Payroll and HR services provider Automatic Data Processing (NASDAQ: ADP) will be announcing earnings results this Wednesday before the bell. Here’s what investors should know.
ADP beat analysts’ revenue expectations by 0.9% last quarter, reporting revenues of $5.18 billion, up 7.1% year on year. It was a mixed quarter for the company, with a narrow beat of analysts’ revenue estimates but revenue guidance for next quarter meeting analysts’ expectations. It reported 752,000 worksite employees, up 1.8% year on year.
Is ADP a buy or sell going into earnings? Read our full analysis here, it’s free for active Edge members.
This quarter, analysts are expecting ADP’s revenue to grow 5.5% year on year to $5.33 billion, slowing from the 8.1% increase it recorded in the same quarter last year. Adjusted earnings are expected to come in at $2.57 per share.
Analysts covering the company have generally reconfirmed their estimates over the last 30 days, suggesting they anticipate the business to stay the course heading into earnings. ADP has a history of exceeding Wall Street’s expectations, beating revenue estimates every single time over the past two years by 1% on average.
Looking at ADP’s peers in the professional services segment, some have already reported their Q4 results, giving us a hint as to what we can expect. Brown & Brown delivered year-on-year revenue growth of 36%, missing analysts’ expectations by 2.2%, and Booz Allen Hamilton reported a revenue decline of 10.2%, falling short of estimates by 3.8%. Booz Allen Hamilton traded down 1.9% following the results.
Read our full analysis of Brown & Brown’s results here and Booz Allen Hamilton’s results here.
Investors in the professional services segment have had steady hands going into earnings, with share prices up 1.8% on average over the last month. ADP’s stock price was unchanged during the same time and is heading into earnings with an average analyst price target of $289.79 (compared to the current share price of $258.75).
Today’s young investors won’t have read the timeless lessons in Gorilla Game: Picking Winners In High Technology because it was written more than 20 years ago when Microsoft and Apple were first establishing their supremacy. But if we apply the same principles, then enterprise software stocks leveraging their own generative AI capabilities may well be the Gorillas of the future. So, in that spirit, we are excited to present our Special Free Report on a profitable, fast-growing enterprise software stock that is already riding the automation wave and looking to catch the generative AI next.
