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What Awaits Automatic Data Processing (ADP) in Q2 Earnings?

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Automatic Data Processing, Inc. (ADP - Free Report) is scheduled to report second-quarter fiscal 2021 results on Jan 27, before market open.

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

Expectations This Time Around

The Zacks Consensus Estimate for revenues stands at $3.58 billion, indicating a decline of 2.4% from the year-ago quarter’s reported figure.

The consensus mark for Employer Services revenues is pegged at $2.44 billion, implying a decline of 3.7% from the year-ago quarter’s reported figure. The top line is likely to have been weighed down by lower New Business Bookings, decrease in pays per control and decrease in interest earned on funds held for clients.

The consensus estimate for PEO Services revenues is pegged at $1.13 billion, indicating growth of 0.1% year over year. The upside is likely to have been aided by an increase in zero-margin benefits pass-throughs.

The consensus mark for Interest on funds held for clients’ revenues is pegged at $96 million, implying a decline of 30.4% from the year-ago quarter’s reported figure. Decline in the company’s average interest rate earned along with fall in average client funds balance might have been weighed on the segmental growth.

The consensus estimate for earnings stands at $1.29, implying a year-over-year decline of 15.1%.

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 -0.70% and a Zacks Rank #4 (Sell).

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 fourth-quarter 2020 earnings.

Avis Budget (CAR - Free Report) has an Earnings ESP of +26.96% 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 +3.38% and a Zacks Rank #2.

ManpowerGroup (MAN - Free Report) has an Earnings ESP of +6.20% and a Zacks Rank #2.

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