Following its recent earnings report, Frontdoor (NASDAQ: FTDR) stock posted big gains on Wednesday. The home repairs and warranty specialist's share price closed out the daily session up 15.1%, according to data from S&P Global Market Intelligence.
Frontdoor published its third-quarter results before the market opened this morning and delivered sales and earnings that came in far above the market's expectations. The company recorded adjusted non-GAAP (generally accepted accounting principles) earnings per share of $0.94 on sales of $524 million, handily topping the average analyst estimate's call for per-share earnings of $0.54 on sales of roughly $513 million.
Frontdoor delivers strong Q3 results
Frontdoor's revenue increased roughly 8.3% year over year last quarter. Despite seeing a 2% decline in total service volume, a 10% increase in average pricing helped the company post solid sales growth in the quarter.
Additionally, the company saw strong margin expansion in the quarter. The homeowner-services specialist closed out the period with a gross margin of 51%, up 760 basis points compared to the prior-year period. Thanks to strong sales and margin expansion, adjusted net income in the period rose 64% year over year to reach $76 million.
On the heels of the strong Q3 performance, the company also raised its full-year performance targets.
What's next for Frontdoor?
Frontdoor now expects sales to come in between $1.765 billion and $1.775 billion, up from its previous target for sales between $1.73 billion and $1.75 billion. Prior to the Q3 release, the average analyst estimate had expected the business to post sales of $1.75 billion in the quarter.
The company also increased its gross profit margin guidance range to between 48% and 49.5% and its adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) range to between $320 million and $330 million. Previously, the company had guided for a gross margin between 45.5% and 47.5% and adjusted EBITDA between $260 million and $280 million.
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Keith Noonan has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
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