Automatic Data Climbs on Beat and Raise

Shares of payroll processor Automatic Data Processing rose 4.2% in late morning trading (as of 11:10 AM ET) as the company's earnings (1Q08) topped the Street's expectations and offered strong guidance. Net income climbed 15% to $297.4 million, good for EPS of $0.55, versus EPS of $0.46 a year ago. Earnings from continuing operations were $0.45 a share; analysts were looking for earnings from continuing operations per share of $0.43. Sales rose to $1.99 billion, up from $1.75 billion in the year-earlier period. CEO Gary Butler said he was "delighted with ADP’s performance thus far in fiscal 2008... we are on target to deliver earnings per share growth at the high end of our forecast," (full earnings call transcript later today). The company predicted its FY2008 revenue will rise between 12%-13% after a previous prediction of a 12% gain. The raised guidance implies FY2008 revenue in a range of $8.74 billion to $8.81 billion; consensus analyst estimates were for $8.67 billion. The company attributed the raised guidance to "to our current estimate of the benefit from foreign exchange rates, as well as the acquisition activity in Dealer Services."

Sources: Press release, Reuters, Dow Jones Newswires, AP
Commentary: ADP: A Good Contrarian Stock • Automatic Data Processing: Expensive Stock, Healthy Dividend Growth • Automatic Data Processing: Cash and Tons of It
Stocks to watch: ADP. Competitors: CEN, ASF, PAYX.
Earnings call transcript: Automatic Data Processing F4Q07 (Qtr End 6/30/07)

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