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6 Reasons to Buy Automatic Data Processing (ADP) Stock Now

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A prudent investment decision involves buying well-performing stocks at the right time while selling those at risk. A rise in share price and strong fundamentals signal a stock’s bullish run.

Automatic Data Processing, Inc. (ADP - Free Report) has performed exceptionally well lately and has the potential to sustain its momentum in the near term. Consequently, if you haven’t taken advantage of the share price appreciation yet, it’s time you add the stock to your portfolio.

What Makes Automatic Data Processing an Attractive Pick?

An Outperformer: A glimpse at the company’s price trend reveals that the stock has had an impressive run on the bourse over the past year. Shares of Automatic Data Processing have gained 12.3% over the past year, outperforming the 10% growth of the industry it belongs to.

Zacks Investment Research
Image Source: Zacks Investment Research

Solid Zacks Rank: Automatic Data Processing has a Zacks Rank #2 (Buy). Our research shows that stocks with a Zacks Rank #1 (Strong Buy) or #2 offer the best investment opportunities. Thus, the company is a compelling investment proposition at the moment. You can see the complete list of today’s Zacks #1 Rank stocks here.

Northward Estimate Revisions: The direction of estimate revisions serves as an important pointer when it comes to the price of a stock. Over the past 90 days, the Zacks Consensus Estimate for Automatic Data Processing’s 2022 earnings has climbed 2.2% to $6.97 per share.

Positive Earnings Surprise History: Automatic Data Processing has an impressive earnings surprise history. The company delivered an earnings surprise of 6.2% in the last four quarters, on average.

Earnings Expectations: Earnings growth and stock price gains often serve as indicators of a company’s prospects. For second-quarter 2022, Automatic Data Processing’s earnings are expected to register 22.7% growth. For full-year 2022 and 2023, the company’s earnings are expected to grow at 15.8% and 11.2%, respectively, year over year. The company has a long-term earnings growth rate of 12%.

Growth Factors: Automatic Data Processing continues to enjoy a dominant position in the human capital management market through strategic buyouts like Celergo, WorkMarket, Global Cash Card and The Marcus Buckingham Company. It has a strong business model, high recurring revenues, good margins, robust client retention and low capital expenditure. Further, it continues to innovate, improve operations and invest in its ongoing transformation efforts.

Other Stocks to Consider

Some other stocks in the broader Business Servicessector that investors can consider are Cross Country Healthcare (CCRN - Free Report) , Gartner (IT - Free Report) and Avis Budget (CAR - Free Report) , each sporting a Zacks Rank #1 at present.

Cross Country Healthcare has an expected earnings growth rate of 54.2% for the current year. CCRN has a trailing four-quarter earnings surprise of 29.2%, on average.

Cross Country Healthcare has a long-term earnings growth rate of 6.9%.

Gartner’s shares have gained 10.6% in the past year. IT delivered a trailing four-quarter earnings surprise of 24.2%, on average.

The Zacks Consensus Estimate for Gartner's current-year earnings has moved up 13.6% in the past 90 days.

Avis Budget has an expected earnings growth rate of 59.8% for the current year. CAR delivered a trailing four-quarter earnings surprise of 102.1%, on average.

Avis Budget has a long-term earnings growth rate of 19.4%.