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frontdoor inc (FTDR)
NASDAQ:FTDR

frontdoor (FTDR) AI Stock Analysis

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frontdoor

(NASDAQ:FTDR)

Rating:78Outperform
Price Target:
$65.00
▲(15.66%Upside)
Frontdoor's strong financial performance and positive earnings call results are key drivers of the high score. The technical analysis indicates bullish momentum, although the overbought conditions warrant caution. Valuation is reasonable, but the lack of dividend yield could be a consideration for some investors. The overall outlook is positive, driven by growth in revenue, membership, and a solid financial strategy.
Positive Factors
Earnings Performance
Frontdoor reported its 11th straight earnings beat with adjusted EPS of $0.64 versus consensus of $0.38.
Financial Strategy
Cash flows are at record levels and share buybacks are accelerating as well.
Growth Prospects
Revenues increased by 13%, surpassing expectations, driven by pricing and higher volumes.
Negative Factors
Direct Revenue Decline
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.

frontdoor (FTDR) vs. SPDR S&P 500 ETF (SPY)

frontdoor Business Overview & Revenue Model

Company DescriptionFrontdoor, Inc. provides home service plans in the United States. The company's home service plans cover the repair or replacement of principal components of approximately 20 home systems and appliances, including electrical, plumbing, water heaters, refrigerators, dishwashers, and ranges/ovens/cooktops, as well as electronics, pools, and spas and pumps; and central heating, ventilation, and air conditioning systems. It also offers ProConnect on-demand home services business and Streem, a technology platform that uses augmented reality, computer vision, and machine learning that helps home service professionals quickly and accurately diagnose breakdowns and complete repairs. The company serves homeowners under the American Home Shield, HSA, Landmark Home Warranty, OneGuard, Frontdoor, and Streem brands. The company was founded in 1971 and is headquartered in Memphis, Tennessee.
How the Company Makes MoneyFrontdoor makes money primarily through the sale of home service plans, which are subscription-based products providing coverage for the repair and replacement of home systems and appliances. Customers pay monthly or annual fees for these plans, generating a steady stream of revenue. Additionally, the company earns from service fees charged when a service request is made, which covers part of the costs associated with dispatching service professionals to perform repairs. Frontdoor also engages in strategic partnerships with real estate companies and other entities to market its service plans, further enhancing its revenue streams. These partnerships help Frontdoor reach a broader customer base, contributing significantly to its earnings.

frontdoor Earnings Call Summary

Earnings Call Date:May 01, 2025
(Q1-2025)
|
% Change Since: 36.71%|
Next Earnings Date:Jul 30, 2025
Earnings Call Sentiment Positive
Frontdoor's earnings call reflected strong financial and operational performance, with significant growth in revenue and membership. The company demonstrated effective cost management and innovation, contributing to high retention rates and improved financial outlook. However, challenges in the real estate channel and potential tariff impacts were noted. Despite these challenges, the overall sentiment is positive due to the outweighing highlights.
Q1-2025 Updates
Positive Updates
Strong Financial Performance
Revenue increased 13% to $426 million, net income grew 9% to $37 million, and adjusted EBITDA grew 41% to $100 million. The company exceeded expectations for both revenue and adjusted EBITDA.
Growth in Member Base
Frontdoor's member count grew 7% to 2.1 million members. The DTC channel saw a 15% increase to 310,000 DTC members, primarily due to the 2-10 acquisition and 4% organic growth.
Innovative Offerings
The AHS app has been downloaded almost 200,000 times, and members have submitted 80,000 service requests. Video chat with an expert is also a hit, with 17% resulting in the problem being resolved over the phone.
Strong Retention Rates
Retention was at 79.9%, supported by an expanded calling program and increased use of preferred contractors. 84% of members are on monthly autopay.
Improved Revenue Outlook
Frontdoor increased revenue outlook for 2025 to $105 million due to growing demand for the HVAC program. They also raised their full year outlook for revenue by $20 million and adjusted EBITDA by nearly $50 million.
Negative Updates
Real Estate Channel Headwinds
The first year organic real estate member count is down 6% in the first quarter compared to the same period last year, impacted by a challenging real estate market.
Impact of Promotional Pricing
Reported DTC revenue is down 9% for the quarter due to a promotional pricing strategy aimed at driving organic unit growth.
Potential Tariff Impacts
Concerns about potential cost increases due to tariffs, particularly affecting parts sourced from China, could lead to mid-single-digit cost inflation.
Company Guidance
During Frontdoor's First Quarter 2025 Earnings Call, the company provided robust guidance and performance updates, highlighting a 13% increase in revenue to $426 million and a 9% rise in net income to $37 million. Adjusted EBITDA surged by 41% to $100 million, while the member count grew by 7% to 2.1 million, with 85% of services using preferred contractors. Despite macroeconomic challenges such as a down real estate market and high interest rates, Frontdoor remains focused on expanding its member base and scaling non-warranty revenue, with the integration of 2-10 Home Buyers Warranty on track. The Direct-to-Consumer (DTC) channel reported a 15% growth in member count, benefiting from both acquisitions and 4% organic growth. Retention was strong at 79.9%, supported by innovative offerings like the AHS app and video chat services, which have enhanced the customer experience. The company raised its 2025 revenue outlook to $2.03 billion to $2.05 billion and increased its share repurchase target to at least $200 million, underscoring its commitment to returning value to shareholders.

