ADT Stock Declines Ahead of Tomorrow's Earnings Results
NEW YORK (TheStreet) -- ADT (ADT) - Get Report stock is slumping by 1.92% to $32.65 in late afternoon trading on Tuesday, ahead of the company's 2015 fourth quarter earnings results, due out before the market open tomorrow.
Analysts expect the monitored security provider to post a year over year decline in earnings and rise in revenue for the most recent quarter.
ADT has been forecast to report earnings of 48 cents per share on revenue of $897.05 by analysts surveyed by Thomson Reuters.
Last year, the company posted earnings of 55 cents per share on revenue of $883 million for the 2014 fourth quarter.
Separately, TheStreet Ratings team rates ADT CORP as a Hold with a ratings score of C+. TheStreet Ratings Team has this to say about their recommendation:
We rate ADT CORP (ADT) a HOLD. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its revenue growth, reasonable valuation levels and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including generally higher debt management risk, disappointing return on equity and a generally disappointing performance in the stock itself.
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The revenue growth came in higher than the industry average of 5.1%. Since the same quarter one year prior, revenues slightly increased by 5.8%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- The gross profit margin for ADT CORP is currently very high, coming in at 87.75%. Regardless of ADT's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, ADT's net profit margin of 8.35% compares favorably to the industry average.
- Currently the debt-to-equity ratio of 1.71 is quite high overall and when compared to the industry average, suggesting that the current management of debt levels should be re-evaluated. Along with this, the company manages to maintain a quick ratio of 0.25, which clearly demonstrates the inability to cover short-term cash needs.
- The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. 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
Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of Jim Cramer, TheStreet or any of its contributors.