Financial Performance - For the year ended December 31, 2024, Frontdoor generated revenue of $1,843 million, net income of $235 million, and Adjusted EBITDA of $443 million[34]. - The company generated 78 percent of its home warranty revenue through existing customer renewals, compared to 77 percent in 2023 and 72 percent in 2022[63]. - The renewal revenue for home warranties was $1,437 million, $1,367 million, and $1,203 million for the years ended December 31, 2024, 2023, and 2022, respectively[64]. - The company’s revenue is primarily derived from home warranty contracts, which are typically one year in duration, and recognized over time based on service costs incurred[215]. - The company experienced seasonal fluctuations, with approximately 21% of revenue recognized in Q1, 29% in Q2, 29% in Q3, and 21% in Q4 of 2024[206]. - The company’s labor, parts, and equipment costs are affected by inflation, impacting overall profitability[209]. - Operating expenses are influenced by inflationary pressures, including salaries, contractor costs, and regulatory compliance costs[216]. - Gross profit is calculated by deducting the cost of services rendered from revenue, with gross profit margin expressed as a percentage of revenue[217]. - Adjusted EBITDA is defined as net income before various expenses, with Adjusted EBITDA margin calculated as Adjusted EBITDA divided by revenue[219]. - Free Cash Flow represents net cash provided from operating activities less property additions, serving as a key cash flow measure[220]. Customer Base and Market Position - As of December 31, 2024, Frontdoor had approximately 2.1 million active home warranties across all brands in the United States[29]. - Approximately 78% of Frontdoor's revenue in 2024 was generated through existing customer renewals, with 84% of home warranty customers on a monthly auto-pay program[31][43]. - Frontdoor's home warranty category currently represents approximately $4 billion in annual revenue, with only about 6% household penetration in the U.S.[34]. - The company aims to grow its home warranty customer base by targeting homeowners more effectively and optimizing strategies with real estate brokers and contractors[50]. - In 2024, approximately 1.1 million U.S. homes were sold with a home warranty, with revenue from the real estate channel amounting to $125 million, $141 million, and $184 million for the years ended December 31, 2024, 2023, and 2022, respectively[60]. - The direct-to-consumer channel generated revenue of $166 million, $194 million, and $219 million for the years ended December 31, 2024, 2023, and 2022, respectively, with a renewal rate of 72 percent[62]. Acquisitions and Strategic Initiatives - The acquisition of 2-10 HBW in December 2024 expanded Frontdoor's builder partnerships to approximately 19,000, enhancing its position in the new home structural warranty market[28]. - The company completed the acquisition of 2-10 HBW on December 19, 2024, for an aggregate cash consideration of $585 million, enhancing its customer base and revenue opportunities[202]. - The company anticipates strategic acquisition opportunities in the fragmented home services industry, having recently acquired 2-10 HBW to expand its customer base and revenue[58]. - The company faces risks related to the integration of 2-10 HBW, which may include unforeseen difficulties and increased costs[149]. Technology and Innovation - The company plans to leverage its technology platform, including video chat and augmented reality, to enhance customer service and reduce the need for in-home visits[41][42]. - The company continues to invest in digital innovation, with approximately 46 percent of home warranty direct-to-consumer sales made online in 2024[73]. - The company has implemented a cybersecurity risk management strategy to protect its systems and data from potential threats, integrating it into its overall enterprise risk management program[176]. Regulatory and Compliance Risks - The company faces risks related to regulatory compliance, which could adversely affect its operations and financial position[86]. - The California Consumer Privacy Act (CCPA) and the California Privacy Rights Act (CPRA) impose new compliance requirements that may increase operational costs[126]. - The company is subject to various federal, state, and local laws that could increase legal and regulatory expenses, impacting financial performance[128]. - Evolving corporate governance regulations may increase administrative expenses and require significant management resources to ensure compliance[140]. Economic and Market Conditions - The company’s financial performance is influenced by macroeconomic conditions, including inflation and interest rates, which have negatively impacted home sales in recent years[93]. - The Federal Reserve's interest rate decisions have led to buyer apprehension, affecting home sales and consequently the company’s business[94]. - Consumer demand for home warranty services is influenced by macroeconomic conditions, including interest rates and inflation, as well as marketing efforts[104]. - Increased operating costs due to inflation and global supply chain challenges have led to a rise in contract claims costs, adversely impacting financial performance[111]. Workforce and Employee Relations - As of December 31, 2024, the company’s workforce is composed of 63% female, 37% male, and 42% racially/ethnically diverse employees[80]. - The company has engaged in a review and update of employee benefits and vacation programs in 2024 to enhance healthcare coverage[81]. - The company faces challenges in attracting and retaining qualified key employees, which could impact operational success and financial performance[114]. Debt and Financial Obligations - As of December 31, 2024, the company had $1,199 million in total consolidated long-term indebtedness, which includes borrowings for the 2-10 HBW acquisition[160]. - The company does not intend to pay cash dividends in the foreseeable future, focusing instead on business development and debt repayment[155]. - The company has significant variable rate indebtedness, with a one percentage point increase in interest rates resulting in approximately $6 million increase in annual interest expense on Term Loan Facilities and $3 million on the Revolving Credit Facility as of December 31, 2024[163]. - The company’s ability to generate sufficient cash flows from operations to service its debt obligations is uncertain, which may force it to delay capital expenditures or restructure its debt[169].

