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Automatic Data Processing, Inc. (ADP - Free Report) has delivered impressive performance over the past six months and shows potential to sustain its near-term momentum. Therefore, if you have not yet taken advantage of the share price appreciation of this leading provider of cloud-based human capital management (HCM) technology solutions, you should add the stock to your portfolio.
What Makes ADP an Attractive Pick?
An Outperformer: A glimpse at the company’s price trend reveals that the stock has had a decent run over the past six months. Shares of Automatic Data Processing have risen 43.4% compared with the 30.4% growth of the industry it belongs to.
Image Source: Zacks Investment Research
Solid Rank: ADP currently carries a Zacks Rank #2 (Buy). Our research shows that stocks with a Zacks Rank #1 (Strong Buy) or #2 offer attractive investment opportunities for investors.
Northward Estimate Revisions: Over the past 60 days, one earnings estimate for fiscal 2027 has moved northward, reflecting analysts’ confidence in the company. The Zacks Consensus Estimate for fiscal 2027 earnings has marginally increased during this period.
Positive Earnings Surprise: ADP has an impressive earnings surprise history. The company outpaced the Zacks Consensus Estimate in each of the trailing four quarters, delivering an earnings surprise of 2.1% on average.
Strong Growth Prospects: The Zacks Consensus Estimate for ADP’sfirst-quarter fiscal 2027 revenues is pegged at $5.47 billion, indicating a 5.6% increase from the year-ago quarter. For fiscal 2027, the consensus estimate is $23.25 billion, suggesting 6% year-over-year growth.
The consensus estimate for first-quarter earnings is pegged at $2.78 per share, indicating 11.7% year-over-year growth. For the full year, the consensus mark is pegged at $12.27 per share, implying 10.3% growth from the prior year.
Growth Factors:
Strategic HCM Focus Supports Sustained Growth: Automatic Data Processing’s strategic priorities reinforce its competitive position as a global HCM and HR outsourcing provider. The company focuses on delivering best-in-class HCM technology, leveraging its expertise and outsourcing capabilities, and expanding its global scale. In fiscal 2026, revenues increased 7% to $21.9 billion, supported by 6% organic growth on a constant-currency basis. Management expects consolidated revenue growth of 5-6% in fiscal 2027. ADP’s focus on technology, outsourcing expertise and global reach should support client retention, deepen customer relationships and provide a foundation for sustained revenue growth.
AI Integration & Acquisitions Broaden Capabilities: ADP is leveraging artificial intelligence (AI) to improve productivity across products, services and sales. In fiscal 2026, ADP Assist handled 12 million conversations, while The Zone, ADP’s proprietary, AI-infused internal ecosystem and customer relationship management sales and service platform, reached 48% of service staff and helped reduce contacts per client by 4%. Management expects AI-driven efficiencies to support adjusted EPS growth in fiscal 2027. Strategic acquisitions have also expanded ADP’s HCM capabilities. WorkForce Software strengthened global workforce management, while Pequity added AI-enabled compensation planning tools. Growth in global time bookings in fiscal 2026 reflected adoption of WorkForce Software’s solution. These initiatives should improve efficiency, deepen client engagement and support long-term growth.
Healthy Cash Flow Supports Financial Flexibility: ADP’s cash generation and liquidity position support financial obligations and shareholder returns. At the end of the fourth quarter of fiscal 2026, cash and equivalents stood at $4.23 billion against long-term debt of $4.96 billion. Fiscal 2026 operating cash flow rose to $5.44 billion from $4.94 billion a year earlier, exceeding the year-end balance of long-term debt. The current ratio stood at 1.05, while commercial paper borrowings declined to zero from $4.77 billion in fiscal 2025. Continued cash generation and access to short-term funding should support ADP’s financial flexibility and capital allocation priorities.
Consistent Capital Returns Support Shareholder Value: ADP continues to reward shareholders through dividends and buybacks. Dividends paid rose to $2.63 billion in fiscal 2026 from $2.40 billion in fiscal 2025 and $2.18 billion in fiscal 2024. Share repurchases totaled $2.08 billion in fiscal 2026. Sustained cash generation should support future distributions while maintaining financial flexibility.
Analog Devices sports a Zacks Rank #1 at present. It has a long-term earnings growth expectation of 25%. ADI delivered a trailing four-quarter earnings surprise of 4.8%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.
Applied Materials also flaunts a Zacks Rank of 1 at present. It has a long-term earnings growth expectation of 28.1%. AMAT’s earnings beat estimates in each of the trailing four quarters, with the surprise being 5.5%, on average.
