Is ADT a high-quality business?

AlphaMadera's AlphaQuality grade scores ADT Inc. on six pillars — profitability, capital efficiency, balance-sheet strength, growth durability, cash generation, and shareholder yield. The composite letter grade reflects how ADT compares to a Buffett-style quality bar.

What is ADT Inc.'s AlphaQuality grade?

AlphaQuality assigns a letter grade (A through F) to ADT based on a six-pillar quantitative model. The live page shows the composite grade plus each pillar's individual score with the underlying metrics.

What makes ADT a quality stock?

AlphaQuality looks at return on capital, free-cash-flow margins, debt-to-equity, revenue stability, dividend and buyback policy, and operating-margin trend. Stocks scoring well across all six pillars earn higher grades — the methodology favors compounders over cyclicals.

ADT - ADT Inc.

Price: -- -- | CONSENSUS: Buy DETAILS | PRICE TARGET: $8.97 DETAILS

AlphaQuality

Quantitative six-pillar business-quality grade

Platform & Compounding FCF

AlphaQuality — archetype-weighted quantitative grade

F 30.0 / 100 pillar composite

Composite Grade

Composite of six pillars weighted for platform & compounding fcf businesses. Purely quantitative — no stock price or analyst input.

⚠ 2 of the last 5 fiscal years showed negative net income — AlphaQuality will not grade above F for persistent unprofitability in a platform & compounding fcf business.

Grade overrides the 30.0 pillar composite because hard gates always win. Use the pillar breakdown below to see where the underlying numbers sit.

Profitability

Weight: 25%

C+ 57.6

5yr Avg ROIC 5.9% 39/100
Operating Margin Trend +6.18 pp/yr 100/100

Capital Efficiency

Weight: 15%

D- 30.1

5yr Avg ROE 3.8% 29/100
5yr Share-Count CAGR 2.1% 32/100

Growth Quality

Weight: 25%

C 51.2

5yr Revenue CAGR -0.9% 18/100
5yr EPS CAGR 52.2% 100/100
Revenue-Growth Years (5) 2/5 40/100

Cash Generation

Weight: 20%

A- 80.2

5yr FCF Margin 22.5% 93/100
5yr FCF/NI Conversion 4.33x 65/100

Balance Sheet

Weight: 10%

D+ 43.7

Net Debt / EBITDA 2.58x 58/100
Interest Coverage (EBIT/Int) 3.25x 47/100
Altman Z-Score 0.84 13/100

Stability

Weight: 5%

C+ 61.0

EPS Volatility (σ/μ) 0.37 47/100
Piotroski F-Score 9 100/100
Negative-Revenue Years (5) 3/5 40/100

4 of 4 gurus held; 1 added; 3 trimmed; 2 full exits.

Holders: 4
Avg Δ position: -29.7%
New buys: 0
Full exits: 2

Soros sold -100%
Wood sold -100%
Cooperman decreased -78%

How this is calculated

AlphaQuality grades six pillars from 0-100 and weights each by archetype:

Profitability (25%) — 5yr Avg ROIC, Operating Margin Trend
Capital Efficiency (15%) — 5yr Avg ROE, 5yr Share-Count CAGR
Growth Quality (25%) — 5yr Revenue CAGR, 5yr EPS CAGR, Revenue-Growth Years (5)
Cash Generation (20%) — 5yr FCF Margin, 5yr FCF/NI Conversion
Balance Sheet (10%) — Net Debt / EBITDA, Interest Coverage (EBIT/Int), Altman Z-Score
Stability (5%) — EPS Volatility (σ/μ), Piotroski F-Score, Negative-Revenue Years (5)

We deliberately ignore stock price, analyst targets, and consensus ratings so the grade is suitable for backtesting forward returns. A minimum of 5 fiscal years of audited statements is required; distressed and highly leveraged infrastructure businesses are declared ungradable rather than forced into a numeric score.