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Automatic Data Processing (ADP) Q4 Earnings Beat, Surge Y/Y
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Automatic Data Processing, Inc. (ADP - Free Report) reported better-than-expected fourth-quarter fiscal 2022 results.
Adjusted earnings per share of $1.50 beat the Zacks Consensus Estimate by 1.4% and grew 25% year over year. Total revenues of $4.13 billion beat the consensus mark by 1.8%, and improved 10.5% year over year on a reported basis and 12% on an organic constant-currency basis.
Over the past year, shares of ADP have gained 5.4% compared with 2% growth of the industry it belongs to.
Image Source: Zacks Investment Research
Let’s check out the numbers in detail:
Segments in Detail
Employer Services revenues of $2.7 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 16% year over year to $1.41 billion. Average worksite employees paid by PEO Services were 704,000, up 14% year over year.
Interest on funds held for clients increased 23% to $127 million. ADP’s average client funds balances increased 12% to $32.8 billion. Average interest yield on client funds expanded 10 basis points to 1.5%.
Margins
Adjusted EBIT increased 21% year over year to $819 million. Adjusted EBIT margin grew 170 basis points to 19.8%.
ADP exited fourth-quarter fiscal 2022 with cash and cash equivalents of $1.44 billion compared with $1.63 billion in the prior quarter. Long-term debt of $2.99 billion was flat sequentially.
Automatic Data Processing generated $912.9 million of cash from operating activities in the quarter. Capital expenditures were $47.6 million. ADP paid out dividends worth $434.3 million and repurchased shares worth $487.5 million.
Fiscal 2023 Outlook
ADP expects revenues to register 7-9% growth. Adjusted EPS is now expected to register 13-16% growth. Adjusted effective tax rate is estimated to be approximately at 23%.
Automatic Data Processing expects Employer Services revenues to grow at a rate of about 6-8% and PEO Services revenues to grow at 10-12% rate.
Recent Performances of Some Other Business Services Companies
Equifax (EFX - Free Report) reported mixed second-quarter 2022 results, wherein earnings beat estimates but revenues missed the same.
EFX’s adjusted earnings of $2.09 per share beat the Zacks Consensus Estimate by 3% and improved 5.6% on a year-over-year basis. Revenues of $1.32 billion missed the consensus estimate marginally but improved 6.6% year over year.
IQVIA Holdings (IQV - Free Report) reported solid second-quarter 2022 results, wherein both earnings and revenues surpassed the Zacks Consensus Estimate.
IQV’s adjusted earnings per share of $2.44 beat the consensus mark by 2.1% and improved 15% on a year-over-year basis. Total revenues of $3.54 billion outpaced the consensus estimate by 1.2% and increased 3% year over year.
Omnicom Group (OMC - Free Report) reported impressive second-quarter 2022 results, wherein both earnings and revenues surpassed the Zacks Consensus Estimate.
OMC’s earnings of $1.68 per share beat the consensus mark by 7.7% and increased 15.1% year over year, driven by a strong margin performance. Total revenues of $3.6 billion surpassed the consensus estimate by 4.4% but declined slightly year over year.
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Automatic Data Processing (ADP) Q4 Earnings Beat, Surge Y/Y
Automatic Data Processing, Inc. (ADP - Free Report) reported better-than-expected fourth-quarter fiscal 2022 results.
Adjusted earnings per share of $1.50 beat the Zacks Consensus Estimate by 1.4% and grew 25% year over year. Total revenues of $4.13 billion beat the consensus mark by 1.8%, and improved 10.5% year over year on a reported basis and 12% on an organic constant-currency basis.
Over the past year, shares of ADP have gained 5.4% compared with 2% growth of the industry it belongs to.
Image Source: Zacks Investment Research
Let’s check out the numbers in detail:
Segments in Detail
Employer Services revenues of $2.7 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 16% year over year to $1.41 billion. Average worksite employees paid by PEO Services were 704,000, up 14% year over year.
Interest on funds held for clients increased 23% to $127 million. ADP’s average client funds balances increased 12% to $32.8 billion. Average interest yield on client funds expanded 10 basis points to 1.5%.
Margins
Adjusted EBIT increased 21% year over year to $819 million. Adjusted EBIT margin grew 170 basis points to 19.8%.
Employer Services segment margin increased 140 bps. PEO Services segment margin surged 260 bps.
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 fourth-quarter fiscal 2022 with cash and cash equivalents of $1.44 billion compared with $1.63 billion in the prior quarter. Long-term debt of $2.99 billion was flat sequentially.
Automatic Data Processing generated $912.9 million of cash from operating activities in the quarter. Capital expenditures were $47.6 million. ADP paid out dividends worth $434.3 million and repurchased shares worth $487.5 million.
Fiscal 2023 Outlook
ADP expects revenues to register 7-9% growth. Adjusted EPS is now expected to register 13-16% growth. Adjusted effective tax rate is estimated to be approximately at 23%.
Automatic Data Processing expects Employer Services revenues to grow at a rate of about 6-8% and PEO Services revenues to grow at 10-12% rate.
Currently, ADP carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Recent Performances of Some Other Business Services Companies
Equifax (EFX - Free Report) reported mixed second-quarter 2022 results, wherein earnings beat estimates but revenues missed the same.
EFX’s adjusted earnings of $2.09 per share beat the Zacks Consensus Estimate by 3% and improved 5.6% on a year-over-year basis. Revenues of $1.32 billion missed the consensus estimate marginally but improved 6.6% year over year.
IQVIA Holdings (IQV - Free Report) reported solid second-quarter 2022 results, wherein both earnings and revenues surpassed the Zacks Consensus Estimate.
IQV’s adjusted earnings per share of $2.44 beat the consensus mark by 2.1% and improved 15% on a year-over-year basis. Total revenues of $3.54 billion outpaced the consensus estimate by 1.2% and increased 3% year over year.
Omnicom Group (OMC - Free Report) reported impressive second-quarter 2022 results, wherein both earnings and revenues surpassed the Zacks Consensus Estimate.
OMC’s earnings of $1.68 per share beat the consensus mark by 7.7% and increased 15.1% year over year, driven by a strong margin performance. Total revenues of $3.6 billion surpassed the consensus estimate by 4.4% but declined slightly year over year.