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Bull of the Day: FrontDoor (FTDR)

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The semiconductors, which had led the market higher throughout this year, are beginning to show some chinks in the armor. I’m not saying yesterday was the start of a reversal to the downside that will last weeks. I’m just saying that this overbought industry is likely to give up some ground. The negativity could spill over to other areas of the market. You want to make sure that any additions you are making are not all flash and no substance. One way to do that is by leaning on the Zacks Rank.

Stocks like today’s Bull of the Day which are Zacks Rank #1 (Strong Buy) stocks have been more resilient in the past during market downturns. Today’s Bull is FrontDoor ((FTDR - Free Report) ). Frontdoor, Inc. provides home warranties in the United States in the United States. Its customizable home warranties help customers protect and maintain their homes from costly and unplanned breakdowns of essential home systems and appliances. The company's home warranty customers subscribe to an annual service plan agreement that covers the repair or replacement of principal components of approximately 20 home systems and appliances, including electrical, plumbing, water heaters, refrigerators, dishwashers, and ranges/ovens/cooktops, as well as electronics, pools, and spas and pumps; and heating, ventilation, and air conditioning systems. It also offers on-demand home services and a one-stop app experience for home repair and maintenance; and Streem technology, an app that empowers homeowners by connecting them in real time through video chat with qualified experts to diagnose and solve their problems.

The reason for the favorable Zacks Rank is that four analysts have increased their earnings estimates for the current year and next year. The bullish moves have increased our Zacks Consensus Estimates from $2.35 to $2.52 for the current year and $2.62 to $2.73 for next year. That means that FrontDoor is expecting to see 9.57% EPS growth this year and 8.43% next year.

Zacks Investment Research
Image Source: Zacks Investment Research

There has been some great bullish divergence on my favorite chart, the Price, Consensus and EPS Surprise Chart. Estimates have been pushing into the positive direction while the stock has been moving sideways. That difference between earnings and price is the divergence. In this case, it’s a good thing for the intermediate term prospects of the stock because eventually, a stock’s price tends to track along with earnings.

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