View the Zacks #1 Rank List
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Reasons Why Investors Can Consider Buying ADP Stock Now
Key Takeaways
Automatic Data Processing, Inc. (ADP - Free Report) has delivered impressive performance over the past six months and shows potential to sustain its near-term momentum. Therefore, if you have not yet taken advantage of the share price appreciation of this leading provider of cloud-based human capital management (HCM) technology solutions, you should add the stock to your portfolio.
What Makes ADP an Attractive Pick?
An Outperformer: A glimpse at the company’s price trend reveals that the stock has had a decent run over the past six months. Shares of Automatic Data Processing have risen 43.4% compared with the 30.4% growth of the industry it belongs to.
Image Source: Zacks Investment Research
Solid Rank: ADP currently carries a Zacks Rank #2 (Buy). Our research shows that stocks with a Zacks Rank #1 (Strong Buy) or #2 offer attractive investment opportunities for investors.
Northward Estimate Revisions: Over the past 60 days, one earnings estimate for fiscal 2027 has moved northward, reflecting analysts’ confidence in the company. The Zacks Consensus Estimate for fiscal 2027 earnings has marginally increased during this period.
Positive Earnings Surprise: ADP has an impressive earnings surprise history. The company outpaced the Zacks Consensus Estimate in each of the trailing four quarters, delivering an earnings surprise of 2.1% on average.
Strong Growth Prospects: The Zacks Consensus Estimate for ADP’sfirst-quarter fiscal 2027 revenues is pegged at $5.47 billion, indicating a 5.6% increase from the year-ago quarter. For fiscal 2027, the consensus estimate is $23.25 billion, suggesting 6% year-over-year growth.
The consensus estimate for first-quarter earnings is pegged at $2.78 per share, indicating 11.7% year-over-year growth. For the full year, the consensus mark is pegged at $12.27 per share, implying 10.3% growth from the prior year.
Growth Factors:
Strategic HCM Focus Supports Sustained Growth: Automatic Data Processing’s strategic priorities reinforce its competitive position as a global HCM and HR outsourcing provider. The company focuses on delivering best-in-class HCM technology, leveraging its expertise and outsourcing capabilities, and expanding its global scale. In fiscal 2026, revenues increased 7% to $21.9 billion, supported by 6% organic growth on a constant-currency basis. Management expects consolidated revenue growth of 5-6% in fiscal 2027. ADP’s focus on technology, outsourcing expertise and global reach should support client retention, deepen customer relationships and provide a foundation for sustained revenue growth.
AI Integration & Acquisitions Broaden Capabilities: ADP is leveraging artificial intelligence (AI) to improve productivity across products, services and sales. In fiscal 2026, ADP Assist handled 12 million conversations, while The Zone, ADP’s proprietary, AI-infused internal ecosystem and customer relationship management sales and service platform, reached 48% of service staff and helped reduce contacts per client by 4%. Management expects AI-driven efficiencies to support adjusted EPS growth in fiscal 2027. Strategic acquisitions have also expanded ADP’s HCM capabilities. WorkForce Software strengthened global workforce management, while Pequity added AI-enabled compensation planning tools. Growth in global time bookings in fiscal 2026 reflected adoption of WorkForce Software’s solution. These initiatives should improve efficiency, deepen client engagement and support long-term growth.
Healthy Cash Flow Supports Financial Flexibility: ADP’s cash generation and liquidity position support financial obligations and shareholder returns. At the end of the fourth quarter of fiscal 2026, cash and equivalents stood at $4.23 billion against long-term debt of $4.96 billion. Fiscal 2026 operating cash flow rose to $5.44 billion from $4.94 billion a year earlier, exceeding the year-end balance of long-term debt. The current ratio stood at 1.05, while commercial paper borrowings declined to zero from $4.77 billion in fiscal 2025. Continued cash generation and access to short-term funding should support ADP’s financial flexibility and capital allocation priorities.
Consistent Capital Returns Support Shareholder Value: ADP continues to reward shareholders through dividends and buybacks. Dividends paid rose to $2.63 billion in fiscal 2026 from $2.40 billion in fiscal 2025 and $2.18 billion in fiscal 2024. Share repurchases totaled $2.08 billion in fiscal 2026. Sustained cash generation should support future distributions while maintaining financial flexibility.
Other Stocks to Consider
A couple of other top-ranked stocks in the broader Computer and Technology sector are Analog Devices, Inc. (ADI - Free Report) and Applied Materials, Inc. (AMAT - Free Report) .
Analog Devices sports a Zacks Rank #1 at present. It has a long-term earnings growth expectation of 25%. ADI delivered a trailing four-quarter earnings surprise of 4.8%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.
Applied Materials also flaunts a Zacks Rank of 1 at present. It has a long-term earnings growth expectation of 28.1%. AMAT’s earnings beat estimates in each of the trailing four quarters, with the surprise being 5.5%, on average.