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Headquartered in Roseland, New Jersey, Automatic Data Processing, Inc. (ADP) provides human capital management solutions. With a market cap of $110.25 billion, ADP is recognized for its comprehensive services in payroll processing, human resources management, and employee benefits administration. The company’s innovative approach to workforce management and business solutions enables organizations to streamline operations, enhance productivity, and focus on their core business objectives, helping to shape the future of work and employee engagement across various industries.
Shares of ADP have underperformed the broader market over the past year. The stock has gained 8% over this time frame, while the broader S&P 500 Index ($SPX) has rallied nearly 27%. In 2024, the stock is up 15.6%, while the SPX has gained 16.8% on a YTD basis.
Narrowing the focus, ADP's underperformance is evident when measured against the Industrial Select Sector SPDR Fund (XLI). The exchange-traded fund has gained about 20.9% over the past year. However, the ETF’s 12.3% gains on a YTD basis fall short of the stock’s returns over the same time frame.
ADP reported Q4 earnings on Jun. 31. The company reported a profit of $829.30 million, or $2.09 per share, surpassing Wall Street expectations of $2.07 per share. Also, the company's revenue of $4.77 billion exceeded analysts’ estimates of $4.73 billion. For the year, the company posted a profit of $3.75 billion, or $9.10 per share, on revenue of $19.2 billion. The stock gained 1.9% on the earnings release day.
For the current fiscal year, ending in June 2025, analysts expect ADP’s EPS to grow 9.4% to $10.04 on a diluted basis. The company's earnings surprise history is robust. It beat the consensus estimate in the last four quarters.
Among the 18 analysts covering ADP stock, the consensus rating is a “Hold.” That’s based on two “Strong Buy” ratings, 14 “Holds,” and two “Strong Sells.”
On Aug. 1, Analyst Bryan Bergin from TD Cowen maintained a “Hold” rating on Automatic Data Processing, with a price target of $263, which indicates that the stock trades at a premium.
The mean price target of $270.53 represents a marginal premium compared to ADP’s current price levels. The Street-high price target of $310 suggests an upside potential of 15.1%.
On the date of publication, Rashmi Kumari did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
