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Automatic Data Processing (ADP) Q3 Earnings Beat Estimates
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Automatic Data Processing, Inc. (ADP - Free Report) has reported impressive third-quarter fiscal 2024 results, wherein both earnings and revenues surpassed the Zacks Consensus Estimate.
ADP’s earnings per share of $2.9 beat the consensus estimate by 4.4% and increased 14.3% from the year-ago quarter. Total revenues of $5.3 billion beat the consensus estimate by a slight margin and grew 6.6% from the year-ago quarter on a reported basis and 6% on an organic constant-currency basis.
The company’s stock has gained 10.7% over the past six months, outperforming the 9% rally of the industry it belongs to.
Automatic Data Processing, Inc. Price and EPS Surprise
Employer Services’ revenues of $3.6 billion increased 8% on a reported basis and 7% at constant currency, meeting our estimate. Pays per control increased 2% from the year-ago quarter.
PEO Services’ revenues rose 5% from the year-ago quarter to $1.7 billion and beat our estimate of $1.6 billion for fourth-quarter fiscal 2023. Average worksite employees paid by PEO Services were 732,000, up 3% from the year-ago quarter.
Interest on funds held for clients grew 29% from the year-ago quarter to $321 million and beat our estimate of $255.8 million. ADP’s average client funds balance increased 6% to $41.7 billion. Average interest yield on client funds expanded 50 basis points to 3.1%.
Margins
Adjusted EBIT increased 12% from the year-ago quarter to $1.5 billion. The adjusted EBIT margin grew 140 basis points (bps) to 29.3%.
The margin of Employer Services increased 230 bps, while PEO Services decreased 220 bps.
Balance Sheet & Cash Flow
ADP exited third-quarter fiscal 2024 with cash and cash equivalents of $3.3 billion compared with $1.6 billion in fourth-quarter fiscal 2023. The long-term debt of $3 billion was flat with the preceding quarter’s figure.
Automatic Data Processing generated $1.5 billion in cash from operating activities in the quarter. Capital expenditure amounted to $1.9 million.
FY24 Outlook
For 2024, ADP expects 6-7% revenue growth. Adjusted EPS is anticipated to register 10-12% growth. The adjusted effective tax rate is estimated to be 23%. The adjusted EBIT margin is expected to grow 60-70 bps.
Automatic Data Processing expects Employer Services revenues to grow 7-8%, whereas PEO Services revenues are expected to rise 3-4%.
TT’s adjusted EPS of $1.94 surpassed the Zacks Consensus Estimate by 18.3% and increased 37.6% year over year. Revenues of $4.2 billion beat the consensus mark by 5.7% and increased 15% year over year on a reported basis and 14% organically. Bookings were up 18% year over year on a reported basis and 17% organically.
MAN’s quarterly adjusted earnings of 94 cents per share surpassed the consensus mark by 4.4% but declined 41.6% year over year mainly due to the run-off Proservia Germany business and Argentina-related currency translation losses. Revenues of $4.4 billion lagged the consensus mark by 0.6% and dipped 7% year over year on a reported basis and 5% on a constant-currency basis.
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Automatic Data Processing (ADP) Q3 Earnings Beat Estimates
Automatic Data Processing, Inc. (ADP - Free Report) has reported impressive third-quarter fiscal 2024 results, wherein both earnings and revenues surpassed the Zacks Consensus Estimate.
ADP’s earnings per share of $2.9 beat the consensus estimate by 4.4% and increased 14.3% from the year-ago quarter. Total revenues of $5.3 billion beat the consensus estimate by a slight margin and grew 6.6% from the year-ago quarter on a reported basis and 6% on an organic constant-currency basis.
The company’s stock has gained 10.7% over the past six months, outperforming the 9% rally of the industry it belongs to.
Automatic Data Processing, Inc. Price and EPS Surprise
Automatic Data Processing, Inc. price-eps-surprise | Automatic Data Processing, Inc. Quote
Segmental Results
Employer Services’ revenues of $3.6 billion increased 8% on a reported basis and 7% at constant currency, meeting our estimate. Pays per control increased 2% from the year-ago quarter.
PEO Services’ revenues rose 5% from the year-ago quarter to $1.7 billion and beat our estimate of $1.6 billion for fourth-quarter fiscal 2023. Average worksite employees paid by PEO Services were 732,000, up 3% from the year-ago quarter.
Interest on funds held for clients grew 29% from the year-ago quarter to $321 million and beat our estimate of $255.8 million. ADP’s average client funds balance increased 6% to $41.7 billion. Average interest yield on client funds expanded 50 basis points to 3.1%.
Margins
Adjusted EBIT increased 12% from the year-ago quarter to $1.5 billion. The adjusted EBIT margin grew 140 basis points (bps) to 29.3%.
The margin of Employer Services increased 230 bps, while PEO Services decreased 220 bps.
Balance Sheet & Cash Flow
ADP exited third-quarter fiscal 2024 with cash and cash equivalents of $3.3 billion compared with $1.6 billion in fourth-quarter fiscal 2023. The long-term debt of $3 billion was flat with the preceding quarter’s figure.
Automatic Data Processing generated $1.5 billion in cash from operating activities in the quarter. Capital expenditure amounted to $1.9 million.
FY24 Outlook
For 2024, ADP expects 6-7% revenue growth. Adjusted EPS is anticipated to register 10-12% growth. The adjusted effective tax rate is estimated to be 23%. The adjusted EBIT margin is expected to grow 60-70 bps.
Automatic Data Processing expects Employer Services revenues to grow 7-8%, whereas PEO Services revenues are expected to rise 3-4%.
Currently, ADP carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Earnings Snapshot
Trane Technologies plc (TT - Free Report) reported better-than-expected first-quarter 2024 results.
TT’s adjusted EPS of $1.94 surpassed the Zacks Consensus Estimate by 18.3% and increased 37.6% year over year. Revenues of $4.2 billion beat the consensus mark by 5.7% and increased 15% year over year on a reported basis and 14% organically. Bookings were up 18% year over year on a reported basis and 17% organically.
ManpowerGroup Inc. (MAN - Free Report) reported mixed first-quarter 2024 results.
MAN’s quarterly adjusted earnings of 94 cents per share surpassed the consensus mark by 4.4% but declined 41.6% year over year mainly due to the run-off Proservia Germany business and Argentina-related currency translation losses. Revenues of $4.4 billion lagged the consensus mark by 0.6% and dipped 7% year over year on a reported basis and 5% on a constant-currency basis.