Critical Survey: Assa Abloy (OTCMKTS:ASAZY) & ADT (NYSE:ADT)

ADT (NYSE:ADT) and Assa Abloy (OTCMKTS:ASAZY) are both industrials companies, but which is the superior investment? We will compare the two businesses based on the strength of their valuation, institutional ownership, analyst recommendations, profitability, earnings, dividends and risk.

Analyst Recommendations

This is a summary of current ratings and price targets for ADT and Assa Abloy, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
ADT	0	4	2	0	2.33
Assa Abloy	0	3	1	0	2.25

ADT currently has a consensus price target of $9.38, indicating a potential upside of 16.53%. Given ADT’s stronger consensus rating and higher probable upside, research analysts plainly believe ADT is more favorable than Assa Abloy.

Valuation and Earnings

This table compares ADT and Assa Abloy”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
ADT	$4.90 billion	1.35	$501.05 million	$0.69	11.66
Assa Abloy	$14.20 billion	2.92	$1.48 billion	$0.71	26.24

Assa Abloy has higher revenue and earnings than ADT. ADT is trading at a lower price-to-earnings ratio than Assa Abloy, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares ADT and Assa Abloy’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
ADT	12.52%	18.96%	4.38%
Assa Abloy	9.57%	14.54%	6.81%

Risk & Volatility

ADT has a beta of 1, meaning that its share price has a similar volatility profile to the S&P 500.Comparatively, Assa Abloy has a beta of 1.2, meaning that its share price is 20% more volatile than the S&P 500.

Institutional & Insider Ownership

87.2% of ADT shares are held by institutional investors. 2.7% of ADT shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Dividends

ADT pays an annual dividend of $0.22 per share and has a dividend yield of 2.7%. Assa Abloy pays an annual dividend of $0.18 per share and has a dividend yield of 1.0%. ADT pays out 31.9% of its earnings in the form of a dividend. Assa Abloy pays out 25.4% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. ADT has increased its dividend for 1 consecutive years. ADT is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Summary

ADT beats Assa Abloy on 9 of the 17 factors compared between the two stocks.

About ADT

ADT Inc. provides security, interactive, and smart home solutions to residential and small business customers in the United States. It operates through two segments, Consumer and Small Business, and Solar. The company provides burglar and life safety alarms, smart security cameras, smart home automation systems, and video surveillance systems. It primarily offers security designed to detect intrusion, control access, sense movement, smoke, fire, carbon monoxide, flooding, temperature, and other environmental conditions and hazards; and address personal medical emergencies, such as injuries or unanticipated falls. The company also provides automation and smart home solutions that allow customers to use their smart phones, smart phone application, or touchscreen panels in their homes to arm and disarm their security systems; record and view real-time video; and creates customized and automated schedules for connected devices; programs systems to react to defined events; integrates system with third-party connected devices, such as cameras, lights, thermostats, appliances, and garage doors, as well as offers monitoring and maintenance services. In addition, the company offers energy storage solutions, energy efficiency upgrades, and roofing services. It offers its products under the ADT, ADT Pulse, ADT+, and ADT Commercial brand names. 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.

About Assa Abloy

ASSA ABLOY AB (publ) provides door opening and access products, solutions, and services for the institutional, commercial, and residential markets in Europe, the Middle East, India, Africa, North and South America, Asia, and Oceania. The company provides digital access solutions, such as electronic access control ecosystem, wireless solutions, electronic key solutions, standalone access solutions, and wired solutions; swing, revolving, and sliding doors; mechanical products, including hinges, lever handles, mortise lockcases, euro profile cylinders, panic exit devices, door closers, floor spring, and general hardware; and doors. It offers Openings Studio, a building information modeling software ecosystem is collaboration tool for designing, documenting, and managing openings. The company provides its products primarily under the ASSA ABLOY, Yale, and HID brands. It sells its products through distributors and wholesalers. The company serves aviation, education, distribution and logistics, entertainment and public facility, finance and banking, government and military, healthcare, hospitality, manufacturing, mining, office and enterprise, homes and residence, retail, shipyards, and transportation industries. ASSA ABLOY AB (publ) was incorporated in 1954 and is based in Stockholm, Sweden.