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ADT Inc.

Data period: Annual Quarterly Graham uses annual
NYSE · Industrials
ADT Inc.
ADT · Security & Protection Services
$6.83
▼ -0.08 (-1.16%)
Cached · 10 min
Overall Grade
D
Defensive
C
Enterprising
Profitability A
Gross Profit Margin 81.0%
Operating Margin 25.5%
Net Income Margin 13.2%
Fin. Health F
Years to Pay Off Debt 45.5 yrs
Working Capital vs Long-Term Debt -$7.5B
Working Capital -$167M
Valuation F
Margin of Safety 0.0%
Price-to-Book 1.27x
Cash Flow C
Free Cash Flow $499M
CapEx % of Net Income 82.9%
Owner Earnings $653M
Defensive — Graham's strict criteria (P/B, P/E, dividends, stability)  ·  Enterprising — Profitability & cash flow focused, accepts higher valuations for quality
Metric Explanations
What each dimension measures and where the thresholds come from.
Gross Profit Margin
Revenue minus cost of goods sold. Graham's ≥40% threshold identifies businesses with durable pricing power. Note: software and financial companies naturally exceed this; retailers and manufacturers rarely reach it due to their cost structures.
Operating Margin
Profit after operating costs before interest and taxes. A consistent ≥15% operating margin signals a business with real competitive advantages. Capital-intensive industries (airlines, auto, commodities) rarely hit this threshold due to their structural cost base — compare within industry for context.
Net Income Margin
Bottom-line profit as a percentage of revenue. The ≥20% target reflects Buffett's preference for highly profitable businesses. Financial engineering (buybacks, tax optimisation) can inflate this temporarily — look for consistency across multiple years rather than a single strong result.
Years to Pay Off Debt
Total Debt ÷ Net Income. Lower = stronger balance sheet. Important caveat: utilities, telecoms, REITs, and infrastructure companies carry large structural debt by design — their bond-like cash flows service it comfortably at ratios that would alarm Graham. Compare within sector.
Working Capital vs Long-Term Debt
Working Capital minus Long-Term Debt. Negative results are common and expected in capital-return-focused businesses like Apple, Domino's, and McDonald's — where aggressive buybacks and dividends intentionally reduce book equity. This does not indicate financial distress in high-FCF businesses.
Working Capital
Current Assets minus Current Liabilities. Negative working capital can be a deliberate efficiency strategy in businesses that collect cash before paying suppliers (retailers, fast food franchises, subscription businesses). Assess alongside free cash flow generation for full context.
Margin of Safety
How far below the Graham Number the stock trades. Graham required a 33% discount as a buffer against analytical error. However, the Graham Number itself assumes 1960s-era P/E and P/B norms — for modern asset-light businesses it often understates true intrinsic value, making 0% MoS appear misleadingly bad.
Price-to-Book
Market price vs book value per share. Rarely below 1.5x for quality businesses today. Intangible assets (brand, software, patents) don't appear on the balance sheet under accounting rules, making P/B artificially high for asset-light companies like software and consumer brands.
Free Cash Flow
Operating cash flow minus capital expenditures. Buffett's most important metric — cash a business actually generates for its owners after maintaining and growing its asset base. Consistently positive FCF is one of the strongest indicators of a durable, well-run business regardless of accounting profits.
CapEx % of Net Income
Capital expenditure as a share of net income. Low CapEx signals a capital-light business that doesn't need heavy reinvestment to sustain earnings — Buffett's ideal. High CapEx is structurally necessary in manufacturing, airlines, telecoms, and semiconductors. For these industries, a high reading reflects the business model, not poor management.
Owner Earnings
Net Income + Depreciation & Amortisation − Capital Expenditures. Buffett's preferred measure of a company's true annual earning power — what could theoretically be distributed to owners without impairing the business. More reliable than reported EPS because it accounts for the capital cost of maintaining the business.
Market Data
Market Cap $5.2B
Enterprise Value $13.0B
P/E (TTM) 8.99
Dividend Yield 3.18%
Exchange NYSE
Key Margins
Gross Profit 81.0%
Operating Margin 25.5%
Net Margin 13.2%
Company Info
Sector Industrials
Industry Security & Protection Services
Employees 12200
Country United States
Visit website
📖
Full Graham Analysis

Mr. Market is currently offering ADT Inc. at $6.83.

