ADT: The Competitive Threats Are Overstated And The Debt Situation Is Improving

This article was first published July 19, 2019 on Seeking Alpha.

ADT Inc.’s (ADT) stock price continues to trade at roughly $6 – $6.50 per share since April 2019. At this point I mostly think that the risks and downside for ADT are priced in. Major risks include the high leverage after the IPO, slow decline in residential security and monitoring customers, and competitive threats to the residential business. On the other hand, the company has improved operational performance reducing customer attrition and time for customer revenue payback. In addition, ADT has completed several M&A deals to grow in the commercial security and monitoring market. The competitive threats to ADT’s residential security and monitoring business is of concern but I believe that the competitive threat has been overstated. The debt though large is being reduced and the maturity profile is improving. Furthermore, ADT should return to profitability sometime in 2019 or 2020. Hence, I am long ADT and view the stock as a buy.

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