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Automatic Data Processing, Inc. (ADP) - free report >>
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Automatic Data Processing, Inc. (ADP) - free report >>
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Here's Why Investors Should Retain ADP Stock in Portfolio Now
Automatic Data Processing, Inc.’s (ADP - Free Report) bottom line is benefiting from its three-tier business strategy and a strong business model.
Factors That Augur Well
ADP’s three-tier business strategy helps it maintain and grow its strong position as a human capital management (HCM) technology and services provider. ADP is focused on delivering a complete suite of cloud-based HCM and HR Outsourcing solutions.
ADP has a strong business model, high recurring revenues, good margins, robust client retention and low capital expenditure. Automatic Data Processing has strong cash generating ability that allows it to pursue growth in areas with great potential.
ADP has been able to accelerate DataCloud penetration, and increase investment in inside sales, mid-market migrations and service alignment initiatives through its ongoing transformation initiatives. Through these endeavors, ADP continues to innovate, improve operations, expand margins and enhance innovation abilities.
Some Risks
ADP's current ratio at the end of fourth-quarter fiscal 2022 was pegged at 0.99, lower than the current ratio of 1.01 reported at the end of third-quarter fiscal 2022 and the prior-year quarter’s 1.07. Decreasing current ratio is not desirable as it is indicative of a company’s difficulty in meeting its short-term debt obligations.
Zacks Rank and Stocks to Consider
ADP currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Some better-ranked stocks in the broader Zacks Business Services sector are Genpact Limited (G - Free Report) and CRA International, Inc. (CRAI - Free Report) .
Genpact carries a Zacks Rank #2 (Buy) at present. G has a long-term earnings growth expectation of 12.2%.
Genpact delivered a trailing four-quarter earnings surprise of 10.1%, on average.
CRA International carries a Zacks Rank of 2, currently. CRAI has a long-term earnings growth expectation of 14.3%.
CRAI delivered a trailing four-quarter earnings surprise of 26%, on average.