GICS Sector : Consumer Cyclical
Frontdoor, 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.
Frontdoor's third-quarter revenue increased 14% to $618 million, driven by a 12% higher volume and 3% higher price, resulting in a gross profit margin expansion of 60 basis points to 57%. Net income grew 5% to $106 million, and adjusted EBITDA grew 18% to $195 million. The company's earnings per share (EPS) came in at $1.58, beating estimates of $1.49. The strong financial performance was a result of the company's focus on driving member growth and its successful direct-to-consumer (DTC) channel, which saw an 8% organic DTC member count growth.
Publication Date: Nov -11
The DTC channel performed well, and the real estate channel also showed signs of improvement, with sequential growth in ending member count. Retention rates remained strong at 79.4%. Nonwarranty revenue, primarily driven by new HVAC sales, continues to be a growth engine, with a 44% increase over 2024. The company's promotional strategy in the real estate channel drove an increase in attachment rates, and it is piloting a program in the nonwarranty segment that it plans to expand nationwide in 2026.
For the fourth quarter, revenue is expected to be $415-425 million, and adjusted EBITDA is expected to be $50-55 million. The full-year outlook is increased, with revenue expected to be $2.075-2.085 billion and adjusted EBITDA expected to be $545-550 million. The company is raising its revenue and adjusted EBITDA outlook and expects to finish 2025 on a high note, driven by measurable progress on strategic initiatives and a focus on driving member growth.
Frontdoor's current valuation metrics, including a P/E Ratio of 14.01, P/B Ratio of 11.62, and EV/EBITDA of 8.58, indicate that the market has priced in a certain level of growth. With analysts estimating revenue growth at 5.7% next year, it's essential to monitor the company's progress on its strategic initiatives and its ability to manage cost inflation, which is currently around 4%. The company's return on equity (ROE) is 104.17%, and its return on invested capital (ROIC) is 19.46%, indicating a strong ability to generate returns.
CFO Jessica Ross will resign on November 10 and be succeeded by Jason Bailey, who brings over 25 years of progressive leadership experience in finance and public accounting. The company reported increased SG&A expenses, primarily due to investments in marketing, particularly the Warrantina campaign targeting potential homebuyers under 45, and digital marketing initiatives. Despite cost inflation, the company maintains its projection of low single-digit inflation for the year and believes it can manage through it with its dynamic pricing model and operational execution.
Frontdoor Stock To $70?
Nov -28
Creative Planning Increases Holdings in Frontdoor Inc. $FTDR
Nov -26
Creative Planning Buys 12,457 Shares of Frontdoor Inc. $FTDR
Nov -26
Frontdoor, Inc. (FTDR) Presents at Wells Fargo's 9th Annual TMT Summit Transcript
Nov -21
Frontdoor Chief Revenue Officer Named a Female Executive of the Year by the Stevie® Awards for Women in Business
Nov -18
Frontdoor, Inc. to Attend and Present at the Wells Fargo 9th Annual TMT Summit
Nov -11
Frontdoor Stock To $20?
Nov -07
Frontdoor, Inc. (FTDR) Q3 2025 Earnings Call Transcript
Nov -05
The home repair and remodeling market is driven by factors such as aging housing stock, increasing homeowner affluence, and a trend towards outsourcing home maintenance. General Contractors is poised to capitalize on these trends, leveraging its network of contractors to deliver high-quality services. The segment's growth is expected to be slightly above the global average, driven by its strong market position and the growing demand for its services.
A home warranty that provides protection against unexpected repair and replacement costs for major home systems and appliances.
A home warranty that provides coverage for home systems and appliances, with flexible pricing and coverage options.
A home warranty that provides comprehensive coverage for home systems and appliances, with a focus on customer service.
A home services platform that connects homeowners with pre-screened and qualified professionals for home repair and maintenance needs.
A home services platform that provides on-demand home repair and maintenance services, with a focus on convenience and speed.
Frontdoor, Inc. operates in a highly competitive market, but the threat of substitutes is mitigated by the company's strong brand recognition and customer loyalty.
Frontdoor, Inc. has a large customer base, but the bargaining power of customers is high due to the availability of alternative service providers.
Frontdoor, Inc. has a diversified supplier base, which reduces the bargaining power of suppliers.
The threat of new entrants is moderate due to the high barriers to entry in the home services market, but Frontdoor, Inc. must continue to innovate to stay ahead of potential competitors.
The home services market is highly competitive, and Frontdoor, Inc. faces intense rivalry from established players and new entrants.
| Value | |
|---|---|
| Debt Weight | 81.66% |
| Debt Cost | 8.39% |
| Equity Weight | 18.34% |
| Equity Cost | 8.39% |
| WACC | 8.39% |
| Leverage | 445.26% |
Value: 5.6
Growth: 6.1
Quality: 5.5
Yield: 7.0
Momentum: 1.5
Volatility: 9.0
1-Year Total Return ->
Value: 0.7
Growth: 7.1
Quality: 7.5
Yield: 2.0
Momentum: 7.5
Volatility: 9.7
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Value: 3.5
Growth: 6.4
Quality: 4.7
Yield: 4.0
Momentum: 6.0
Volatility: 9.3
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Value: 8.0
Growth: 6.4
Quality: 4.2
Yield: 4.0
Momentum: 1.0
Volatility: 8.3
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Value: 3.5
Growth: 6.7
Quality: 6.6
Yield: 0.0
Momentum: 8.0
Volatility: 6.7
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Value: 2.5
Growth: 6.0
Quality: 5.5
Yield: 0.0
Momentum: 2.5
Volatility: 5.7
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