Group 1 - The upcoming report from Frontdoor (FTDR) is expected to show quarterly earnings of $0.08 per share, a decline of 60% year-over-year, with revenues forecasted at $368.3 million, reflecting a 0.6% increase year-over-year [1] - Over the past 30 days, the consensus EPS estimate for the quarter has been adjusted upward by 0.8%, indicating a reassessment by analysts [1][2] - The 'Revenue by Customer Channel- Renewals' is projected to reach $291.61 million, showing a year-over-year change of +2.3% [4] Group 2 - The 'Revenue by Customer Channel- Other' is estimated at $23.99 million, suggesting a year-over-year increase of +33.3% [4] - The 'Revenue by Customer Channel- Direct-to-consumer (First-Year)' is expected to be $29.14 million, indicating a decline of -21.2% from the prior-year quarter [5] - The 'Customer retention rate' is projected to be 77.3%, an increase from 76.2% reported in the same quarter of the previous year [6] Group 3 - Shares of Frontdoor have shown a return of -2.3% over the past month, compared to a -0.5% change in the Zacks S&P 500 composite [6] - Frontdoor holds a Zacks Rank 2 (Buy), suggesting expectations to outperform the overall market in the near future [6]

Company Overview - Frontdoor (FTDR) is expected to report a year-over-year decline in earnings of 60%, with projected earnings of $0.08 per share for the quarter ended December 2024 [3][12] - Revenue is anticipated to be $368.3 million, reflecting a slight increase of 0.6% from the previous year [3] Earnings Estimates and Trends - The consensus EPS estimate has been revised 0.79% higher in the last 30 days, indicating a reassessment by analysts [4] - The Most Accurate Estimate for Frontdoor is lower than the Zacks Consensus Estimate, resulting in an Earnings ESP of -166.67%, suggesting a bearish outlook from analysts [10][11] Historical Performance - Frontdoor has a history of beating consensus EPS estimates, having done so in the last four quarters, with a notable surprise of +33.98% in the last reported quarter [12][13] Industry Comparison - Owens Corning (OC), another player in the Zacks Building Products - Miscellaneous industry, is expected to report earnings of $2.87 per share, indicating a year-over-year decline of 10.6%, with revenues projected at $2.78 billion, up 20.5% from the previous year [17] - Owens Corning's consensus EPS estimate has been revised 1.9% higher in the last 30 days, but it also has a negative Earnings ESP of -0.44%, making it difficult to predict an earnings beat [18]

