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Automatic Data Processing (ADP) Outpaces Stock Market Gains: What You Should Know
Automatic Data Processing (ADP - Free Report) closed at $222.55 in the latest trading session, marking a +1.36% move from the prior day. This move outpaced the S&P 500's daily gain of 0.76%. Elsewhere, the Dow gained 1.05%, while the tech-heavy Nasdaq lost 0.98%.
Coming into today, shares of the payroll and human resources company had lost 3.16% in the past month. In that same time, the Business Services sector lost 5.02%, while the S&P 500 lost 3.91%.
Wall Street will be looking for positivity from Automatic Data Processing as it approaches its next earnings report date. In that report, analysts expect Automatic Data Processing to post earnings of $2.42 per share. This would mark year-over-year growth of 9.5%. Meanwhile, our latest consensus estimate is calling for revenue of $4.89 billion, up 8.26% from the prior-year quarter.
ADP's full-year Zacks Consensus Estimates are calling for earnings of $8.12 per share and revenue of $17.91 billion. These results would represent year-over-year changes of +15.83% and +8.55%, respectively.
Investors might also notice recent changes to analyst estimates for Automatic Data Processing. These revisions help to show the ever-changing nature of near-term business trends. As a result, we can interpret positive estimate revisions as a good sign for the company's business outlook.
Research indicates that these estimate revisions are directly correlated with near-term share price momentum. Investors can capitalize on this by using the Zacks Rank. This model considers these estimate changes and provides a simple, actionable rating system.
The Zacks Rank system ranges from #1 (Strong Buy) to #5 (Strong Sell). It has a remarkable, outside-audited track record of success, with #1 stocks delivering an average annual return of +25% since 1988. Within the past 30 days, our consensus EPS projection has moved 0.06% higher. Automatic Data Processing is currently a Zacks Rank #3 (Hold).
In terms of valuation, Automatic Data Processing is currently trading at a Forward P/E ratio of 27.03. This represents a premium compared to its industry's average Forward P/E of 15.89.
We can also see that ADP currently has a PEG ratio of 2.25. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. The Outsourcing was holding an average PEG ratio of 1.69 at yesterday's closing price.
The Outsourcing industry is part of the Business Services sector. This group has a Zacks Industry Rank of 93, putting it in the top 37% of all 250+ industries.
The Zacks Industry Rank includes is listed in order from best to worst in terms of the average Zacks Rank of the individual companies within each of these sectors. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.
To follow ADP in the coming trading sessions, be sure to utilize Zacks.com.