Trade-Ideas LLC identified ADT ( ADT) as a "dead cat bounce" (down big yesterday but up big today) candidate. In addition to specific proprietary factors, Trade-Ideas identified ADT as such a stock due to the following factors:

  • ADT has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $83.2 million.
  • ADT has traded 90,468 shares today.
  • ADT is up 6.3% today.
  • ADT was down 15.7% yesterday.

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More details on ADT:

The ADT Corporation provides monitored security, interactive home and business automation, and related monitoring services in the United States and Canada. The stock currently has a dividend yield of 3%. ADT has a PE ratio of 17. Currently there are 4 analysts that rate ADT a buy, 1 analyst rates it a sell, and 2 rate it a hold.

The average volume for ADT has been 1.9 million shares per day over the past 30 days. ADT has a market cap of $4.9 billion and is part of the services sector and diversified services industry. The stock has a beta of 1.39 and a short float of 27% with 11.76 days to cover. Shares are down 10.3% year-to-date as of the close of trading on Monday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates ADT as a hold. 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 deteriorating net income, generally higher debt management risk and a generally disappointing performance in the stock itself.

Highlights from the ratings report include:
  • ADT's revenue growth has slightly outpaced the industry average of 5.0%. Since the same quarter one year prior, revenues slightly increased by 1.8%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • The gross profit margin for ADT CORP is currently very high, coming in at 87.32%. ADT has managed to maintain the strong profit margin since the same quarter of last year. Even though there were mixed results for the gross profit margin, ADT's net profit margin of 9.01% matches the industry average.
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed compared to the Commercial Services & Supplies industry average, but is greater than that of the S&P 500. The net income has decreased by 1.2% when compared to the same quarter one year ago, dropping from $82.00 million to $81.00 million.
  • Currently the debt-to-equity ratio of 1.85 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 0.27, which clearly demonstrates the inability to cover short-term cash needs.

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