Frontdoor (spun off from ServiceMaster) is the parent company of four home service plan brands: American Home Shield, HSA, Landmark and OneGuard. Together, they serve more than two million customers across the U.S. through a network of 15,000 pre-qualified contractor firms that employ over 45,000 technicians. The company’s customizable home service plans help customers protect and maintain their homes from costly and unplanned breakdowns of essential home systems and appliances.
FTDR Price Forecast Based on DCF Valuation
DCF Fair Value Target:
We started the process of determining a valid price forecast for frontdoor inc with a discounted cash flow analysis -- the results of which can be found in the table below. To summarize, we found that frontdoor inc ranked in the 28th percentile in terms of potential gain offered. We should note, though, that all scenearios modelled for this stock suggest it is overvalued. The most interesting components of our discounted cash flow analysis for frontdoor inc ended up being:
The stock's equity weight, or the proportion of capital from equity relative to debt, is 80. Its equity weight surpasses that of 63.66% of free cash flow generating stocks in the Industrials sector.
frontdoor inc's effective tax rate, as measured by taxes paid relative to net income, is at 18 -- greater than 69.79% of US stocks with positive free cash flow.
frontdoor inc's interest coverage rate -- a measure of gross earnings relative to interest payments -- comes in at 7.34. This coverage rate is greater than that of 69.41% of stocks we're observing for the purpose of forecasting via discounted cash flows.
Terminal Growth Rate in Free Cash Flow
Return Relative to Current Share Price
Want more companies with a valuation profile/forecast similar to that of frontdoor inc? See MSA, BAH, ENS, GGG, and HURN.
In an effort to help keep Pros working, Lowe's unveils the first step in its previously announced $25 million commitment to support small businesses with the launch of Lowe's for Pros JobSIGHT powered by Streem, an augmented video chat service that allows Pros to conduct virtual home visits with customers. With more people staying at home, the need to keep homes running safely has never been more important. This new offering allows Pros the ability to interact with homeowners and clients without entering their homes, which expands their job opportunities.
Beginning today's call is Matt Davis, vice president of investor relations and treasurer. Joining me on today's call are frontdoor's chief executive officer, Rex Tibbens; and frontdoor's chief financial officer, Brian Turcotte. As stated on Slide 3 of the presentation, I'd like to remind you that this call and webcast may contain forward-looking statements.