Financial Analysis: Automatic Data Processing (ADP) vs. The Competition
Automatic Data Processing (NASDAQ: ADP) is one of 172 publicly-traded companies in the “IT Services & Consulting” industry, but how does it weigh in compared to its competitors? We will compare Automatic Data Processing to related companies based on the strength of its profitability, risk, dividends, valuation, earnings, analyst recommendations and institutional ownership.
Valuation and Earnings
This table compares Automatic Data Processing and its competitors revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Net Income||Price/Earnings Ratio|
|Automatic Data Processing||$12.38 billion||$1.73 billion||30.07|
|Automatic Data Processing Competitors||$2.91 billion||$304.65 million||385.68|
Automatic Data Processing has higher revenue and earnings than its competitors. Automatic Data Processing is trading at a lower price-to-earnings ratio than its competitors, indicating that it is currently more affordable than other companies in its industry.
This table compares Automatic Data Processing and its competitors’ net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Automatic Data Processing||14.08%||42.34%||4.28%|
|Automatic Data Processing Competitors||-21.82%||-288.43%||-4.70%|
This is a summary of recent ratings and price targets for Automatic Data Processing and its competitors, as provided by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Automatic Data Processing||0||10||5||0||2.33|
|Automatic Data Processing Competitors||670||4433||7127||170||2.55|
Automatic Data Processing presently has a consensus target price of $113.23, suggesting a potential downside of 4.20%. As a group, “IT Services & Consulting” companies have a potential downside of 7.06%. Given Automatic Data Processing’s higher probable upside, analysts plainly believe Automatic Data Processing is more favorable than its competitors.
Institutional & Insider Ownership
78.8% of Automatic Data Processing shares are held by institutional investors. Comparatively, 61.1% of shares of all “IT Services & Consulting” companies are held by institutional investors. 0.3% of Automatic Data Processing shares are held by insiders. Comparatively, 16.9% of shares of all “IT Services & Consulting” companies are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.
Risk and Volatility
Automatic Data Processing has a beta of 0.85, indicating that its share price is 15% less volatile than the S&P 500. Comparatively, Automatic Data Processing’s competitors have a beta of 1.15, indicating that their average share price is 15% more volatile than the S&P 500.
Automatic Data Processing pays an annual dividend of $2.52 per share and has a dividend yield of 2.1%. Automatic Data Processing pays out 64.1% of its earnings in the form of a dividend. As a group, “IT Services & Consulting” companies pay a dividend yield of 1.5% and pay out 37.3% of their earnings in the form of a dividend.
Automatic Data Processing beats its competitors on 8 of the 15 factors compared.
Automatic Data Processing Company Profile
Automatic Data Processing, Inc. (ADP) is a provider of human capital management (HCM) solutions to employers, offering solutions to businesses of various sizes. The Company also provides business process outsourcing solutions. Its segments include Employer Services and Professional Employer Organization (PEO) Services. The Employer Services segment offers a range of human resources (HR) business process outsourcing and technology-enabled HCM solutions. These offerings include payroll services, benefits administration, talent management, HR management, time and attendance management, insurance services, retirement services, and tax and compliance services. ADP TotalSource, ADP’s PEO business, offers small and mid-sized businesses a HR outsourcing solution through a co-employment model. As a PEO, ADP TotalSource provides HR management services while the client continues to direct the day-to-day job-related duties of the employees.
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