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frontdoor inc (FTDR)
NASDAQ:FTDR
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frontdoor
(NASDAQ:FTDR)
76Outperform
Positive Factors
Earnings Beat
Frontdoor reported its 11th straight earnings beat with adjusted EPS of $0.64 versus consensus of $0.38.
Financial Performance
Revenues increased by 13%, surpassing expectations, driven by pricing and higher volumes.
Stock Valuation
With shares trading at 12-13 times the 2025 EPS estimate, well below historical levels, upside could be significant on any signs of improving housing conditions.
Negative Factors
Direct Revenues
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. S&P 500 (SPY)
Market Cap
$3.93B
Dividend YieldN/A
Average Volume (3M)1.01M
Price to Earnings (P/E)17.4
Beta (1Y)1.08
Revenue Growth5.53%
EPS Growth36.30%
CountryUS
Employees2,120
SectorConsumer Cyclical
Sector Strength60
IndustryPersonal Products & Services
Share Statistics
EPS (TTM)0.64
Shares Outstanding73,585,800
10 Day Avg. Volume1,020,431
30 Day Avg. Volume1,011,950
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)0.00
Price to Cash Flow (P/CF)0.00
P/FCF Ratio0.00
Enterprise Value/Market Cap0.93
Enterprise Value/RevenueN/A
Enterprise Value/Gross Profit3.82
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$58.50Price Target Upside10.13% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering4
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 offer repair and replacement services for home systems and appliances. Customers pay a monthly or annual fee to subscribe to these plans, which cover the costs of repairs or replacements for specified items in their homes. The company's revenue model largely relies on these subscription fees, which provide a steady and recurring income stream. Additionally, Frontdoor may earn income from service fees charged for each service call or repair, as well as from partnerships with service technicians and contractors who perform the repair work. These partnerships help Frontdoor manage service delivery costs and maintain a network of qualified professionals to meet customer needs efficiently.
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
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.85
Very Positive
Balance Sheet
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.70
Positive
Cash Flow
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.78
Positive
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 1.84B | 1.78B | 1.66B | 1.60B | 1.47B | Gross Profit |
| 952.00M | 848.00M | 676.00M | 749.00M | 682.00M | EBIT |
| 357.00M | 267.00M | 154.00M | 240.00M | 215.00M | EBITDA |
| 408.00M | 311.00M | 153.00M | 232.00M | 231.00M | Net Income Common Stockholders |
| 235.00M | 171.00M | 71.00M | 128.00M | 112.00M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 436.00M | 325.00M | 292.00M | 262.00M | 597.00M | Total Assets |
| 2.11B | 1.09B | 1.08B | 1.07B | 1.41B | Total Debt |
| 1.22B | 610.00M | 627.00M | 644.00M | 993.00M | Net Debt |
| 798.00M | 285.00M | 335.00M | 382.00M | 396.00M | Total Liabilities |
| 1.87B | 953.00M | 1.02B | 1.07B | 1.47B | Stockholders Equity |
| 239.00M | 137.00M | 61.00M | 3.00M | -61.00M |
| Cash Flow | Free Cash Flow | |||
| 231.00M | 170.00M | 102.00M | 154.00M | 175.00M | Operating Cash Flow |
| 270.00M | 202.00M | 142.00M | 185.00M | 207.00M | Investing Cash Flow |
| -622.00M | -32.00M | -35.00M | -31.00M | -31.00M | Financing Cash Flow |
| 447.00M | -137.00M | -77.00M | -489.00M | -7.00M |
frontdoor Technical Analysis
Positive
53.12
Price Trends
41.11
Positive
49.28
Positive
49.67
Positive
Market Momentum
3.36
Negative
79.82
Negative
94.47
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 53.12 is above the 20-day moving average (MA) of 44.35, above the 50-day MA of 41.11, and above the 200-day MA of 49.67, indicating a bullish trend. The MACD of 3.36 indicates Negative momentum. The RSI at 79.82 is Negative, neither overbought nor oversold. The STOCH value of 94.47 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 | $27.53B | 57.84 | 37.83% | 1.11% | 9.46% | 9.04% | |
76 Outperform | $3.93B | 17.35 | 132.22% | ― | 5.53% | 36.30% | |
73 Outperform | $10.94B | 20.71 | 32.71% | 1.60% | 2.40% | 4.07% | |
67 Neutral | $8.19B | 16.93 | 657.13% | 2.48% | 3.71% | -8.07% | |
61 Neutral | $6.66B | 11.77 | 3.06% | 3.96% | 2.60% | -21.54% |
* Consumer Cyclical Sector Average
Performance Comparison
FTDR
frontdoor
53.12
16.86
46.50%
HRB
H&R Block
57.66
6.29
12.24%
ROL
Rollins
56.72
10.75
23.38%
SCI
Service International
75.87
6.82
9.88%
frontdoor Earnings Call Summary
Earnings Call Date:May 01, 2025
(Q1-2025)
| % Change Since: 29.21%|
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 Corporate Events
Private Placements and FinancingM&A TransactionsBusiness Operations and Strategy
Frontdoor Expands with Major Acquisition and Financing
Positive
Dec 19, 2024
Frontdoor, Inc. announced the completion of its acquisition of 2-10 Home Buyers Warranty for $585 million, enhancing its customer base, revenue, and product portfolio. The acquisition aligns with Frontdoor’s strategic growth priorities by opening new sales channels and diversifying its offerings. Additionally, the company secured a $1.47 billion credit facility to finance the purchase and refinance existing debts, positioning itself for further corporate initiatives.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
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.