Automatic Data Processing: 3 Different Insiders Have Sold Shares During The Last 30 Days

Jun. 9.14 | About: Automatic Data (ADP)

Summary

3 insiders sold Automatic Data Processing's stock within one month.

The stock was not purchased by any insiders in the month of intensive selling.

All 3 of these insiders decreased their holdings by more than 10% each.

Automatic Data Processing (NASDAQ:ADP) provides technology-based outsourcing solutions to employers and vehicle retailers and manufacturers worldwide.

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Insider selling during the last 30 days

Here is a table of Automatic Data Processing's insider activity during the last 30 days.

Name Title Trade Date Shares Sold Option Exercise & Sale Rule 10b5-1 Current Ownership Decrease In Ownership
R. Glenn Hubbard Director June 4 25,974 Yes No 28,936
shares
47.3%
Mark Benjamin VP May 14 10,000 Yes No 23,063
shares
30.2%
Eric Fast Director May 12 10,000 Yes No 23,255 shares 30.1%
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There have been 45,974 shares sold by insiders during the last 30 days.

Insider selling by calendar month

Here is a table of Automatic Data Processing's insider activity by calendar month.

Month Insider selling / shares Insider buying / shares
June 2014 25,974 0
May 2014 27,485 0
April 2014 0 0
March 2014 29,464 0
February 2014 6,590 0
January 2014 234,870 0
December 2013 0 0
November 2013 35,257 0
October 2013 0 0
September 2013 0 0
August 2013 16,571 0
July 2013 0 0
June 2013 0 0
May 2013 23,424 0
April 2013 0 0
March 2013 108,649 0
February 2013 10,069 0
January 2013 28,690 0
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There have been 547,043 shares sold and there have been zero shares purchased by insiders since January 2013.

Financials

Automatic Data Processing reported the fiscal 2014 third-quarter, which ended March 31, financial results on April 30 with the following highlights:

Revenue $3.3 billion
Net income $521.6 million
Cash $1.7 billion
Debt $12.1 million
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The three insiders sold their shares after these results.

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(Source: Earnings presentation)

Outlook

Automatic Data Processing's fiscal 2014 guidance is as follows:

Revenue growth ~8%
EPS growth from continuing operations ~9%
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(Source: Earnings presentation)

Competition

Automatic Data Processing's competitors include Insperity (NYSE:NSP), Paychex (NASDAQ:PAYX), and TriNet Group (NYSE:TNET). Here is a table comparing these companies.

Company ADP NSP PAYX TNET
Market Cap: 38.38B 851.56M 14.99B 1.86B
Employees: 60,000 2,300 12,700 1,783
Qtrly Rev Growth (yoy): 0.07 0.04 0.07 0.45
Revenue: 11.96B 2.28B 2.44B 1.80B
Gross Margin: 0.49 0.17 0.72 0.19
EBITDA: 2.49B 71.71M 1.07B 149.42M
Operating Margin: 0.18 0.02 0.40 0.04
Net Income: 1.44B 27.61M 605.10M 11.30M
EPS: 3.00 1.11 1.65 0.15
P/E: 26.55 30.07 24.97 176.47
PEG (5 yr expected): 2.44 2.04 2.50 1.27
P/S: 3.17 0.37 6.13 1.03
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Automatic Data Processing has the second-highest P/S ratio among these four companies.

Here is a table of these competitors' insider activities this year.

Company Insider buying / shares Insider selling / shares
NSP 0 20,000
PAYX

0

83,051
TNET 0 2,250,000
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Only Automatic Data Processing has seen intensive insider selling during the last 30 days.

Conclusion

There have been three different insiders selling Automatic Data Processing, and there have not been any insiders buying Automatic Data Processing during the last 30 days. All three of these insiders decreased their holdings by more than 10% each. Automatic Data Processing has an insider ownership of 0.18%.

Automatic Data Processing has a $61 price target from the Point & Figure chart. I believe there is an opportunity for a short entry with the $61 price target. I would place a stop loss at $83, which is the all-time high. The two main reasons for the proposed short entry are a bearish Point & Figure chart, and the intensive insider-selling activity.

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Disclosure: I have no positions in any stocks mentioned, but may initiate a short position in ADP over the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.