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Automatic Data Processing (ADP) Q3 Earnings Beat, '22 View Up
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Automatic Data Processing, Inc. (ADP - Free Report) reported better-than-expected third-quarter fiscal 2022 results.
Adjusted earnings per share of $2.21 beat the Zacks Consensus Estimate by 6.8% and grew 16.9% year over year. Total revenues of $4.51 billion beat the consensus mark by 1.2% and improved 10% year over year on a reported basis and 11% on an organic constant-currency basis.
Over the past year, shares of ADP have gained 19.1% compared with 17.4% growth of the industry it belongs to and 2.5% surge of the Zacks S&P 500 composite.
Image Source: Zacks Investment Research
Let’s check out the numbers in detail:
Segments in Detail
Employer Services revenues of $3 billion increased 8% on a reported basis and 9% on an organic constant-currency basis. Pays per control increased 7% year over year.
PEO Services revenues were up 14% year over year to $1.51 billion. Average worksite employees paid by PEO Services were 688,000, up 16% year over year.
Interest on funds held for clients increased 10% to $118 million. The company’s average client funds balance increased 15% to $38.1 billion. Average interest yield on client funds declined 10 basis points to 1.2%.
Margins
Adjusted EBIT increased 12% year over year to $1.2 billion. Adjusted EBIT margin grew 50 basis points to 26.8%. The uptick was backed by higher revenues, which were partially offset by the effect of increased expenses related to selling, implementation and service, and higher PEO pass-through expenses.
ADP exited third-quarter fiscal 2022 with cash and cash equivalents of $1.63 billion compared with $1.75 billion in the prior quarter. Long-term debt of $2.99 billion was flat sequentially.
The company generated $971 million of cash from operating activities in the quarter. Capital expenditures were $51 million. The company paid out dividends worth $437.7 million and repurchased shares worth $491.4 million.
Fiscal 2022 Outlook
ADP raised its fiscal 2022 outlook. The company now expects revenues to register 9-10% growth compared with the expected prior growth rate of 8-9%. Adjusted EPS is now expected to register 15-17% growth compared with the expected prior growth rate of 12-14%.
The company now expects Employer Services revenues to grow at a rate of about 7% compared with the expected prior growth rate of about 6% and PEO Services revenues to grow at a rate of 14-15% compared with the expected prior growth rate of 13% to 15%.
Equifax’s adjusted earnings of $2.22 per share beat the Zacks Consensus Estimate by 3.3% and improved 13% on a year-over-year basis. The reported figure exceeded the guided range of $2.08-$2.18.
Equifax’s revenues of $1.36 billion outpaced the consensus estimate by 2.4% and improved 12.4% year over year on a reported basis and 13% on a local-currency basis. The reported figure exceeded the guided range of $1.32-$1.34 billion.
Waste Management (WM - Free Report) reported solid first-quarter 2022 results, wherein the company’s earnings and revenues surpassed the Zacks Consensus Estimate.
Waste Management’s adjusted earnings per share of $1.29 beat the Zacks Consensus Estimate by 15.2% and improved 21.7% year over year.
Waste Management’s total revenues of $4.66 billion beat the consensus estimate by 4.6% and increased 13.4% year over year.
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Automatic Data Processing (ADP) Q3 Earnings Beat, '22 View Up
Automatic Data Processing, Inc. (ADP - Free Report) reported better-than-expected third-quarter fiscal 2022 results.
Adjusted earnings per share of $2.21 beat the Zacks Consensus Estimate by 6.8% and grew 16.9% year over year. Total revenues of $4.51 billion beat the consensus mark by 1.2% and improved 10% year over year on a reported basis and 11% on an organic constant-currency basis.
Over the past year, shares of ADP have gained 19.1% compared with 17.4% growth of the industry it belongs to and 2.5% surge of the Zacks S&P 500 composite.
Image Source: Zacks Investment Research
Let’s check out the numbers in detail:
Segments in Detail
Employer Services revenues of $3 billion increased 8% on a reported basis and 9% on an organic constant-currency basis. Pays per control increased 7% year over year.
PEO Services revenues were up 14% year over year to $1.51 billion. Average worksite employees paid by PEO Services were 688,000, up 16% year over year.
Interest on funds held for clients increased 10% to $118 million. The company’s average client funds balance increased 15% to $38.1 billion. Average interest yield on client funds declined 10 basis points to 1.2%.
Margins
Adjusted EBIT increased 12% year over year to $1.2 billion. Adjusted EBIT margin grew 50 basis points to 26.8%. The uptick was backed by higher revenues, which were partially offset by the effect of increased expenses related to selling, implementation and service, and higher PEO pass-through expenses.
Employer Services segment margin increased 120 bps. PEO Services segment margin was flat.
Automatic Data Processing, Inc. Price, Consensus and EPS Surprise
Automatic Data Processing, Inc. price-consensus-eps-surprise-chart | Automatic Data Processing, Inc. Quote
Balance Sheet and Cash Flow
ADP exited third-quarter fiscal 2022 with cash and cash equivalents of $1.63 billion compared with $1.75 billion in the prior quarter. Long-term debt of $2.99 billion was flat sequentially.
The company generated $971 million of cash from operating activities in the quarter. Capital expenditures were $51 million. The company paid out dividends worth $437.7 million and repurchased shares worth $491.4 million.
Fiscal 2022 Outlook
ADP raised its fiscal 2022 outlook. The company now expects revenues to register 9-10% growth compared with the expected prior growth rate of 8-9%. Adjusted EPS is now expected to register 15-17% growth compared with the expected prior growth rate of 12-14%.
The company now expects Employer Services revenues to grow at a rate of about 7% compared with the expected prior growth rate of about 6% and PEO Services revenues to grow at a rate of 14-15% compared with the expected prior growth rate of 13% to 15%.
Currently, ADP carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Business Services Companies
Omnicom Group (OMC - Free Report) reported impressive first-quarter 2022 results, wherein the company’s earnings and revenues surpassed the Zacks Consensus Estimate.
Omnicom’s earnings of $1.39 per share beat the consensus mark by 8.6% and increased 4.5% year over year, driven by strong margin performance.
Omnicom’s total revenues of $3.4 billion surpassed the consensus estimate by 5.4% but declined slightly year over year.
Equifax (EFX - Free Report) reported better-than-expected first-quarter 2022 results.
Equifax’s adjusted earnings of $2.22 per share beat the Zacks Consensus Estimate by 3.3% and improved 13% on a year-over-year basis. The reported figure exceeded the guided range of $2.08-$2.18.
Equifax’s revenues of $1.36 billion outpaced the consensus estimate by 2.4% and improved 12.4% year over year on a reported basis and 13% on a local-currency basis. The reported figure exceeded the guided range of $1.32-$1.34 billion.
Waste Management (WM - Free Report) reported solid first-quarter 2022 results, wherein the company’s earnings and revenues surpassed the Zacks Consensus Estimate.
Waste Management’s adjusted earnings per share of $1.29 beat the Zacks Consensus Estimate by 15.2% and improved 21.7% year over year.
Waste Management’s total revenues of $4.66 billion beat the consensus estimate by 4.6% and increased 13.4% year over year.