Ascent Capital Group (ASCMA) & ADT (ADT) Critical Analysis

Ascent Capital Group (NASDAQ: ASCMA) and ADT (NYSE:ADT) are both industrial products companies, but which is the better business? We will contrast the two companies based on the strength of their institutional ownership, profitability, valuation, analyst recommendations, dividends, earnings and risk.

Insider and Institutional Ownership

80.7% of Ascent Capital Group shares are owned by institutional investors. 9.6% of Ascent Capital Group shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.

Analyst Ratings

This is a breakdown of recent ratings and recommmendations for Ascent Capital Group and ADT, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Ascent Capital Group 0 2 1 0 2.33
ADT 0 0 0 0 N/A

Ascent Capital Group presently has a consensus price target of $14.33, suggesting a potential upside of 35.86%. Given Ascent Capital Group’s higher possible upside, equities analysts clearly believe Ascent Capital Group is more favorable than ADT.

Dividends

ADT pays an annual dividend of $0.88 per share and has a dividend yield of 7.7%. Ascent Capital Group does not pay a dividend. ADT pays out -176.0% of its earnings in the form of a dividend. Ascent Capital Group has increased its dividend for 5 consecutive years.

Earnings and Valuation

This table compares Ascent Capital Group and ADT’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Ascent Capital Group $570.37 million 0.23 -$91.24 million ($9.03) -1.17
ADT N/A N/A N/A ($0.50) -22.90

ADT has lower revenue, but higher earnings than Ascent Capital Group. ADT is trading at a lower price-to-earnings ratio than Ascent Capital Group, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Ascent Capital Group and ADT’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Ascent Capital Group -19.68% -56.10% -5.20%
ADT N/A N/A N/A

Summary

Ascent Capital Group beats ADT on 7 of the 13 factors compared between the two stocks.

About Ascent Capital Group

Ascent Capital Group, Inc. is a holding company. The Company’s subsidiaries include Monitronics International, Inc. (MONI) and LiveWatch Security, LLC (LiveWatch). The Company’s segments include MONI, LiveWatch and Other Activities. The MONI segment is primarily engaged in the business of providing security alarm monitoring services: monitoring signals arising from burglaries, fires, medical alerts and other events through security systems at subscribers’ premises, as well as providing customer service and technical support. LiveWatch is a do-it-yourself home security provider offering professionally monitored security services through a direct-to-consumer sales channel. LiveWatch offers a differentiated go-to-market strategy through direct response television, Internet and radio advertising. When a customer initiates the process to obtain monitoring services, LiveWatch pre-configures the alarm monitoring system based on customer specifications.

About ADT

The ADT Corporation (ADT) is a provider of electronic security, interactive home and business automation, and monitoring services for residences and small businesses in the United States and Canada. The Company’s products and services include home and business solutions, and home health services. The Company’s brands include ADT, ADT Pulse and Companion Service. On August 2, 2013, the Company acquired Devcon Security Holdings, Inc. In November 2013, Kastle Systems International announced that it had acquired Mutual Central Alarm Services and Stat-Land Security Systems from ADT Corporation. In July 2014, ADT Corp acquired Reliance Protectron Inc, from Reliance Comfort Limited Partnership, a portfolio company of investment funds managed by Alinda Capital Partners.

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