Automatic Data Processing, Inc. (ADP), founded in 1949 and headquartered in Roseland, New Jersey, is a global leader in human capital management (HCM) solutions. With a market cap of $117 billion, ADP provides comprehensive payroll, HR, and workforce management services, helping businesses of all sizes enhance efficiency and streamline operations. The company is set to announce its Q2 earnings before the market opens on Wednesday, Jan. 29.
Ahead of this event, analysts expect ADP to report a profit of $2.27 per share, up 6.6% from $2.13 per share in the year-ago quarter. The company’s solid track record of consistently surpassing Wall Street's bottom-line estimates in the last four quarterly reports is even more impressive.
In Q1, the company reported an EPS of $2.33, which topped the consensus estimates by 5.9%. ADP's strong performance in the last reported quarter was driven by higher-than-expected revenues and earnings, reflecting strong demand for its payroll and HR services.
For fiscal 2025, analysts expect ADP to report EPS of $9.93, up 8.2% from $9.18 in fiscal 2024.
Shares of Automatic Data Processing have climbed 22.1% over the past 52 weeks, trailing the S&P 500 Index's ($SPX) 27.2% rise and the 29.7% rally of the Technology Select Sector SPDR Fund (XLK) during the same timeframe.
ADP stock gained 1.7% on Oct. 30 after a strong Q1 earnings report. Revenues grew 7% year over year to $4.8 billion, while adjusted EBIT rose 13% annually to $1.2 billion. The adjusted EBIT margin expanded by 130 basis points to 25.5%. For fiscal 2025, the company expects revenue growth between 6% and 7%, along with an adjusted EBIT margin expansion of 30 to 50 basis points.
Analysts' consensus view on ADP stock is cautious, with a "Hold" rating overall. Out of 19 analysts covering the stock, three advise a "Strong Buy," 14 indicate a “Hold,” and two recommend a “Strong Sell” rating.
The average analyst price target for ADP is $296.25, suggesting a potential upside of 3.2% from the current levels.