Technical Analysis - Frontdoor (FTDR) has reached a key level of support and recently crossed above the 20-day moving average, indicating a short-term bullish trend [1] - The 20-day simple moving average (SMA) is favored by traders as it reflects a shorter price history and helps smooth out fluctuations, providing more trend reversal signals compared to longer-term averages [2] Earnings Estimates - Positive earnings estimate revisions for FTDR strengthen the bullish outlook, with no earnings estimates lowered in the past two months and one estimate raised for the current fiscal year, leading to an increase in the consensus estimate [3] Performance Metrics - Over the past four weeks, FTDR has gained 8.5%, and it currently holds a Zacks Rank 1 (Strong Buy), suggesting potential for further price increases [4]

Group 1 - Frontdoor (FTDR) is currently outperforming its sector with a year-to-date return of 14.1%, compared to the Construction sector's average gain of 14% [4] - The Zacks Consensus Estimate for FTDR's full-year earnings has increased by 9.6% over the past three months, indicating improved analyst sentiment [4] - Frontdoor holds a Zacks Rank of 1 (Strong Buy), suggesting it is poised for strong performance in the near term [3] Group 2 - Frontdoor is part of the Building Products - Miscellaneous industry, which has seen a year-to-date gain of approximately 16.7%, indicating that FTDR is slightly underperforming its industry [6] - M-tron Industries, Inc. (MPTI) is another notable stock in the Construction sector, with a year-to-date return of 18.8% and a Zacks Rank of 2 (Buy) [5] - The Engineering - R and D Services industry, where M-tron operates, has only gained 2.8% this year, highlighting MPTI's strong performance relative to its industry [7]

Group 1: Momentum Investing Overview - Momentum investing involves following a stock's recent trend, with the aim of buying high and selling higher, capitalizing on established price movements [1] - The Zacks Momentum Style Score helps define momentum characteristics, with Frontdoor (FTDR) currently holding a Momentum Style Score of A [2] Group 2: Zacks Rank and Performance - Frontdoor has a Zacks Rank of 1 (Strong Buy), indicating strong potential for outperformance, especially for stocks rated 1 or 2 with Style Scores of A or B [3] - Stocks with Zacks Rank 1 and 2 tend to outperform the market over the following month [3] Group 3: Price Performance - FTDR shares have increased by 5.48% over the past week, while the Zacks Building Products - Miscellaneous industry rose by 5.66% [5] - Over the past quarter, FTDR shares have risen by 17.13%, and over the last year, they have gained 75.61%, compared to the S&P 500's increases of 2.93% and 28.08% respectively [6] Group 4: Trading Volume - FTDR's average 20-day trading volume is 516,209 shares, which serves as a price-to-volume baseline; rising stocks with above-average volume are generally bullish [7] Group 5: Earnings Outlook - In the past two months, one earnings estimate for FTDR has increased, while none have decreased, raising the consensus estimate from $3.14 to $3.15 [9] - For the next fiscal year, one estimate has moved upwards with no downward revisions during the same period [9] Group 6: Conclusion - Given the strong performance metrics and positive earnings outlook, FTDR is positioned as a 1 (Strong Buy) stock with a Momentum Score of A, making it a compelling investment option [11]

Acquisition and Financial Overview - The acquisition of 2-10 Home Buyers Warranty (2-10 HBW) was valued at $585 million, with the final purchase price subject to adjustments based on various financial factors [1][11] - FTDR announced a successful pricing of its $1.47 billion credit facility, which includes a $418 million Term Loan A, an $800 million Term Loan B, and a $250 million revolving credit line [3][10] Market Performance - FTDR's shares have increased by 56.1% over the past six months, significantly outperforming the Zacks Building Products - Miscellaneous industry and the S&P 500, which grew by 6.9% and 7.7%, respectively [4] - Despite the positive performance, FTDR's shares experienced a slight decline of 0.6% during the trading session and 1.9% in after-hours trading [8] Strategic Positioning - The acquisition of 2-10 HBW enhances FTDR's customer base, revenue, and earnings, aligning with its growth strategy [2][9] - FTDR is well-positioned for growth in the home warranty sector, supported by strong customer retention, expanded brand awareness, and ongoing acquisition efforts [5] Earnings Estimates and Analyst Confidence - The Zacks Consensus Estimate for FTDR's 2025 earnings per share (EPS) has increased by 6.5% in the past 60 days, indicating growing analyst confidence in the stock [18][19]

