Ford Next and ADT/canopy strategy?

If we are going to partner with a security company, wouldn’t it make sense to work with one that is in good financial shape? I came across this article from a ADT user who is unhappy that police don’t respond to an ADT alarm. What value will canopy even offer customers? I don’t see any value you can’t get with just a $89 Apple air tag and no subscription fees.

From Simply Wall St:

One of the best investments we can make is in our own knowledge and skill set. With that in mind, this article will work through how we can use Return On Equity (ROE) to better understand a business. To keep the lesson grounded in practicality, we'll use ROE to better understand ADT Inc. (NYSE:ADT).

ROE or return on equity is a useful tool to assess how effectively a company can generate returns on the investment it received from its shareholders. Simply put, it is used to assess the profitability of a company in relation to its equity capital.

How To Calculate Return On Equity?

The formula for return on equity is:

Return on Equity = Net Profit (from continuing operations) ÷ Shareholders' Equity

So, based on the above formula, the ROE for ADT is:

0% = US$173m ÷ US$3.4b (Based on the trailing twelve months to December 2022).

The 'return' is the income the business earned over the last year. One way to conceptualize this is that for each $1 of shareholders' capital it has, the company made $0.05 in profit.

Does ADT Have A Good Return On Equity?

By comparing a company's ROE with its industry average, we can get a quick measure of how good it is. However, this method is only useful as a rough check, because companies do differ quite a bit within the same industry classification. As shown in the graphic below, ADT has a lower ROE than the average (8.7%) in the Consumer Services industry classification.

Unfortunately, that's sub-optimal. That being said, a low ROE is not always a bad thing, especially if the company has low leverage as this still leaves room for improvement if the company were to take on more debt. A high debt company having a low ROE is a different story altogether and a risky investment in our books. Our risks dashboard should have the 4 risks we have identified for ADT.

Why You Should Consider Debt When Looking At ROE

Companies usually need to invest money to grow their profits. The cash for investment can come from prior year profits (retained earnings), issuing new shares, or borrowing. In the first and second cases, the ROE will reflect this use of cash for investment in the business. In the latter case, the debt required for growth will boost returns, but will not impact the shareholders' equity. In this manner the use of debt will boost ROE, even though the core economics of the business stay the same.

ADT's Debt And Its 5.0% ROE

ADT does use a high amount of debt to increase returns. It has a debt to equity ratio of 2.84. The combination of a rather low ROE and significant use of debt is not particularly appealing. Debt does bring extra risk, so it's only really worthwhile when a company generates some decent returns from it.

Conclusion

Return on equity is one way we can compare its business quality of different companies. A company that can achieve a high return on equity without debt could be considered a high quality business. If two companies have around the same level of debt to equity, and one has a higher ROE, I'd generally prefer the one with higher ROE

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@czu+1mbr6YHJ Your answer was published today, and it is “not good:”

With A 6.2% Return On Equity, Is Ford Motor Company (NYSE:F) A Quality Stock?

Simply Wall St
Sat, May 6, 2023
One of the best investments we can make is in our own knowledge and skill set. With that in mind, this article will work through how we can use Return On Equity (ROE) to better understand a business. We'll use ROE to examine Ford Motor Company (NYSE:F), by way of a worked example.

Return on Equity or ROE is a test of how effectively a company is growing its value and managing investors’ money. Put another way, it reveals the company's success at turning shareholder investments into profits.

ROE can be calculated by using the formula:
Return on Equity = Net Profit (from continuing operations) ÷ Shareholders' Equity
So, based on the above formula, the ROE for Ford Motor is:

2% = US$2.6b ÷ US$42b (Based on the trailing twelve months to March 2023).

The 'return' refers to a company's earnings over the last year. So, this means that for every $1 of its shareholder's investments, the company generates a profit of $0.06.

Does Ford Motor Have A Good ROE?

Arguably the easiest way to assess company's ROE is to compare it with the average in its industry. Importantly, this is far from a perfect measure, because companies differ significantly within the same industry classification. If you look at the image below, you can see Ford Motor has a lower ROE than the average (23%) in the Auto industry classification.

ADT lists on their current filings under Forward-Looking Statements subject to risks and uncertainties the Company’s ability to commercialize its joint venture with Ford. That’s a big risk, especially since ADT hasn’t been profitable.

