Critical Analysis: Grand Canyon Education (NASDAQ:LOPE) versus ADT (NYSE:ADT)

ADT (NYSE:ADT) and Grand Canyon Education (NASDAQ:LOPE) are both mid-cap consumer discretionary companies, but which is the superior investment? We will compare the two businesses based on the strength of their profitability, institutional ownership, dividends, risk, analyst recommendations, earnings and valuation.

Valuation and Earnings

This table compares ADT and Grand Canyon Education”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
ADT	$5.13 billion	1.07	$595.95 million	$0.71	10.54
Grand Canyon Education	$1.11 billion	3.60	$216.17 million	$8.27	18.46

ADT has higher revenue and earnings than Grand Canyon Education. ADT is trading at a lower price-to-earnings ratio than Grand Canyon Education, indicating that it is currently the more affordable of the two stocks.

Volatility and Risk

ADT has a beta of 1.02, suggesting that its share price is 2% more volatile than the S&P 500. Comparatively, Grand Canyon Education has a beta of 0.58, suggesting that its share price is 42% less volatile than the S&P 500.

Profitability

This table compares ADT and Grand Canyon Education’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
ADT	11.85%	18.99%	4.40%
Grand Canyon Education	19.63%	36.62%	26.87%

Institutional & Insider Ownership

87.2% of ADT shares are held by institutional investors. Comparatively, 94.2% of Grand Canyon Education shares are held by institutional investors. 3.0% of ADT shares are held by company insiders. Comparatively, 2.1% of Grand Canyon Education shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Analyst Recommendations

This is a summary of current ratings and price targets for ADT and Grand Canyon Education, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
ADT	1	4	2	0	2.14
Grand Canyon Education	0	2	3	0	2.60

ADT currently has a consensus price target of $8.23, indicating a potential upside of 10.03%. Grand Canyon Education has a consensus price target of $161.67, indicating a potential upside of 5.89%. Given ADT’s higher possible upside, equities analysts clearly believe ADT is more favorable than Grand Canyon Education.

Summary

Grand Canyon Education beats ADT on 9 of the 14 factors compared between the two stocks.

About ADT

ADT Inc. provides security, interactive, and smart home solutions to residential and small business customers in the United States. It operates through two segments, Consumer and Small Business, and Solar. The company provides burglar and life safety alarms, smart security cameras, smart home automation systems, and video surveillance systems. It primarily offers security designed to detect intrusion, control access, sense movement, smoke, fire, carbon monoxide, flooding, temperature, and other environmental conditions and hazards; and address personal medical emergencies, such as injuries or unanticipated falls. The company also provides automation and smart home solutions that allow customers to use their smart phones, smart phone application, or touchscreen panels in their homes to arm and disarm their security systems; record and view real-time video; and creates customized and automated schedules for connected devices; programs systems to react to defined events; integrates system with third-party connected devices, such as cameras, lights, thermostats, appliances, and garage doors, as well as offers monitoring and maintenance services. In addition, the company offers energy storage solutions, energy efficiency upgrades, and roofing services. It offers its products under the ADT, ADT Pulse, ADT+, and ADT Commercial brand names. The company was formerly known as Prime Security Services Parent, Inc. and changed its name to ADT Inc. in September 2017. ADT Inc. was founded in 1874 and is headquartered in Boca Raton, Florida.

About Grand Canyon Education

Grand Canyon Education, Inc. provides education services to colleges and universities in the United States. It offers technology services, including learning management system, internal administration, infrastructure, and support services; academic services, such as program and curriculum, faculty and related training and development, class scheduling, and skills and simulation lab sites; and counseling services and support services comprising admission, financial aid, and field experience and other counseling services. The company also offers marketing and communication services that include lead acquisition, digital communications strategy, brand identity, media planning and strategy, video, business intelligence and data science, and market research services; and back-office services consisting of finance and accounting, human resources, audit, and procurement services. In addition, it provides education services to 25 university partners. Grand Canyon Education, Inc. was founded in 1949 and is headquartered in Phoenix, Arizona.