Core Viewpoint - Frontdoor, Inc. (FTDR) is experiencing significant investor interest, with its stock nearing a 52-week high and demonstrating strong performance compared to industry peers and broader market indices [1][2][3]. Stock Performance - FTDR shares have increased by 21.8% over the past three months, outperforming the Zacks Building Products - Miscellaneous industry's 3.3% rise and the S&P 500's growth of 8% [2]. - The stock is currently trading around $59 per share, just below its 52-week peak of $60.42 [1]. Market Position and Strategy - Frontdoor is the leading provider of home warranties in the U.S. and is focused on expanding brand awareness and direct-to-consumer efforts [2][5]. - The company's marketing campaign has significantly increased brand awareness for American Home Shield (AHS) from 39% in 2022 to over 54% by the end of the third quarter [6]. Customer Engagement and Retention - The direct-to-consumer (DTC) customer count has grown, with retention rates improving by 150 basis points to a record high of 77.7% in the third quarter [9]. - The company is enhancing customer engagement through initiatives like the new AHS app launched in November [6]. Financial Position - FTDR's net cash provided by operations was $212 million in the first nine months of 2024, up from $139 million a year ago [14]. - The company has completed a $400 million share repurchase program and has repurchased 3.2 million shares for $119 million from the start of 2024 through August [15][16]. Acquisitions and Growth Initiatives - Frontdoor is pursuing growth through acquisitions, including a $1.47 billion credit facility to fund the acquisition of 2-10 Home Buyers Warranty and refinance existing debt [12][13]. - The acquisition is expected to close in the fourth quarter, supporting the company's long-term expansion plans [13]. Industry Outlook - Despite challenges in the home warranty sector due to reduced consumer spending and a sluggish real estate market, there are signs of improvement with existing home inventory rising to 4.3 months of supply [10]. - Mortgage rates have declined, which may spur increased demand from homebuyers, positively impacting the home warranty market [11]. Financial Metrics - FTDR's return on invested capital (ROIC) stands at 35.75%, significantly higher than the industry average of 8.83%, indicating effective capital allocation and operational efficiency [18]. Earnings Estimates - The Zacks Consensus Estimate for FTDR's 2025 EPS has increased by 6.5% in the past 60 days, reflecting analysts' growing confidence in the stock [19].

Core Viewpoint - Purcell & Lefkowitz LLP is investigating Frontdoor, Inc. to determine if the company's directors breached their fiduciary duties related to recent corporate actions [1]. Group 1 - The investigation is on behalf of Frontdoor's shareholders [1]. - The law firm specializes in representing shareholders affected by securities fraud and breaches of fiduciary duty [3]. - Shareholders can obtain additional information regarding their rights and options at no cost [2].

Group 1: Kura Sushi USA, Inc. (KRUS) - Kura Sushi USA, Inc. is a Japanese restaurant chain with a Zacks Rank 1 [1] - The Zacks Consensus Estimate for its current year earnings increased by 21.2% over the last 60 days [1] - Kura Sushi's shares gained 78.4% over the last three months, outperforming the S&P 500's advance of 11.3% [1] - The company has a Momentum Score of A [1] Group 2: Frontdoor, Inc. (FTDR) - Frontdoor, Inc. is a home warranties company with a Zacks Rank 1 [2] - The Zacks Consensus Estimate for its current year earnings increased by 5.7% over the last 60 days [2] - Frontdoor's shares gained 28.2% over the last three months, also outperforming the S&P 500's advance of 11.3% [2] - The company possesses a Momentum Score of A [2] Group 3: LivaNova PLC (LIVN) - LivaNova PLC is a medical device company with a Zacks Rank 1 [3] - The Zacks Consensus Estimate for its current year earnings increased nearly 7% over the last 60 days [3] - LivaNova's shares gained 15.8% over the last three months, compared to the S&P 500's advance of 11.3% [3] - The company has a Momentum Score of A [3]