Value
6.4/10data confidence 100%| Component | Sub-score |
|---|---|
| P/E | 8.4 |
| P/S | 9.4 |
| EV/EBITDA | 8.5 |
| Fwd P/E | 9.3 |
| PEG | 2.0 |
| Analyst target | 3.0 |
- â–¸Forward P/E: 10.0x
- â–¸PEG: 5.88
ADT · Why this verdict
Why ADT (ADT) is rated SELL
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results. How we score · Editorial policy
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VerdictSELL
Overall score5.0/10
ConfidenceHIGH
MacroRISK_OFF
TrendMatrix Research · core thesis
Engine thesis — one sentence
ADT is a stable security-services business with a perfect four-quarter earnings beat streak and strong cash conversion, but at $9.86 it trades 23.5% above the $7.54 analyst target after an overbought run (RSI 92) into earnings.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
RSI is 92, overbought, with a flat or negative 200-day moving-average slope, flagged as late-cycle distribution risk. Momentum breakdown | RSI should normalize below 70 without a price drop of more than 10%. | ↑Improving |
| CounterMomentum score is 7.7 with rising on-balance volume, and a positive price breakout can persist well after RSI is overbought. | ||
The price of $9.86 is above the $7.54 analyst target (upside of -23.5%), giving a reward-to-risk of -1.57 and downside of 15.0%. Analyst target | Price should consolidate lower toward the target, or analysts should raise their targets above $9.86. | ↓Deteriorating |
| CounterAnalyst targets may be stale after a sharp rally, and strong results could justify revisions upward. | ||
ADT has beaten earnings estimates in all 4 recent quarters with an average surprise of +6.1%, and reports in 2 days. Earnings | EPS should beat estimates again, with an average surprise staying above 0%. | ↓Deteriorating |
| CounterA beat streak is already priced in after the rally, so an inline report could trigger a sharp pullback. | ||
Quarterly revenue is steady at $1.27-1.31B, with cash conversion of 195% FCF/NI and a Piotroski F-Score of 7/9. Quality breakdown | Quarterly revenue should reach about $1.32B, in line with the estimate, and FCF should remain above net income. | →Stable |
| CounterGrowth score is only 2.6, so flat revenue offers little to drive further re-rating. | ||
Put/call ratio of 7.57 and implied volatility of 95% show heavy put hedging ahead of earnings. Key risks | Put/call ratio should fall below 2 after earnings if sentiment normalizes. | →Stable |
| CounterHeavy put buying can reflect hedging by holders protecting large gains rather than a bearish view. | ||
RSI is 92, overbought, with a flat or negative 200-day moving-average slope, flagged as late-cycle distribution risk.
↑ImprovingMomentum breakdown
- Expectation
- RSI should normalize below 70 without a price drop of more than 10%.
CounterMomentum score is 7.7 with rising on-balance volume, and a positive price breakout can persist well after RSI is overbought.
The price of $9.86 is above the $7.54 analyst target (upside of -23.5%), giving a reward-to-risk of -1.57 and downside of 15.0%.
↓DeterioratingAnalyst target
- Expectation
- Price should consolidate lower toward the target, or analysts should raise their targets above $9.86.
CounterAnalyst targets may be stale after a sharp rally, and strong results could justify revisions upward.
ADT has beaten earnings estimates in all 4 recent quarters with an average surprise of +6.1%, and reports in 2 days.
↓DeterioratingEarnings
- Expectation
- EPS should beat estimates again, with an average surprise staying above 0%.
CounterA beat streak is already priced in after the rally, so an inline report could trigger a sharp pullback.
Quarterly revenue is steady at $1.27-1.31B, with cash conversion of 195% FCF/NI and a Piotroski F-Score of 7/9.
→StableQuality breakdown
- Expectation
- Quarterly revenue should reach about $1.32B, in line with the estimate, and FCF should remain above net income.
CounterGrowth score is only 2.6, so flat revenue offers little to drive further re-rating.
Put/call ratio of 7.57 and implied volatility of 95% show heavy put hedging ahead of earnings.
→StableKey risks
- Expectation
- Put/call ratio should fall below 2 after earnings if sentiment normalizes.
CounterHeavy put buying can reflect hedging by holders protecting large gains rather than a bearish view.
