Analyzing Duolingo (NASDAQ:DUOL) and ADT (NYSE:ADT)

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

Risk & Volatility

Duolingo has a beta of 1.05, meaning that its stock price is 5% more volatile than the S&P 500. Comparatively, ADT has a beta of 1.04, meaning that its stock price is 4% more volatile than the S&P 500.

Insider & Institutional Ownership

91.6% of Duolingo shares are held by institutional investors. Comparatively, 87.2% of ADT shares are held by institutional investors. 16.6% of Duolingo shares are held by insiders. Comparatively, 3.0% of ADT shares are held by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.

Profitability

This table compares Duolingo and ADT’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Duolingo	35.88%	12.10%	8.24%
ADT	11.85%	18.99%	4.40%

Analyst Ratings

This is a summary of current recommendations for Duolingo and ADT, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Duolingo	1	14	8	1	2.38
ADT	1	4	2	0	2.14

Duolingo presently has a consensus target price of $125.31, suggesting a potential downside of 8.91%. ADT has a consensus target price of $8.13, suggesting a potential upside of 23.65%. Given ADT’s higher possible upside, analysts plainly believe ADT is more favorable than Duolingo.

Earnings & Valuation

This table compares Duolingo and ADT”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Duolingo	$1.04 billion	6.20	$414.07 million	$8.44	16.30
ADT	$5.13 billion	0.94	$595.95 million	$0.71	9.26

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

Summary

Duolingo beats ADT on 11 of the 15 factors compared between the two stocks.

About Duolingo

Duolingo, Inc. operates as a mobile learning platform in the United States, the United Kingdom, and internationally. The company offers courses in 40 different languages, including Spanish, English, French, German, Italian, Portuguese, Japanese, and Chinese through its Duolingo app. It also provides a digital English language proficiency assessment exam. Duolingo, Inc. was incorporated in 2011 and is headquartered in Pittsburgh, Pennsylvania.

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.