Story updated at 10 a.m. to reflect market activity.
ADT gaing 0.7% to $31.43 in morning trading.
The firm also raised EPS estimates for the security company. According to Credit Suisse analysts ADT is growing customers and keeping a tight lid on costs.
Separately, TheStreet Ratings team rates ADT CORP as a Sell with a ratings score of D. TheStreet Ratings Team has this to say about their recommendation:
"We rate ADT CORP (ADT) a SELL. This is driven by a few notable weaknesses, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its unimpressive growth in net income, generally high debt management risk, generally disappointing historical performance in the stock itself and feeble growth in its earnings per share."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Commercial Services & Supplies industry. The net income has significantly decreased by 41.1% when compared to the same quarter one year ago, falling from $107.00 million to $63.00 million.
- Currently the debt-to-equity ratio of 1.51 is quite high overall and when compared to the industry average, suggesting that the current management of debt levels should be re-evaluated. To add to this, ADT has a quick ratio of 0.57, this demonstrates the lack of ability of the company to cover short-term liquidity needs.
- Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 28.92%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 27.65% compared to the year-earlier quarter. Turning toward the future, the fact that the stock has come down in price over the past year should not necessarily be interpreted as a negative; it could be one of the factors that may help make the stock attractive down the road. Right now, however, we believe that it is too soon to buy.
- ADT CORP's earnings per share declined by 27.6% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, ADT CORP increased its bottom line by earning $1.88 versus $0.40 in the prior year. For the next year, the market is expecting a contraction of 0.5% in earnings ($1.87 versus $1.88).
- When compared to other companies in the Commercial Services & Supplies industry and the overall market, ADT CORP's return on equity is below that of both the industry average and the S&P 500.
- You can view the full analysis from the report here: ADT Ratings Report