ADP Reports Strong Earnings, Outpacing Market Expectations
Financial Performance Highlights Strong Year-Over-Year Growth
Automatic Data Processing, Inc. (ADP), headquartered in Roseland, New Jersey, specializes in cloud-based human capital management (HCM) solutions globally. With a market capitalization of $124.1 billion, ADP operates through its Employer Services and Professional Employer Organization (PEO) segments.
Over the past year, ADP has exceeded overall market performance. In 2024, ADP’s stock prices have surged by 30.7%, while over the past 52 weeks, the increase stands at 31.7%. This compares favorably to the S&P 500 Index, which recorded gains of 24.7% and 31.1% for the same periods, respectively.
Focusing further, ADP has also surpassed the Technology Select Sector SPDR Fund’s (XLK) YTD gains of 21.3% and the 26.9% rise over the past year.
Following the release of strong Q3 earnings on October 30, ADP shares climbed by 1.7%. The company began the year on a high note, boosted by its recent acquisition of WorkForce Software—a leading provider of workforce management solutions—and the launch of ADP Lyric HCM, a flexible and intelligent global HCM platform. These developments position ADP to offer clients a comprehensive solution for HR, payroll, time, and service needs. The latest report revealed a robust 7.1% growth in total revenues, reaching $4.8 billion, surpassing Wall Street’s expectations.
ADP also posted impressive profitability metrics. Its adjusted EBIT margin expanded by 130 basis points to 25.5%, leading to a 12.7% increase in adjusted EBIT, amounting to $1.2 billion. Additionally, ADP’s adjusted EPS climbed 12% compared to the same quarter last year, reaching $2.33 and exceeding analysts’ expectations by 5.9%.
Looking ahead, analysts anticipate an 8.2% year-over-year growth in adjusted EPS for the current fiscal year, which ends in June 2025, predicting it will reach $9.93. Notably, ADP has a strong track record of beating earnings expectations, having done so for the past four quarters.
The consensus rating for ADP stock is a “Hold.” Among the 20 analysts covering the stock, three recommend “Strong Buy,” 15 suggest “Hold,” while two advise a “Strong Sell.”
On November 4, Mizuho analyst Dan Dolev maintained an “Outperform” rating and increased the price target to $310.
As of now, ADP trades above its average price target of $291. The highest price target from analysts stands at $325, suggesting a 6.7% increase from current prices.
On the date of publication, Aditya Sarawgi did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information, please view the Barchart Disclosure Policy here.
The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.
