ADT
ADT Inc.
$7.03
Platform & Compounding FCF
85%
Two-stage FCF DCF
Strong
·
Conviction
Undervalued
Trading 40.5% below fair value
You pay
$7.03
Bear
$10.33
Fair
$11.80
Bull
$13.71
Bear
$10.33
+47.0%
3% stage 1 growth, 11% discount
Fair
$11.80
+68.0%
4% stage 1 growth, 11% discount
Bull
$13.71
+95.1%
5% stage 1 growth, 11% discount
Key Value Driver
FCF growth rate (4% base case)
Terminal Value % of EV
34%
Implied Market Multiple
10.3x
Market is pricing in (growth)
-0.1%
vs 4.0% base
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 $8.95 from 17 analysts, using a 25% weight on analyst consensus. That produces an estimated intrinsic value of $11.80 per share.
Warnings
Wall Street's average price target is $8.95 (from 17 analysts). Our estimate is 42% 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