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What Awaits Automatic Data Processing (ADP) in Q4 Earnings?

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Automatic Data Processing, Inc. (ADP - Free Report) is scheduled to report fourth-quarter fiscal 2020 results on Jul 29, before market open.

Let’s check how things have shaped up for this announcement.

Expectations This Time Around

Automatic Data Processing’s fourth-quarter fiscal 2020 performance is expected to have been affected by coronavirus-led lockdowns prompting firms to "reshore" jobs amid lack of labor, supply-chain disruptions and workplace closures.

The Zacks Consensus Estimate for revenues stands at $3.29 billion, indicating decline of 5.9% from the year-ago quarter’s reported figure. Segment-wise, the consensus mark for Employer Services revenues stands at $2.26 billion, suggesting a decrease of 7.1% from the year-ago period’s reported figure. The consensus mark for Professional Employer Organization Services revenues is pegged at $1 billion, indicating year-over-year decline of 5.7%.

The consensus estimate for earnings stands at 96 cents, implying a year-over-year decline of 15.8%. The bottom line is expected to have been weighed down by expenses of global associate-assistance payment related to COVID-19, as well as incremental amortization and PEO pass-through expenses. These were, however, partially offset by continued execution of transformation initiatives and operating efficiencies.

What Our Model Says

Our proven model does not conclusively predict an earnings beat for Automatic Data Processing this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Automatic Data Processing has an Earnings ESP of -2.49% and a Zacks Rank #3.

Stocks to Consider

Here are a few stocks from the broader Zacks Business Services sector that investors may consider, as our model shows that these have the right combination of elements to beat on second-quarter 2020 earnings.

Waste Management (WM - Free Report) has an Earnings ESP of +7.67% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Aptiv (APTV - Free Report) has an Earnings ESP of +7.14% and a Zacks Rank #3.

Waste Connections (WCN - Free Report) has an Earnings ESP of +7.04% and a Zacks Rank #3.

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