Frontdoor's Stock Rises 36% in Three Months: Good Time to Buy FTDR?

Core Viewpoint - Frontdoor, Inc. (FTDR) has experienced a significant stock rally of 36.1% over the past three months, outperforming the broader market and its industry peers, driven by improved contract claims costs and customer retention [1][2]. Group 1: Stock Performance - FTDR's stock has outperformed the Zacks Building Products - Miscellaneous industry, which saw a 2% rise, and the Zacks Construction sector's 5.1% growth, as well as the S&P 500 index's 0.8% increase during the same period [1]. - The stock is currently trading above its 50-day and 200-day moving averages, indicating a bullish trend and positive market sentiment [2]. Group 2: Factors Driving Growth - Despite macroeconomic challenges, Frontdoor is focusing on long-term growth potential in the home warranty market and has modestly revised its outlook for member count [3]. - The American Home Shield (AHS) brand is actively promoting home warranties, with a successful marketing campaign launched in April and a 50% discount promotion in July 2024 that resulted in positive renewal rates [4][5]. - The company is expanding its on-demand business, particularly in HVAC services, with other revenues increasing by 46% year over year, driven by new HVAC sales [6][7]. Group 3: Strategic Acquisitions - In June, Frontdoor announced the acquisition of 2-10 Home Buyers Warranty, which is expected to enhance customer base, product diversification, and long-term growth [8]. Group 4: Financial Health - Frontdoor reported net cash from operations of $187 million for the six months ended June 30, 2024, up from$112 million a year ago, and improved its net debt to adjusted EBITDA ratio to 0.85x [9]. - The company has approved a new 3-year share repurchase plan worth $650 million, reflecting a 63$1.81 billion and $1.84 billion [17].