ADT
ADT Inc.
$6.97
Platform & Compounding FCF
85%
Two-stage FCF DCF
Strong
·
Conviction
Undervalued
Trading 44.0% below fair value
You pay
$6.97
Bear
$10.91
Fair
$12.46
Bull
$14.47
Bear
$10.91
+56.6%
3% stage 1 growth, 11% discount
Fair
$12.46
+78.7%
4% stage 1 growth, 11% discount
Bull
$14.47
+107.6%
5% stage 1 growth, 11% discount
Key Value Driver
FCF growth rate (4% base case)
Terminal Value % of EV
34%
Implied Market Multiple
10.0x
Summary
Our base-case estimate uses a two-stage discounted cash flow model based on free cash flow. We then blend that result with the average analyst price target of $8.97 from 17 analysts, using a 25% weight on analyst consensus. That produces an estimated intrinsic value of $12.46 per share.
Warnings
Wall Street's average price target is $8.97 (from 17 analysts). Our estimate is 52% above the consensus -- consider that gap carefully.
Key Risks
- P/E alone misleads — earnings depressed by growth investment
- Cyclical or commodity businesses may be misclassified as platforms
- Terminal value dominance suggests sensitivity to long-run assumptions