ADT also announced a partnership with Nest, so their camera deal with Ford is nothing special to them.

Now they are saying:
“Canopy creates smart security devices with an effort to end truck and van thefts.”

Nothing they are doing will ever end truck or van thefts. They might as well say Canopy will bring world peace.

General Motors has a better team than Ford, as they have actually delivered business with positive revenue. The interesting part of this article is that GM is doing all this with just 40 employees. Ford Next has 300 employees. Clearly at least 260 Next employees,, starting at the top, should be terminated:

“Inside General Motors Co.'s Global Technical Center are teams of people creating new vehicles, but one of them is dedicated to completely different design projects.

From logos to refrigerated carts, charging stations to buildings, the product and experience team that's part of GM's industrial design organization has large tasks on hand, and all of them are crucial for the automaker's electric, techcentered future.

The team of about 40 is essentially a creative design firm within the legacy automaker, helping its brands better define their identities and project them to the public. They also are helping complete the brand experience by designing the products that accompany vehicles, such as the electric vehicle chargers for models powered by Ultium, GM's EV platform.

“We're here because it's good business and we can save money, but ... fortunately, we're positioned to be able to reach out and find opportunities,” said Jeff Nield, GM's design director of product and experience, global industrial design.”

Ford is on welfare...

Right watch the financial statements. Some of the fake efforts on vapor-ware features and products are engineered tax write offs. Oh look we spent 2 billion on green/EV/other venture and so we will write all that off as a loss to reduce or eliminate the taxes we owe.
Meanwhile begging for handouts and subsidies, which Michigan is gullible enough to provide.

We will soon learn whether Next lost another billion dollars in Q1. I’m guessing over a billion.

@1ccl+1mbr6YHJ
Have you seen the numbers they used to justify this “venture.”

the numbers are way too high, there are already cheaper alternatives
they are late to market, there are a dozen in-vehicle camera security systems available today
nobody will buy it unless they are buying a Ford vehicle, and that market had been shrinking as long as Farley has been in charge
they can’t sell enough subscriptions to pay Moran’s salary

What is the date you are convinced they will show positive revenue and cash flow?
I’ll wait for your imaginative response.

You are all criticizing Canopy and it isn't even fully out yet to the public. Shameful gas lighting from the negative people that troll this comment board.

Looking forward to seeing your comments when the project shows profitability.

Did they bring in Drew Barrymore to sell overalls, or was that Alexandra of GAP fame?

Our competition, without a “special” group called GM Next, created this, already revenue positive, not losing billions:

BrightDrop is a subsidiary[1] business created by the American manufacturer General Motors in 2021.[2] The business offers a system of connected products targeting first- and last-mile delivery customers, including light commercial electric vehicles, ePallets, and cloud-based software.[3]

Its first products, the BrightDrop Zevo delivery van and Trace electric cart, were unveiled at the Consumer Electronics Show in Las Vegas, Nevada on 12 January 2021.[4] General Motors announced in 2021 it would invest $800 million to produce the Zevo 600 in the CAMI Automotive manufacturing facility in Ingersoll, Canada.[5] In 2022, CEO Travis Katz announced the company was on track to generate $1 billion in revenue in 2023, making BrightDrop one of the fastest companies in history to achieve this milestone.[6][7]

Then there is also this, apparently ADT’s revenue is expected to decline after partnering with Ford Next:

Here are three stocks added to the Zacks Rank #5 (Strong Sell) List today:

ADT Inc. ADT is a smart-home solutions providing company. The Zacks Consensus Estimate for its current year earnings has been revised 5.1% downward over the last 60 days.

Is “Ford ROE” like “jumbo shrimp”?

You think they actually have a strategy? 🤣🤣🤣🤣🤣🤣🤣🤣🤣🤣🤣🤣🤣🤣🤣🤣🤣
Canopy is not even a real product. It was announced in January 2022 to boost the stock price. Two years later, there is still no product or subscription to sell.
Ford Next has never created anything, they’ve only made acquisitions that were failures. Nobody is aware of a single positive contribution from Victor, Moran or Moser. They are all collecting million dollar paychecks just for kissing the right backsides.

It’s the Ford Way Forward!

Interesting what is Ford ROE?

Thread regarding Ford layoffs

Ford Next and ADT/canopy strategy?

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