FRONTDOOR INC (FTDR) is a mid-cap growth stock in the business services sector. The rating under our Joel Greenblatt-based strategy has increased from 80% to 90% depending on the company’s underlying fundamentals and stock valuation. A score of 80% or higher generally indicates that the strategy has some interest in the stock and a score above 90% generally indicates strong interest.
Company Description: Frontdoor, Inc. is a home service plan provider in the United States. The Company operates under the American Home Shield, HSA, OneGuard and Landmark brands. Its customizable home service plans help customers protect and maintain their homes and assets against costly and unexpected breakdowns of home systems and appliances, including electrical, plumbing, central heating, ventilation and air conditioning systems. (HVAC), water heaters, refrigerators, dishwashers, and stoves/ovens/cooktops, plus optional coverage for electronics, pools, spas, and pumps. Its plan covers the repair or replacement of components of home systems and appliances. Its operations also include its ProConnect, an on-demand membership service for home repairs and maintenance, and Streem, a technology platform that uses augmented reality, computer vision and machine learning to, among other things, helping home service professionals to more quickly and accurately diagnose breakdowns and complete repairs.
The following table summarizes whether the stock meets each of the tests for this strategy. Not all criteria in the table below are given the same weight or are independent, but the table provides a brief overview of the stock’s strengths and weaknesses in the context of the strategy criteria.
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Detailed Analysis of FRONTDOOR INC
About Joel Greenblatt: In his 2005 bestseller The Little Book That Beats the Market, hedge fund manager Joel Greenblatt laid out a surprisingly simple way to beat the market using two – and only two – fundamental variables. The “magic formula,” as he called it, produced look-back returns of 30.8% per year from 1988 to 2004, more than double the 12.4% return of the S&P 500 during that period. Greenblatt also produced stellar returns as managing partner of Gotham Capital, a New York-based hedge fund he founded. The company has averaged a remarkable 40% annualized return over more than two decades.
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