Strength Seen in ADT: Can Its 7.9% Jump Turn into More Strength?

ADT ADT shares ended the last trading session 7.9% higher at $7.75. The jump came on an impressive volume with a higher-than-average number of shares changing hands in the session. This compares to the stock's 0.3% loss over the past four weeks.

ADT's rally is primarily driven by optimism regarding strength in the Consumer and Small Business segment, driven by strong customer demand for monitoring and related services. Also, the company's strategic initiatives, innovation and operational excellence bode well.

This home security company is expected to post quarterly earnings of $0.17 per share in its upcoming report, which represents a year-over-year change of +6.3%. Revenues are expected to be $1.22 billion, down 23.2% from the year-ago quarter.

Earnings and revenue growth expectations certainly give a good sense of the potential strength in a stock, but empirical research shows that trends in earnings estimate revisions are strongly correlated with near-term stock price movements.

For ADT, the consensus EPS estimate for the quarter has remained unchanged over the last 30 days. And a stock's price usually doesn't keep moving higher in the absence of any trend in earnings estimate revisions. So, make sure to keep an eye on ADT going forward to see if this recent jump can turn into more strength down the road.

The stock currently carries a Zacks Rank #2 (Buy).

ADT belongs to the Zacks Security and Safety Services industry. Another stock from the same industry, Resideo Technologies REZI, closed the last trading session 0.9% higher at $19.63. Over the past month, REZI has returned -8.8%.

For Resideo Technologies, the consensus EPS estimate for the upcoming report has remained unchanged over the past month at $0.50. This represents a change of +47.1% from what the company reported a year ago. Resideo Technologies currently has a Zacks Rank of #3 (Hold).

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