What If You Were Missing The Value In FTDR Stock?
Here is why we think Frontdoor (FTDR) deserves consideration as a value stock.
- Reasonable Revenue Growth: 8.7% LTM and 6.0% last 3 year average.
- Cash Generative: Nearly 15.4% free cash flow margin and 19.5% operating margin LTM.
- No Major Shocks: FTDR has avoided any revenue collapses in the last 3 years.
- Modest Valuation: Despite encouraging fundamentals, FTDR trades at a PE multiple of 17.7
- Opportunity vs S&P: Compared to S&P, you get lower valuation, higher revenue growth, and better LTM fcf and operating margins
As a quick background, Frontdoor provides home service plans covering repairs or replacements of major systems and appliances, along with on-demand services and a technology platform using augmented reality and machine learning.
| FTDR | S&P Median | |
|---|---|---|
| Sector | Consumer Discretionary | – |
| Industry | Specialized Consumer Services | – |
| PE Ratio | 17.7 | 23.9 |
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| LTM* Revenue Growth | 8.7% | 5.1% |
| 3Y Average Annual Revenue Growth | 6.0% | 5.3% |
| Min Annual Revenue Growth Last 3Y | 3.3% | -0.3% |
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| LTM* Operating Margin | 19.5% | 18.6% |
| 3Y Average Operating Margin | 16.5% | 17.8% |
| LTM* Free Cash Flow Margin | 15.4% | 13.2% |
*LTM: Last Twelve Months
But do these numbers tell the full story? Read Buy or Sell FTDR Stock to see if Frontdoor still has an edge that holds up under the hood.
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That is one way to look at stocks. Trefis High Quality Portfolio evaluates much more, and is designed to reduce stock-specific risk while giving upside exposure
Stocks Like These Can Outperform. Here Is Data
For 65 similar value stocks chosen as of mid 2024, consider the following stats for the subsequent 1 year period.
- Average peak return of 39.3% vs 14.4% for S&P, with maximum peak return of 133%
- Win rate of 60%; win rate represents % of stocks with positive return
- Average 1-year return of 14.6%, similar to S&P’s despite tariff instability
But Consider The Risk
FTDR isn’t immune to big drops. It fell about 57% in the 2018 correction, nearly 37% during the Covid crash, and over 66% in the inflation shock. Even with solid fundamentals, these dips show how volatile it can get when the market turns. Good qualities matter, but sharp sell-offs still hit hard.
But the risk is not limited to major market crashes. Stocks fall even when markets are good – think events like earnings, business updates, outlook changes. Read FTDR Dip Buyer Analyses to see how the stock has recovered from sharp dips in the past.
The Trefis High Quality (HQ) Portfolio, with a collection of 30 stocks, has a track record of comfortably outperforming its benchmark that includes all 3 – the S&P 500, S&P mid-cap, and Russell 2000 indices. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride, as evident in HQ Portfolio performance metrics.