Back to top

Image: Bigstock

What Awaits Automatic Data Processing (ADP) in Q3 Earnings?

Read MoreHide Full Article

Automatic Data Processing, Inc. (ADP - Free Report) is scheduled to report third-quarter fiscal 2020 results on Apr 29, before market open.

So far this year, shares of ADP have lost 18.4% compared with a 20.4% decline of the industry and 12% of the Zacks S&P 500 composite.

 

 Let’s check how things have shaped up for the announcement.

Top-Line Expectations

The Zacks Consensus Estimate for revenues stands at $4.05 billion, indicating growth of 5.2% from the year-ago quarter’s reported figure.

Segment-wise, the consensus mark for Employer Services revenues stands at $2.84 billion, suggesting an increase of 4.3% from the year-ago period’s reported figure. Contributions from New Business Bookings, solid retention, interest earned on funds held for clients and growth in the number of employees on clients’ payrolls are likely to have aided the segment.

The consensus mark for PEO Services revenues is pegged at $1.23 billion, indicating year-over-year growth of 8%. The segment is likely to have been driven by an increase in the average number of worksite employees.

Bottom-Line Expectations

ADP’s bottom line is likely to have benefited from revenue growth, strength in margin performance, lower adjusted effective tax rate and fewer shares outstanding. The Zacks Consensus Estimate for earnings per share is pegged at $1.93, indicating growth of 9% year over year.

What Our Model Says

Our proven Zacks model does not conclusively predict an earnings beat for ADP this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

ADP has an Earnings ESP of -0.67% and a Zacks Rank #3.

Automatic Data Processing, Inc. Price and EPS Surprise

 

Automatic Data Processing, Inc. Price and EPS Surprise

Automatic Data Processing, Inc. price-eps-surprise | Automatic Data Processing, Inc. Quote

Stocks to Consider

Here are a few stocks investors may consider from the broader Zacks Business Services sector, as our model shows that these have the right combination of elements to beat on first-quarter 2020 earnings.

Spotify Technology (SPOT - Free Report) has an Earnings ESP of +26.53% and a Zacks Rank #2. The company is slated to report results on Apr 29.  You can see the complete list of today’s Zacks #1 Rank stocks here.

Clean Harbors (CLH - Free Report) has an Earnings ESP of +51.79% and a Zacks Rank #3. The company is slated to release results on Apr 29.

ICF International (ICFI - Free Report) has an Earnings ESP of +3.08% and a Zacks Rank #3. The company is slated to release results on May 5.

Just Released: Zacks’ 7 Best Stocks for Today

Experts extracted 7 stocks from the list of 220 Zacks Rank #1 Strong Buys that has beaten the market more than 2X over with a stunning average gain of +24.1% per year.

These 7 were selected because of their superior potential for immediate breakout.

See these time-sensitive tickers now >>