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frontdoor inc (FTDR)
NASDAQ:FTDR
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frontdoor
(NASDAQ:FTDR)
Rating:75Outperform
Price Target:
$67.00
▲(8.06% Upside)
Positive Factors
Earnings Performance
Frontdoor reported its 11th straight earnings beat with adjusted EPS of $0.64 versus consensus of $0.38.
Financial Performance
Cash flows are at record levels and share buybacks are accelerating as well.
Revenue Growth
Revenue growth accelerated to 14%, driven by 2% of pricing increases and a 12% increase from higher volumes mainly due to the 2-10 deal.
Negative Factors
Direct Revenue
Direct revenues decreased by 9% as a result of a higher level of promotional activity.
Revenue Guidance
The stock traded down 19% likely due to the weaker-than-expected 2025 revenue guide.
Stock Valuation
The recent pullback appears overdone as the stock trades at only 12 times 2025 EPS versus 20 times historically.
frontdoor (FTDR) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$4.43B
Dividend YieldN/A
Average Volume (3M)662.47K
Price to Earnings (P/E)18.0
Beta (1Y)1.12
Revenue Growth8.56%
EPS Growth31.87%
CountryUS
Employees2,120
SectorConsumer Cyclical
Sector Strength80
IndustryPersonal Products & Services
Share Statistics
EPS (TTM)1.63
Shares Outstanding72,849,400
10 Day Avg. Volume612,364
30 Day Avg. Volume662,474
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)N/A
P/FCF RatioN/A
Enterprise Value/Market Cap1.14
Enterprise Value/Revenue2.57
Enterprise Value/Gross Profit4.76
Enterprise Value/Ebitda10.79
Forecast
1Y Price Target
$64.50Price Target Upside4.03% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering6
frontdoor Business Overview & Revenue Model
Company DescriptionFrontdoor, Inc. (FTDR) is a leading provider of home service plans, focused on offering homeowners peace of mind through a range of home warranty solutions. The company operates primarily in the residential services sector, providing coverage for various home systems and appliances, including plumbing, electrical, and HVAC systems. Frontdoor's core products include home warranty plans that protect homeowners from unexpected repair costs, along with additional services and products that enhance home maintenance and repair processes.
How the Company Makes MoneyFrontdoor generates revenue primarily through the sale of home warranty plans. Customers pay an annual fee for coverage, which typically includes a service fee for each repair request. The company's revenue model is based on subscription fees, where homeowners commit to annual or multi-year plans. Key revenue streams include the initial premium payments from new customers, renewals from existing customers, and service fees associated with claims processing. Additionally, Frontdoor benefits from partnerships with a network of service providers and contractors, which enables it to fulfill repair requests efficiently. The company may also explore upselling opportunities by offering add-on services or products that complement their core warranty offerings, further enhancing their earnings potential.
frontdoor Earnings Call Summary
Earnings Call Date:Aug 05, 2025
(Q2-2025)
| % Change Since: |
Next Earnings Date:Oct 30, 2025
Earnings Call Sentiment Positive
The earnings call highlighted significant revenue growth, improved margins, and successful integration and performance in the HVAC and 2-10 acquisition sectors. However, challenges in the real estate market and expected decline in home warranties were noted as concerns. Overall, the positive financial performance and strategic advancements outweighed the challenges.Q2-2025 Updates
Positive Updates
Strong Revenue Growth
Revenue increased 14% year-over-year to $617 million, with significant contributions from the 2-10 acquisition and organic growth in the direct-to-consumer channel.
Improved Gross Margin
Gross margin improved to 58%, a 130 basis point increase over the prior year, driven by operational efficiencies and favorable macroeconomic conditions.
Net Income and EBITDA Growth
Net income grew 21% to $111 million, and adjusted EBITDA increased 26% to $199 million, showcasing strong financial performance.
Successful Integration of 2-10 Acquisition
Synergies from the 2-10 acquisition are ahead of schedule, with cost synergies expected to reach $15 million, up from $10 million.
Successful Non-Warranty Revenue Growth
Non-warranty revenue, including the new HVAC program, grew significantly, with HVAC program revenue expected to be 40% higher than last year.
Strong Free Cash Flow
Free cash flow increased 44% to $237 million in the first half of 2025, demonstrating strong cash generation capabilities.
Negative Updates
Challenges in Real Estate Market
The real estate market remains challenging with existing home sales at low levels, impacting real estate units by a 63% decline over the last 5 years.
Expected Decline in Home Warranties
The number of home warranties is expected to decline by 1% to 3% for the year, despite efforts to stabilize and grow the count.
