Head to Head Comparison: Automatic Data Processing (NASDAQ:ADP) and Booz Allen Hamilton (NYSE:BAH)

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

Institutional and Insider Ownership

91.8% of Booz Allen Hamilton shares are owned by institutional investors. Comparatively, 80.0% of Automatic Data Processing shares are owned by institutional investors. 1.1% of Booz Allen Hamilton shares are owned by insiders. Comparatively, 0.2% of Automatic Data Processing shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Analyst Recommendations

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

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Booz Allen Hamilton	4	8	3	0	1.93
Automatic Data Processing	1	8	3	0	2.17

Booz Allen Hamilton presently has a consensus price target of $83.69, suggesting a potential upside of 10.42%. Automatic Data Processing has a consensus price target of $273.50, suggesting a potential upside of 1.95%. Given Booz Allen Hamilton’s higher possible upside, equities research analysts clearly believe Booz Allen Hamilton is more favorable than Automatic Data Processing.

Dividends

Booz Allen Hamilton pays an annual dividend of $2.36 per share and has a dividend yield of 3.1%. Automatic Data Processing pays an annual dividend of $6.80 per share and has a dividend yield of 2.5%. Booz Allen Hamilton pays out 37.1% of its earnings in the form of a dividend. Automatic Data Processing pays out 62.2% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Booz Allen Hamilton has increased its dividend for 14 consecutive years and Automatic Data Processing has increased its dividend for 49 consecutive years. Booz Allen Hamilton is clearly the better dividend stock, given its higher yield and lower payout ratio.

Volatility & Risk

Booz Allen Hamilton has a beta of 0.36, suggesting that its stock price is 64% less volatile than the S&P 500. Comparatively, Automatic Data Processing has a beta of 0.82, suggesting that its stock price is 18% less volatile than the S&P 500.

Earnings & Valuation

This table compares Booz Allen Hamilton and Automatic Data Processing”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Booz Allen Hamilton	$11.22 billion	0.81	$851.00 million	$6.36	11.92
Automatic Data Processing	$21.95 billion	4.86	$4.41 billion	$10.94	24.52

Automatic Data Processing has higher revenue and earnings than Booz Allen Hamilton. Booz Allen Hamilton 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.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Booz Allen Hamilton	7.01%	76.71%	11.48%
Automatic Data Processing	20.11%	71.34%	6.73%

Summary

Automatic Data Processing beats Booz Allen Hamilton on 9 of the 16 factors compared between the two stocks.

About Booz Allen Hamilton

Booz Allen Hamilton Holding Corporation provides management and technology consulting, analytics, engineering, digital solutions, mission operations, and cyber services to governments, corporations, and not-for-profit organizations in the United States and internationally. It focuses on artificial intelligence services comprising of machine learning, predictive modeling, automation and decision analytics, and quantum computing. The company offers artificial intelligence, machine learning, and computer network related operations. In addition, it provides data science, engineering, visualization, and analysis related capabilities. Further, the company engages in user experience, user interface, graphic and web design, design thinking, sketching, and digital product design capabilities. Additionally, it architects and engineers help accelerate, scale, secure, and transform mission and business outcomes using the technologies and partner offering; offers software engineering in agile practices, DevSecOps, automation and Cloud, and Low/No Code Platform engineering; systems and digital engineering; and tech strategy and product management. Booz Allen Hamilton Holding Corporation was founded in 1914 and is headquartered in McLean, Virginia.

About Automatic Data Processing

Automatic Data Processing, Inc. provides cloud-based human capital management solutions worldwide. It operates in two segments, Employer Services and Professional Employer Organization (PEO). The Employer Services segment offers strategic, cloud-based platforms, and human resources (HR) outsourcing solutions. Its offerings include payroll services, benefits administration, talent management, HR management, workforce management, insurance, retirement, and compliance services, as well as integrated HCM solutions. The PEO Services segment provides HR outsourcing solution to businesses through a co-employment model. This segment offers employee benefits, protection and compliance, talent engagement, expertise, comprehensive outsourcing, and recruitment process outsourcing services. Automatic Data Processing, Inc. was founded in 1949 and is headquartered in Roseland, New Jersey.