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Automatic Data Processing (ADP) Outpaces Stock Market Gains: What You Should Know

In the latest trading session, Automatic Data Processing (ADP) closed at $221.97, marking a +0.31% move from the previous day. This change outpaced the S&P 500's 0.14% gain on the day. Meanwhile, the Dow lost 0.18%, and the Nasdaq, a tech-heavy index, added 1.54%.

Coming into today, shares of the payroll and human resources company had lost 2.42% in the past month. In that same time, the Business Services sector lost 3.16%, while the S&P 500 lost 4.07%.

Wall Street will be looking for positivity from Automatic Data Processing as it approaches its next earnings report date. The company is expected to report EPS of $2.42, up 9.5% from the prior-year quarter. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $4.89 billion, up 8.26% from the year-ago period.

For the full year, our Zacks Consensus Estimates are projecting earnings of $8.12 per share and revenue of $17.91 billion, which would represent changes of +15.83% and +8.55%, respectively, from the prior year.


Any recent changes to analyst estimates for Automatic Data Processing should also be noted by investors. These revisions typically reflect the latest short-term business trends, which can change frequently. With this in mind, we can consider positive estimate revisions a sign of optimism about 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, which ranges from #1 (Strong Buy) to #5 (Strong Sell), has an impressive outside-audited track record of outperformance, with #1 stocks generating 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 currently has a Zacks Rank of #3 (Hold).

Digging into valuation, Automatic Data Processing currently has a Forward P/E ratio of 27.24. Its industry sports an average Forward P/E of 15.86, so we one might conclude that Automatic Data Processing is trading at a premium comparatively.

It is also worth noting that ADP currently has a PEG ratio of 2.27. 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 1.73 at yesterday's closing price.

The Outsourcing industry is part of the Business Services sector. This industry currently has a Zacks Industry Rank of 72, which puts it in the top 29% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our industry groups by measuring the average Zacks Rank of the individual stocks within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

Make sure to utilize to follow all of these stock-moving metrics, and more, in the coming trading sessions.

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