Per-dimension breakdown
Quality
6.7/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 5.7 |
| ROA | 3.5 |
| Gross margin | 10.0 |
| Op margin | 9.6 |
| Net margin | 5.9 |
| Current ratio | 2.8 |
| FCF quality | 10.0 |
| Moat | 5.8 |
| Rule of 40 | 5.5 |
| Piotroski F | 7.8 |
- â–¸Excellent cash conversion: 195% FCF/NI
- â–¸Strong Piotroski F-Score: 7/9
Growth
2.6/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 3.0 |
| EPS growth | 2.3 |
Momentum
4.7/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 3.4 |
| MACD | 10.0 |
| OBV | 1.0 |
| MA position | 7.5 |
| Volume | 1.8 |
- â–¸Overbought (RSI 91)
- â–¸Volume distribution (falling OBV)
- â–¸Above 200-MA but MA slope flat/negative + RSI 91 (late-cycle distribution risk)
Sentiment
4.8/10data confidence 100%| Component | Sub-score |
|---|---|
| LLM sentiment | 5.7 |
| Analyst rating | 5.0 |
| Price target | 3.5 |
- â–¸Below analyst target
Insider
6.5/10data confidence 75%| Component | Sub-score |
|---|---|
| materiality | 5.0 |
| holder change | 7.4 |
| notable moves | 7.0 |
- ▸No net insider activity — $0 (0.000% of mkt cap)
Peer rank
3.2/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 7.2 |
| quality rank | 4.5 |
| growth rank | 0.9 |
- â–¸Attractive P/E vs peers
Technical
3.6/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 0.8 |
| support resistance | 0.3 |
| 52w position | 9.8 |
Risk (lower is worse)
5.2/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 7.2 |
| days to cover | 7.8 |
| volatility | 4.1 |
| put call | 6.4 |
| implied vol | 0.0 |
| beta | 7.2 |
| debt equity | 2.8 |
| news risk | 6.0 |
- â–¸High IV: 128%
Catalyst
6.2/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 1.0 |
| earnings history | 10.0 |
| surprise avg | 5.2 |
| dividend safety | 6.8 |
| news activity | 8.0 |
- â–¸Estimates down -31.8% (30d)
- â–¸Strong earnings: 3B/0M
How the verdict was assembled
Engine trigger
Multiple concerning factors. Consider reducing position.
Engine technical detail
verdict_path:
L4:PATH_F_SELLPassed (5)
- MOMENTUM:4.7>=4.5
- INSIDER:OK
- EARNINGS_PROXIMITY:NO_DATE
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (1)
- ASYMMETRY:-1.6=NEGATIVE
Warning (2)
- MOMENTUM:4.7<5.5 (soft — BUY_NOW allowed but watch)
- 8K_CSUITE_CHANGE:5.02 (officer departure/appointment)
Reward-to-Risk
-1.58
Upside
-23.8%
Downside
15.0%
Sizing output
AVOID
Setup— — No clear chart pattern; technical signals are mixed
EdgeNo clear edge — No clear edge identified
SuitabilityModerate — Balanced profile
Investment implication
The F-path SELL output reflects an overall score of 2.8 below the 5.6 soft trigger — multiple weakening dimensions accumulated rather than a single hard-floor breach. The strongest dimension ( Quality at 6.7) was not enough to lift the adjusted overall above the threshold. Co-occurring failed gates ( ASYMMETRY:-1.6=NEGATIVE) reinforce the read. Current asymmetry R:R is -1.58 — supplementary context, not the trigger for this path.
The strongest dimensions are Quality at 6.7, Insider at 6.5, and Value at 6.4; the weakest are Growth at 2.6, Peer rank at 3.2, and Technical at 3.6. The V9 engine flagged 1 failed gate with 2 warnings, producing an asymmetric reward-to-risk of -1.58 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Price Well Above Analyst Target
Trip ifPrice exceeds 40% above the $7.54 analyst target, above about $10.60.
- P2Overbought Late Cycle Momentum
Trip ifPrice falls more than 15% below $9.86 after the overbought run.
- P3Perfect Earnings Beat Streak
Trip ifEPS surprise falls below 0% in the next reported quarter.
- P4Steady Revenue And Cash Conversion
Trip ifQuarterly revenue falls below $1.25B for 2 consecutive quarters.
- P5Elevated Options Hedging
Trip ifPut/call ratio stays above 5 for 2 consecutive months.