The business passes only 3 of 7 of Graham's defensive criteria — well below his required standard.

At $6.83, the stock trades at a 42% premium to its Graham Number of $4.80. Graham would consider this price speculative.

There is no margin of safety at the current price. Graham would advise patience and waiting for a better entry point.

Negative NCAV — liabilities exceed current assets. Common in capital-return businesses (buybacks, debt-funded dividends) and capital-intensive industries. Not automatically a warning sign..

Conclusion: By Graham's standards, this stock is speculative at its current price. The intelligent investor would look elsewhere or wait.

About ADT Inc.

ADT Inc. provides security, interactive, and smart home solutions in the United States. The company offers burglar and life safety alarms, smart security cameras, smart home automation systems, and video surveillance systems to detect intrusion; control access; sense movement, smoke, fire, carbon monoxide, leaks, temperature, and other environmental conditions and hazards; and address personal medical emergencies, such as injuries or unanticipated falls. It also provides routine maintenance and installation services for upgraded or additional equipment; and personal emergency response system products and services to sustain independent living, detect when a fall occurs, and provide protection while on the go with geolocation capability. In addition, the company offers ADT+ app, an interactive technology platform; Trusted Neighbor, which allows customers to grant access to their homes through homeowner-authorized credentials and the ADT+ app; automation and smart home solutions, which allow for the remote monitoring and managing of spaces through smartphone applications, customized web portals, and touchscreen panels; and professionally installed and DIY security and smart home solutions. Further, it operates monitoring centers that provide professional and outsourced monitoring services; and field and call centers. The company sells its products under the ADT, ADT Pulse, and ADT+ brands. It serves the residential and small business security and automation markets comprising owners and renters of single-family homes, apartments, and small businesses owners through customer referrals, door-to-door activities, lead generation partners, retail and e-commerce channels, network of field sales and service offices, third-party independent dealers, and authorized dealers. The company was formerly known as Prime Security Services Parent, Inc. and changed its name to ADT Inc. in September 2017. ADT Inc. was founded in 1874 and is headquartered in Boca Raton, Florida.