Company Guidance
During the Frontdoor Incorporated Second Quarter 2025 Earnings Conference Call, the company provided several key metrics and guidance for the fiscal year. Revenue for the second quarter increased by 14% year-over-year to $617 million, and gross margin improved by 130 basis points to 58%. Net income grew by 21% to $111 million, while adjusted EBITDA saw a significant rise of 26% to $199 million. The company also reported a 9% organic growth in first-year DTC home warranties and strong performance in non-warranty revenue, notably from the new HVAC program, which is projected to generate $120 million in revenue for the year. Additionally, Frontdoor repurchased $150 million worth of shares year-to-date through July 31. For the full year, the company raised its revenue outlook to between $2.055 billion and $2.075 billion and increased its adjusted EBITDA guidance to a range of $530 million to $550 million. Frontdoor also highlighted a retention rate of 78.3% and a strong utilization of preferred contractors at 84%.frontdoor Financial Statement Overview
Summary
Frontdoor exhibits strong revenue and profit growth, supported by effective cost management and operational efficiency. While the company is highly leveraged, it maintains a strong return on equity. Cash flow generation is robust, supporting the company's financial health. However, the high debt levels could pose risks if not carefully managed.Income Statement
Frontdoor has demonstrated consistent revenue growth with a TTM revenue growth rate of 3.97%. The gross profit margin has improved to 53.94% in the TTM, indicating strong cost management. Net profit margin is healthy at 13.08%, showing effective bottom-line management. EBIT and EBITDA margins are solid, reflecting operational efficiency.82
Very Positive
Balance Sheet
The company has a high debt-to-equity ratio of 4.74, indicating significant leverage, which could pose risks if not managed properly. However, return on equity is strong at 107.98%, suggesting effective use of equity to generate profits. The equity ratio is low, highlighting a reliance on debt financing.65
Positive
Cash Flow
Free cash flow growth is robust at 10.58% in the TTM, indicating strong cash generation capabilities. The operating cash flow to net income ratio is 0.80, showing good conversion of income to cash. The free cash flow to net income ratio is high at 0.91, reflecting efficient cash management.78
Positive
| Breakdown | TTM | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 1.97B | 1.84B | 1.78B | 1.66B | 1.60B | 1.47B |
| Gross Profit | 1.06B | 952.00M | 848.00M | 676.00M | 749.00M | 682.00M |
| EBITDA | 468.00M | 408.00M | 311.00M | 153.00M | 232.00M | 231.00M |
| Net Income | 257.00M | 235.00M | 171.00M | 71.00M | 128.00M | 112.00M |
Balance Sheet | ||||||
| Total Assets | 2.17B | 2.11B | 1.09B | 1.08B | 1.07B | 1.41B |
| Cash, Cash Equivalents and Short-Term Investments | 562.00M | 436.00M | 325.00M | 292.00M | 262.00M | 597.00M |
| Total Debt | 1.21B | 1.22B | 610.00M | 627.00M | 644.00M | 993.00M |
| Total Liabilities | 1.92B | 1.87B | 953.00M | 1.02B | 1.07B | 1.47B |
| Stockholders Equity | 253.00M | 239.00M | 137.00M | 61.00M | 2.00M | -61.00M |
Cash Flow | ||||||
| Free Cash Flow | 303.00M | 231.00M | 170.00M | 102.00M | 154.00M | 175.00M |
| Operating Cash Flow | 334.00M | 270.00M | 202.00M | 142.00M | 185.00M | 207.00M |
| Investing Cash Flow | -558.00M | -622.00M | -32.00M | -35.00M | -31.00M | -31.00M |
| Financing Cash Flow | 365.00M | 447.00M | -137.00M | -77.00M | -489.00M | -7.00M |
frontdoor Technical Analysis
Positive
62.00
Price Trends
58.42
Positive
53.90
Positive
53.38
Positive
Market Momentum
0.81
Negative
64.97
Neutral
90.49
Negative
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For FTDR, the sentiment is Positive. The current price of 62 is above the 20-day moving average (MA) of 58.50, above the 50-day MA of 58.42, and above the 200-day MA of 53.38, indicating a bullish trend. The MACD of 0.81 indicates Negative momentum. The RSI at 64.97 is Neutral, neither overbought nor oversold. The STOCH value of 90.49 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for FTDR.
frontdoor Risk Analysis
frontdoor disclosed 39 risk factors in its most recent earnings report. frontdoor reported the most risks in the "Finance & Corporate" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
frontdoor Peers Comparison
Overall Rating
UnderperformOutperform
Sector (61)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
78 Outperform | $11.16B | 21.69 | 34.52% | 1.55% | 2.65% | 7.42% | |
75 Outperform | $4.43B | 17.97 | 109.83% | ― | 8.56% | 31.87% | |
75 Outperform | $27.37B | 55.91 | 36.52% | 1.16% | 10.38% | 6.62% | |
67 Neutral | $6.74B | 11.81 | 673.21% | 2.95% | 4.17% | 5.56% | |
61 Neutral | $17.75B | 12.56 | -5.49% | 3.02% | 1.43% | -14.12% |
* Consumer Cyclical Sector Average
Performance Comparison
FTDR
frontdoor
62.00
14.45
30.39%
HRB
H&R Block
50.90
-11.14
-17.96%
ROL
Rollins
56.67
7.18
14.51%
SCI
Service International
79.76
2.62
3.40%
frontdoor Corporate Events
Executive/Board Changes
Frontdoor Announces Retirement of Chief Accounting Officer
Neutral
Jul 23, 2025
On July 22, 2025, Frontdoor, Inc. announced that Chastitie Brim, the Vice President, Controller, and Chief Accounting Officer, will retire effective August 24, 2025, and will serve in an advisory capacity until September 15, 2025. Her retirement is not due to any disagreements with the company. Sally J. Shanks has been appointed to replace her, effective August 25, 2025. Ms. Shanks brings extensive experience from her previous role as Chief Accounting Officer at WillScot Holdings Corporation and other financial leadership positions. Her compensation package includes a base salary, bonus opportunity, equity-based awards, and a sign-on equity grant, along with eligibility for company benefits.
Executive/Board ChangesBusiness Operations and Strategy
Frontdoor Appoints New CTO to Boost Innovation
Positive
Jun 25, 2025
On June 24, 2025, Frontdoor, Inc. announced the appointment of Dr. Bala Ganesh as Senior Vice President and Chief Technology Officer, effective July 14, 2025. Dr. Ganesh, who has been a member of the Board since July 2023, resigned from the Board and the Audit Committee effective June 30, 2025. His extensive experience in digital transformation and technology innovation positions him well to enhance Frontdoor’s product offerings and member experience. This strategic move is expected to bolster Frontdoor’s technological capabilities and strengthen its market position.
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.