I have been investing in stocks for over 20 years. I focus on dividend growth investing with a long-term horizon since I believe in the compounding power of dividend growth investing. I generally look for undervalued large cap stocks with sustainable dividend growth and capital appreciation potential. My second focus is tech and small- or mid-cap stocks with or without dividends for their growth potential. I try to provide a little more in depth analysis weighing the positives and negatives. You can see my performance at my Tip Ranks profile. I am now in the Top 2.5% out of 26,000+ financial bloggers (September 2023).You can follow me at my blog Dividend Power. Read my e-book --> 10 Forever Dividend Growth StocksI also write stock analyses for Sure Dividend as a part-time free lance equity analyst. I provide investment analyses and research for their Sure Analysis Research Database. Additionally, I write stock snapshots and other research for Portfolio Insight.

Analyst’s Disclosure: I am/we are long ADT. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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Comments (2)

What is your take on the earnings results?
Dividend Power profile picture
About what I expected. Revenue increase but still a loss. ADT is not cutting guidance and infant upped it a bit from prior guidance. The company has a lot of recurring revenue but I I think 2020 will be tough as for most companies.
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