Showing Key Metrics
Income Highlights
Metric Q1 2026 Q4 2025 Q4 2024
Gross Profit % 81.0%▼ 81.0%• N/A
Operating Margin % 25.5%▼ 26.1%• N/A
Net Income % 13.2%▲ 11.4%• N/A
Diluted EPS 0.19▲ 0.17• N/A
Balance Sheet Highlights
Metric Q1 2026 Q4 2025 Q4 2024
Total Assets $15.9B $15.8B N/A
Total Debt $7.7B▼ $7.7B• N/A
Working Capital -$167M▼ -$67M• N/A
Years to Pay Debt 45.55 52.89 N/A
Cash Flow Highlights
Metric Q1 2026 Q4 2025 Q4 2024
Free Cash Flow $499M▲ $235M• N/A
Owner Earnings $653M $625M N/A
CapEx % of Net Income 82.9% 95.4% N/A
📊 Quarterly mode — Graham Fair Value & 7 Criteria require annual data. Switch to Annual for full analysis.
Quarter vs Same Quarter Last Year
YoY strips seasonality
Revenue Growth (YoY)
Prior year: $1.3B ▲ $1.3B +0.9%
Revenue growth vs same quarter last year strips seasonality. Consistent double-digit growth is a Buffett hallmark.
Gross Margin
Prior year: 81.1% ▲ 81.0% -0.1pp
Buffett: consistent gross margin above 40% signals durable pricing power and competitive moat.
Operating Margin
Prior year: 25.7% ▲ 25.5% -0.2pp
Graham: operating margin reflects true business economics before financing. Trend matters as much as level.
Net Margin
Prior year: 11.1% ▲ 13.2% +2.1pp
Net margin can be distorted by one-time items, tax timing, or interest costs — compare to operating margin for signal quality.
Quarterly Health Checks
3 Graham/Buffett criteria that are valid and reliable on quarterly data
✅ Adequate Size
Graham required scale for resilience. Quarterly revenue × 4 gives an annualised proxy.
$1.3B/qtr (≈$5.1B ann.)
vs > $1.5B annualised revenue
❌ Financial Condition
Current assets vs current liabilities — a real-time liquidity snapshot. Valid and reliable on quarterly data.
0.84x current ratio
vs ≥ 2.0x
✅ Free Cash Flow
Buffett's most important single metric. A positive FCF quarter means the business generated real cash for owners after maintaining its asset base.
$499M
vs Positive
Operating Cash Flow
$638M
Latest quarter · Buffett's cash reality check
ROIC
1.7%
Based on latest annual operating income
Return on Invested Capital — Buffett's preferred measure for asset-light businesses. ROIC > 15% consistently signals a durable competitive advantage (moat). More meaningful than P/B for software, pharma, and consumer brand companies where most value is intangible and off-balance-sheet.
Market Cap / Net Assets
1.3x
Net Assets: $3.8B
Peers & Industry
No auto-detected peers for Security & Protection Services. You can manually compare ADT against any stock using the Compare tool.
"The management of a business is its most important single factor — more important than market position, patents, or financial structure."
— Benjamin Graham
Capital Allocation & Alignment
Insider Ownership
1.71%
Low — management has little skin in the game
Return on Equity (ROE)
4.4%
Weak — poor returns on equity
Return on Assets (ROA)
1.1%
Poor — assets are not generating adequate returns
Share Buybacks (Latest Year)
$607M
Management is returning capital to shareholders via buybacks
Debt Trend YoY
-0.3% YoY
Debt is declining — management is deleveraging
Leadership Team
James David DeVries
CEO, President & Chairman
Age 61
Pay: $3,812,789
2.264% of net income
Jeffrey Likosar
CFO and President of Corporate Development & Transformation
Age 54
Pay: $2,031,612
1.207% of net income
Fawad Khalil Ahmad
Executive VP and Chief Operating & Customer Officer
Age 48
Pay: $1,664,505
0.989% of net income
Robert Dale
Senior Vice President of National Account Sales
Age 67
Top Institutional Holders
Institution % Owned Shares
State Farm Mutual Automobile Insurance Co 18.14% 133,333,333
Apollo Management Holdings, L.P. 13.88% 102,000,366
Blackrock Inc. 8.54% 62,757,465
Vanguard Portfolio Management LLC 6.23% 45,767,952
AQR Capital Management, LLC 6.11% 44,938,803
Dimensional Fund Advisors LP 5.43% 39,887,288
LSV Asset Management 4.05% 29,784,400
Vanguard Capital Management LLC 3.04% 22,316,573
⚠️ Current ratio below 1 — liquidity risk
Risk Analysis
Beta (Market Risk)
1.07
Moderate volatility — moves slightly more than market
Short Interest
6.2% of float
Moderate short interest
Debt-to-Equity
2.04x
High leverage — significant financial risk
Current Ratio
0.84x
Weak liquidity — current liabilities exceed current assets
52-Week Price Range
Low: $6.25 Current: $6.83 High: $8.94
Currently at 22% of 52-week range

ADT Inc. (ADT) fundamental analysis — Overall grade D based on profitability, financial health, valuation and cash flow. Graham's Fair Value: $4.80. Margin of safety: 0%. Gross profit margin: 81.0%. Operating margin: 25.5%. Net margin: 13.2%. Market cap: $5.2B. Sector: Industrials. Industry: Security & Protection Services. Analysis powered by 360investing — free fundamental stock analysis based on Benjamin Graham and Warren Buffett principles.

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