Automatic Data Processing (NASDAQ:ADP) and Bitauto (NYSE:BITA) are both business services companies, but which is the superior investment? We will compare the two businesses based on the strength of their earnings, risk, institutional ownership, profitability, analyst recommendations, valuation and dividends.

Profitability

This table compares Automatic Data Processing and Bitauto’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Automatic Data Processing 16.17% 47.48% 5.73%
Bitauto -4.86% 2.95% 1.01%

Institutional and Insider Ownership

80.2% of Automatic Data Processing shares are owned by institutional investors. Comparatively, 23.6% of Bitauto shares are owned by institutional investors. 0.3% of Automatic Data Processing shares are owned by insiders. Comparatively, 17.0% of Bitauto shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Earnings & Valuation

This table compares Automatic Data Processing and Bitauto’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Automatic Data Processing $14.18 billion 4.93 $2.29 billion $5.45 29.57
Bitauto $1.54 billion 0.63 -$87.68 million $1.40 9.48

Automatic Data Processing has higher revenue and earnings than Bitauto. Bitauto is trading at a lower price-to-earnings ratio than Automatic Data Processing, indicating that it is currently the more affordable of the two stocks.

Volatility and Risk

Automatic Data Processing has a beta of 0.9, indicating that its share price is 10% less volatile than the S&P 500. Comparatively, Bitauto has a beta of 0.74, indicating that its share price is 26% less volatile than the S&P 500.

Dividends

Automatic Data Processing pays an annual dividend of $3.16 per share and has a dividend yield of 2.0%. Bitauto does not pay a dividend. Automatic Data Processing pays out 58.0% of its earnings in the form of a dividend. Automatic Data Processing has increased its dividend for 44 consecutive years.

Analyst Ratings

This is a summary of current ratings and recommmendations for Automatic Data Processing and Bitauto, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Automatic Data Processing 0 8 3 0 2.27
Bitauto 0 1 2 0 2.67

Automatic Data Processing currently has a consensus price target of $175.78, indicating a potential upside of 9.08%. Bitauto has a consensus price target of $18.33, indicating a potential upside of 38.16%. Given Bitauto’s stronger consensus rating and higher possible upside, analysts plainly believe Bitauto is more favorable than Automatic Data Processing.

Summary

Automatic Data Processing beats Bitauto on 13 of the 17 factors compared between the two stocks.

About Automatic Data Processing

Automatic Data Processing, Inc. provides business process outsourcing services worldwide. It operates through two segments, Employer Services and Professional Employer Organization (PEO) Services. The Employer Services segment offers various human resources (HR) outsourcing and technology-based human capital management solutions. Its offerings include payroll, benefits administration, talent management, HR management, time and attendance management, insurance, retirement, and compliance services. This segment provides a range of solutions, which businesses of various types and sizes can use to activate talent, as well as recruit, pay, manage, and retain their workforce. It serves approximately 630,000 clients through its cloud-based strategic software as a service offering. The PEO Services segment provides HR outsourcing solutions through a co-employment model. This segment offers HR administration services, including employee recruitment, payroll and tax administration, time and attendance management, benefits administration, employee training and development, online HR management tools, and employee leave administration. It also provides employee benefits that enable eligible worksite employees with access to a 401(k) retirement savings plan, health savings accounts, flexible spending accounts, group term life and disability coverage, and an employee assistance program, as well as group health, dental, and vision coverage. In addition, this segment offers employer liability management services comprising workers' compensation program, unemployment claims management, safety compliance guidance and access to safety training, access to employment practices liability insurance, and guidance on compliance with the United States federal, state, and local employment laws and regulations. The company was founded in 1949 and is headquartered in Roseland, New Jersey.

About Bitauto

Bitauto Holdings Limited, through its subsidiaries, provides Internet content and marketing services, and transaction services for the automobile industry in the People's Republic of China. It operates in three segments: Advertising and Subscription Business, Transaction Services Business, and Digital Marketing Solutions Business. The Advertising and Subscription Business segment offers advertising services, including automobile pricing and promotional information, specifications, reviews, and consumer feedback to automakers through its bitauto.com Website and related mobile applications. It also provides transaction-focused online advertisement and promotional services for automakers, automobile dealers, auto finance partners, and insurance companies; and Web-based and mobile-based integrated digital marketing solutions to automobile dealers. The Transaction Services Business segment operates an online automobile retail transaction platform, which provides transaction platform and self-operated financing services. The Digital Marketing Solutions Business segment offers one-stop digital marketing solutions, including Website creation and maintenance, online public relation, online marketing campaign, advertising agency, big data application, and digital image creation services for automakers. The company also distributes its dealer customers' automobile pricing and promotional information through its Internet service provider partners. Bitauto Holdings Limited was founded in 2000 and is headquartered in Beijing, the People's Republic of China.

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