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Automatic Data Processing, Inc. (ADP)

  • Wed, Oct. 28, 2:18 PM
    • Though it beat FQ1 EPS estimates (while slightly missing on revenue), ADP (ADP -3.4%) now expects FY16 (ends June '16) EPS growth to be at the lower end of a prior 12%-14% guidance range; consensus is for EPS to rise 13% to $3.27. The company blames "additional selling expenses due to an increased forecast for new business bookings growth, as well as expected investments in operational resources to support additional new business sold."
    • FY16 revenue growth guidance has been cut to 7%-8% from 7%-9% (consensus is at 8.1%) due to the sale of ADP's AdvancedMD electronic health record system unit. However, new business bookings are now expected to rise at least 10%, better than prior guidance of 8%-10%. New business bookings rose 13% Y/Y in FQ1, after growing 18% in FQ4.
    • Employer Services revenue rose 3% Y/Y in FQ1 to $2.13B; segment op. margin fell 40 bps Y/Y to 27.6%. PEO services revenue rose 18% to $701.5M; op. margin grew 130 bps to 12.6%. Forex had a 3% impact on total revenue growth (6% vs. 9%).
    • EPS received a lift from the repurchase of $4.2M shares at a cost of $334M - in August, ADP raised $2B to finance buybacks.
    • Shares went into earnings just $2.35 away from a 52-week high of $90.67.
    • FQ1 results, PR
    | Wed, Oct. 28, 2:18 PM | Comment!
  • Thu, Jul. 30, 4:01 PM
    • ADP (ADP -2.7%) has sold off after posting an FQ4 miss and guiding for FY16 (ends June '16) EPS to rise 12%-14% from an FY15 level of $2.89. That implies a range of $3.24-$3.29, below a $3.31 consensus. Revenue is expected to rise 7%-9%, in-line with an 8.1% consensus.
    • The HR/BPO services giant notes FQ4 selling expenses were higher than expected due to strong bookings activity (+18% Y/Y). Employer services revenue rose 2% Y/Y to $2.18B; PEO services rose 16% to $678M. Op. margin rose 30 bps to 14.2%. Forex had a 3% impact on total revenue growth.
    • FQ4 results, PR
    | Thu, Jul. 30, 4:01 PM | Comment!
  • Oct. 13, 2014, 5:07 PM
    • In an article now out of embargo, David Hernandez observes Paylocty (PCTY +3.1%) has posted a 40% revenue CAGR over its last 4 fiscal year, thanks in large part to the ability of its cloud payroll software to take share from traditional payroll outsourcing providers such as ADP and Paychex (NASDAQ:PAYX).
    • He notes Paylocity CEO Steve Beauchamp declared on a May CC (transcript) "more than 50% of our new business" comes from displacing traditional payroll outsources, while adding "ADP and Paychex would be the two most common providers in that space."
    • ADP has rolled out its own cloud payroll offerings in an attempt to counter upstarts such as Paylocity. Paychex bought online payroll service provider SurePayroll in 2011.
    • Though admitting ADP and Ultimate Software are beginning to provide tougher competition in Paylocity's midmarket niche, Hernandez still sees plenty of room for growth in the near-term, given the company has penetrated less than 2% of the midmarket (estimated to have 656K organizations as of 2010).
    | Oct. 13, 2014, 5:07 PM | Comment!
  • Oct. 3, 2014, 5:36 PM
    • Top gainers, as of 5:15 p.m.: EOX +6.7%. AEM +4.5%. GPT +4.1%. SC +3.7%. NFG +3.2%.
    • Top losers, as of 5:15 p.m.: PAG -5.7%. ZBRA -5.1%. SAFM -4.2%. SALT -3.2%. ADP -3.1%.
    | Oct. 3, 2014, 5:36 PM | 2 Comments
  • Oct. 1, 2014, 12:46 PM
    | Oct. 1, 2014, 12:46 PM | Comment!
  • Jul. 31, 2014, 2:13 PM
    • ADP (ADP -0.9%) expects FY15 (ends June '15) revenue growth of 7%-8% and EPS growth of 11%-13% (translates into EPS of $3.48-$3.54). That's in-line with a consensus for 7.5% growth and EPS of $3.49.
    • Employer services revenue +8% Y/Y in FQ4 to $2.14B; PEO services +19% to $584M; dealer services (set to be spun off) +8% to $499.4M. Employer services margin +250 bps Y/Y to 26.3%, PEO services +70 bps to 10.7%, dealer services +210 bps to 22.6%.
    • Total op. margin rose 170 bps to 14.6%. 430K+ clients now use ADP's cloud service offerings.
    • FQ4 results, PR
    | Jul. 31, 2014, 2:13 PM | Comment!
  • Aug. 2, 2013, 9:56 AM
    • Groupon (GRPN -0.2%) has been upgraded to Equal Weight by Evercore, a long-time bear.
    • Chipmakers Broadcom (BRCM -1.4%) and Linear (LLTC -1.4%) have been cut to Neutral by UBS. Broadcom received 7 downgrades last week following its Q2 report.
    • Guidance Software (GUID -17.3%) has been cut to Sell by Benchmark following its Q2 report and light 2013 guidance.
    • ValueClick (VCLK -16.4%) has been cut to Underperform by Raymond James, and to Hold by Needham, in response to its Q2 report and light guidance.
    • Citrix (CTXS +0.9%) has been upgraded to Outperform by Credit Suisse.
    • Cbeyond (CBEY -4.3%) has been cut to Market Perform by FBR following its Q2 report.
    • Automatic Data (ADP -1.2%) has been cut to Neutral by Susquehanna following its FQ4 report.
    | Aug. 2, 2013, 9:56 AM | 1 Comment
  • Mar. 1, 2012, 12:22 PM
    UBS initiates Automatic Data (ADP +1.2%) and Paychex (PAYX +2%) Buy ratings ahead of what it sees as a U.S. recovery, noting that both companies have limited international exposure and attractive dividend yields.
    | Mar. 1, 2012, 12:22 PM | Comment!
Company Description
Automatic Data Processing Inc is the provider of technology-based outsourcing solutions to employers and vehicle retailers and manufacturers.