Automatic Data Processing, Inc. (ADP - Free Report) is benefiting from its strong business model and the three-tier business strategy.
ADP’s earnings and revenues for 2023 are expected to improve 15.8% and 8.5%, respectively, from the year-ago reported figures. Shares of ADP have jumped 7.7% in the past year compared with the 4.8% rise of the industry it belongs to.
Factors That Augur Well
ADP has a strong business model, leading to high recurring revenues, good margins, robust client retention and low capital expenditure. It has a strong cash generating ability, which allows it to pursue growth in areas that exhibit true potential. The adjusted EBIT margin grew 15% in second-quarter fiscal 2023.
ADP’s three-tier business strategy helps it maintain and grow its strong position as a human capital management ("HCM") technology and services provider. The company is focused on delivering a complete suite of cloud-based HCM and HR Outsourcing solutions. It is expanding its international HCM and HRO businesses with established local, in-country software solutions and cloud-based multi-country solutions.
Key Risk
ADP's current ratio at the end of second-quarter fiscal 2023 was pegged at 0.99, lower than the current ratio of 1.04 reported at the end of second-quarter fiscal 2022. A decreasing current ratio is not desirable, as it indicates that the company may have problems meeting its short-term debt obligations.
Zacks Rank and Stocks to Consider
ADP currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader Zacks Business Services sector are Avis Budget Group, Inc. (CAR - Free Report) and ICF International, Inc. (ICFI - Free Report) .
Avis Budget currently carries a Zacks Rank #2 (Buy). CAR has a VGM score of A. Our research shows that stocks with a VGM Score of A or B, when combined with a Zacks Rank #1 (Strong Buy) or 2, offer the best investment opportunities. You can see the complete list of today’s Zacks #1 Rank stocks here.
CAR delivered a trailing four-quarter earnings surprise of 78%, on average.
ICF International carries a Zacks Rank #2 at present. ICFI’s 2023 revenues and earnings are expected to rise 10.4% and 3.6% year over year, respectively.
ICF International delivered a trailing four-quarter earnings surprise of 9.2%, on average.
Zacks Names #1 Semiconductor Stock
It's only 1/9,000th the size of NVIDIA which skyrocketed more than +800% since we recommended it. NVIDIA is still strong, but our new top chip stock has much more room to boom.
With strong earnings growth and an expanding customer base, it's positioned to feed the rampant demand for Artificial Intelligence, Machine Learning, and Internet of Things. Global semiconductor manufacturing is projected to explode from $452 billion in 2021 to $803 billion by 2028.
See This Stock Now for Free >>
Automatic Data Processing, Inc. (ADP - Free Report) is benefiting from its strong business model and the three-tier business strategy.
ADP’s earnings and revenues for 2023 are expected to improve 15.8% and 8.5%, respectively, from the year-ago reported figures. Shares of ADP have jumped 7.7% in the past year compared with the 4.8% rise of the industry it belongs to.
Factors That Augur Well
ADP has a strong business model, leading to high recurring revenues, good margins, robust client retention and low capital expenditure. It has a strong cash generating ability, which allows it to pursue growth in areas that exhibit true potential. The adjusted EBIT margin grew 15% in second-quarter fiscal 2023.
ADP’s three-tier business strategy helps it maintain and grow its strong position as a human capital management ("HCM") technology and services provider. The company is focused on delivering a complete suite of cloud-based HCM and HR Outsourcing solutions. It is expanding its international HCM and HRO businesses with established local, in-country software solutions and cloud-based multi-country solutions.
Key Risk
ADP's current ratio at the end of second-quarter fiscal 2023 was pegged at 0.99, lower than the current ratio of 1.04 reported at the end of second-quarter fiscal 2022. A decreasing current ratio is not desirable, as it indicates that the company may have problems meeting its short-term debt obligations.
Zacks Rank and Stocks to Consider
ADP currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader Zacks Business Services sector are Avis Budget Group, Inc. (CAR - Free Report) and ICF International, Inc. (ICFI - Free Report) .
Avis Budget currently carries a Zacks Rank #2 (Buy). CAR has a VGM score of A. Our research shows that stocks with a VGM Score of A or B, when combined with a Zacks Rank #1 (Strong Buy) or 2, offer the best investment opportunities. You can see the complete list of today’s Zacks #1 Rank stocks here.
CAR delivered a trailing four-quarter earnings surprise of 78%, on average.
ICF International carries a Zacks Rank #2 at present. ICFI’s 2023 revenues and earnings are expected to rise 10.4% and 3.6% year over year, respectively.
ICF International delivered a trailing four-quarter earnings surprise of 9.2%, on average.
Zacks Names #1 Semiconductor Stock
It's only 1/9,000th the size of NVIDIA which skyrocketed more than +800% since we recommended it. NVIDIA is still strong, but our new top chip stock has much more room to boom.
With strong earnings growth and an expanding customer base, it's positioned to feed the rampant demand for Artificial Intelligence, Machine Learning, and Internet of Things. Global semiconductor manufacturing is projected to explode from $452 billion in 2021 to $803 billion by 2028.
See This Stock Now for Free >>
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