frontdoor Financial Statement Overview

Summary
Frontdoor demonstrates robust financial health with strong revenue and profit growth, efficient cost management, and solid cash generation capabilities. Despite high leverage, the company maintains a good balance between debt and equity, alongside exceptional returns on equity. Continuous monitoring of debt levels and cash reserves is recommended to sustain financial stability.
Income Statement
85
Very Positive
The income statement shows a strong performance with significant revenue growth from 2020 to TTM, reaching $1.89 billion. Gross profit margin remains healthy at approximately 52.9% for TTM, indicating efficient cost management. The net profit margin has improved to 12.6% in TTM, reflecting enhanced profitability. The EBIT margin of 20.6% and EBITDA margin of 22.1% in TTM suggest solid operational efficiency. Overall, the company exhibits robust growth and profitability trends.
Balance Sheet
70
Positive
The balance sheet reflects a leveraged position with a debt-to-equity ratio of 6.13 in TTM, indicating high reliance on debt financing. However, the equity ratio improved to 9.3%, showing an increase in equity relative to assets. Return on equity (ROE) stood at a strong 120.2% in TTM, highlighting effective use of equity to generate profits. While the high leverage poses a risk, the improving equity position and strong ROE are positive indicators.
Cash Flow
78
Positive
The cash flow statement displays a commendable increase in free cash flow, growing from $102 million in 2022 to $274 million in TTM, representing strong cash generation capabilities. The operating cash flow to net income ratio of 1.3 indicates efficient conversion of profits into cash. The free cash flow to net income ratio of 1.15 also underscores solid cash profitability. The company shows strong cash flow management, although fluctuations in cash reserves warrant attention.
Breakdown
TTMDec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income StatementTotal Revenue
1.89B1.84B1.78B1.66B1.60B1.47B
Gross Profit
1.00B952.00M848.00M676.00M749.00M682.00M
EBIT
366.00M357.00M267.00M154.00M240.00M215.00M
EBITDA
417.00M408.00M311.00M153.00M232.00M231.00M
Net Income Common Stockholders
238.00M235.00M171.00M71.00M128.00M112.00M
Balance SheetCash, Cash Equivalents and Short-Term Investments
506.00M436.00M325.00M292.00M262.00M597.00M
Total Assets
2.12B2.11B1.09B1.08B1.07B1.41B
Total Debt
1.21B1.22B610.00M627.00M644.00M993.00M
Net Debt
707.00M798.00M285.00M335.00M382.00M396.00M
Total Liabilities
1.92B1.87B953.00M1.02B1.07B1.47B
Stockholders Equity
198.00M239.00M137.00M61.00M3.00M-61.00M
Cash FlowFree Cash Flow
274.00M231.00M170.00M102.00M154.00M175.00M
Operating Cash Flow
310.00M270.00M202.00M142.00M185.00M207.00M
Investing Cash Flow
-565.00M-622.00M-32.00M-35.00M-31.00M-31.00M
Financing Cash Flow
383.00M447.00M-137.00M-77.00M-489.00M-7.00M

frontdoor Technical Analysis

Technical Analysis Sentiment
Positive
Last Price56.20
Price Trends
50DMA
48.30
Positive
100DMA
49.14
Positive
200DMA
50.96
Positive
Market Momentum
MACD
2.20
Positive
RSI
63.57
Neutral
STOCH
64.04
Neutral
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 56.2 is above the 20-day moving average (MA) of 55.47, above the 50-day MA of 48.30, and above the 200-day MA of 50.96, indicating a bullish trend. The MACD of 2.20 indicates Positive momentum. The RSI at 63.57 is Neutral, neither overbought nor oversold. The STOCH value of 64.04 is Neutral, 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 (63)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
78
Outperform
$4.17B18.25132.22%5.53%36.30%
ROROL
78
Outperform
$27.56B57.7237.83%1.16%9.46%9.04%
SCSCI
73
Outperform
$11.36B21.9832.71%1.60%2.40%4.07%
63
Neutral
$6.98B11.412.80%4.24%2.68%-24.94%
HRHRB
49
Neutral
$7.36B13.46657.13%2.73%3.71%-8.07%
* Consumer Cyclical Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
FTDR
frontdoor
56.20
21.21
60.62%
HRB
H&R Block
54.95
5.53
11.19%
ROL
Rollins
56.99
9.73
20.59%
SCI
Service International
79.43
7.72
10.77%

frontdoor Corporate Events

Executive/Board ChangesShareholder Meetings
Frontdoor Stockholders Approve Key Governance Decisions
Neutral
May 20, 2025

On May 14, 2025, Frontdoor held its 2025 Annual Meeting for Stockholders, where 94.43% of the company’s shares were represented. During the meeting, stockholders elected eight directors for a one-year term, ratified Deloitte & Touche LLP as the independent public accounting firm for fiscal 2025, and approved the executive officer compensation on an advisory basis. These decisions are expected to influence the company’s governance and financial oversight for the coming year.

The most recent analyst rating on (FTDR) stock is a Buy with a $56.00 price target. To see the full list of analyst forecasts on frontdoor stock, see the FTDR Stock Forecast page.

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.