Advertisement
Australia markets open in 55 minutes
  • ALL ORDS

    8,050.20
    -23.90 (-0.30%)
     
  • AUD/USD

    0.6471
    +0.0004 (+0.06%)
     
  • ASX 200

    7,788.10
    -25.50 (-0.33%)
     
  • OIL

    85.36
    -0.30 (-0.35%)
     
  • GOLD

    2,374.10
    0.00 (0.00%)
     
  • Bitcoin AUD

    101,012.61
    +898.80 (+0.90%)
     
  • CMC Crypto 200

    885.54
    0.00 (0.00%)
     

Automatic Data Processing (ADP) Q3 Earnings Beat, Up Y/Y

Automatic Data Processing, Inc. (ADPreported better-than-expected third-quarter fiscal 2023 results.

Adjusted earnings per share of $2.52 (excluding 1 cent from non-recurring items) beat the Zacks Consensus Estimate by 4.1% and our estimate by 4.6% and grew 14% from the year-ago fiscal quarter’s figure.

Total revenues of $4.9 billion beat the Zacks Consensus Estimate by 0.9% and our estimate by 1.2% and improved 9.2% from the year-ago fiscal quarter’s reading on a reported basis and 10% on an organic constant-currency basis.

Over the past year, shares of ADP have dropped 7.1% compared with the 9.1% decline of the industry it belongs to.

Automatic Data Processing, Inc. Price, Consensus and EPS Surprise

Automatic Data Processing, Inc. Price, Consensus and EPS Surprise
Automatic Data Processing, Inc. Price, Consensus and EPS Surprise

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

ADVERTISEMENT

Third Quarter in Details

Segments:

Employer Services’ revenues of $3.1 billion increased 11% on a reported basis and 12% on an organic constant-currency basis. Pays per control increased 4% from the year-ago fiscal quarter’s reading.

PEO Services’ revenues were up 5% year over year to $1.6 billion. Average paid worksite employees were 710,000, up 3.2% from the year-ago fiscal quarter’s figures.

Interest on funds for clients increased more than 100% to $249.4 million. ADP’s average client funds balance increased 3% to $39.2 billion. The average interest yield on client funds expanded 130 basis points to 2.5%.

Margins:

Adjusted EBIT increased 14% from the year-ago fiscal quarter’s reading to $1.4 billion. Adjusted EBIT margin grew 110 basis points to 27.8%.

The margin of Employer Services and PEO Services increased 170 bps and 130 bps, respectively.

Balance Sheet and Cash Flow

ADP exited third-quarter fiscal 2023 with cash and cash equivalents of $1.83 billion compared with $1.35 billion in the prior fiscal quarter. Long-term debt of $2.99 billion was flat sequentially.

Automatic Data Processing generated $1.4 billion in cash from operating activities in the quarter. Capital expenditures were $50.3 million. ADP paid out dividends worth $520.6 million and repurchased shares worth $264 million in the reported quarter.

Fiscal 2023 Outlook

ADP still expects revenues to register 8-9% growth. Adjusted EPS is expected to register 16-17% growth as compared to the previous guidance of 15-17%. The adjusted effective tax rate is estimated to be approximately 23%.

Automatic Data Processing expects Employer Services revenues to grow at a rate of about 9%, while PEO Services revenues are still expected to grow at 8%.

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

Equifax EFX reported better-than-expected first-quarter 2023 results. Adjusted earnings (excluding 52 cents from non-recurring items) came in at $1.43, beating the Zacks Consensus Estimate by 4.4% but declining 35.6% from the year-ago figure. Total revenues of $1.3 billion surpassed the consensus estimate by 1.5% but decreased 4.5% on a reported basis from the year-ago figure. The top line was down 3% on a local currency basis.

OmnicomOMC reported better-than-expected first-quarter 2023 results. OMC’s earnings of $1.56 per share beat the Zacks Consensus Estimate by 13% and our estimates by 11.4%. EPS increased 12.2% year over year. Total revenues of $3.4 billion surpassed the consensus estimate by 2.3% and our estimate by 1.4%. The top line increased 1% year over year.

Fiserv FISV reported impressive first-quarter 2023 results, wherein earnings and revenues beat the Zacks Consensus Estimate. Adjusted earnings per share (excluding 69 cents from non-recurring items) of $1.58 increased 12.9% year over year, beating the consensus mark by 1.3%. Earnings beat our estimate by 2.6%. Adjusted revenues of $4.28 billion beat the Zacks Consensus Estimate by 3% and increased 9.5% year over year. Revenues surpassed our estimates by 4.65%.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

Automatic Data Processing, Inc. (ADP) : Free Stock Analysis Report

Omnicom Group Inc. (OMC) : Free Stock Analysis Report

Fiserv, Inc. (FISV) : Free Stock Analysis Report

Equifax, Inc. (EFX) : Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research