Home warranty company Frontdoor (NASDAQ:FTDR) will be reporting earnings tomorrow before market open. Here’s what to look for.

Frontdoor missed analysts’ revenue expectations by 0.7% last quarter, reporting revenues of $540 million, up 3.1% year on year. It was a very strong quarter for the company, with EBITDA guidance for next quarter exceeding analysts’ expectations and an impressive beat of analysts’ EPS estimates. It reported 1.95 million home service plans, down 4.4% year on year.

Is Frontdoor a buy or sell going into earnings? Read our full analysis here, it’s free.

This quarter, analysts are expecting Frontdoor’s revenue to be flat year on year at $368 million, slowing from the 8% increase it recorded in the same quarter last year. Adjusted earnings are expected to come in at $0.11 per share.

Analysts covering the company have generally reconfirmed their estimates over the last 30 days, suggesting they anticipate the business to stay the course heading into earnings. Frontdoor has only missed Wall Street’s revenue estimates once over the last two years, exceeding top-line expectations by 1.2% on average.

Looking at Frontdoor’s peers in the specialized consumer services segment, some have already reported their Q4 results, giving us a hint as to what we can expect. Pool’s revenues decreased 1.6% year on year, beating analysts’ expectations by 2.4%, and LKQ reported a revenue decline of 4.1%, falling short of estimates by 2%. Pool’s stock price was unchanged after the resultswhile LKQ was up 2.8%.

Read our full analysis of Pool’s results here and LKQ’s results here.

Valuation multiples for many growth stocks have not yet reverted to their early 2021 highs, but the market has been optimistic as of late due to a soft landing. This is an economic situation where rate hikes successfully quelled inflation but did not send the economy into a recession. Furthermore, recent rate cuts and Donald Trump's triumph in the 2024 Presidential election have been tailwinds for the market, and while some of the specialized consumer services stocks have shown solid performance, the group has generally underperformed, with share prices down 3.3% on average over the last month. Frontdoor is down 6.9% during the same time and is heading into earnings with an average analyst price target of $58.50 (compared to the current share price of $58.40).

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