Comparing Automatic Data Processing (ADP) and Its Competitors

Automatic Data Processing (NASDAQ: ADP) is one of 186 publicly-traded companies in the “IT Services & Consulting” industry, but how does it compare to its competitors? We will compare Automatic Data Processing to similar businesses based on the strength of its earnings, risk, institutional ownership, analyst recommendations, profitability, dividends and valuation.

Volatility & Risk

Automatic Data Processing has a beta of 0.87, meaning that its stock price is 13% less volatile than the S&P 500. Comparatively, Automatic Data Processing’s competitors have a beta of 1.10, meaning that their average stock price is 10% more volatile than the S&P 500.

Earnings & Valuation

This table compares Automatic Data Processing and its competitors revenue, earnings per share and valuation.

Gross Revenue NetIncome Price/Earnings Ratio
Automatic Data Processing $12.38 billion $1.73 billion 27.99
Automatic Data Processing Competitors $2.79 billion $290.25 million 301.72

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.

Analyst Recommendations

This is a breakdown of current ratings and price targets for Automatic Data Processing and its competitors, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Automatic Data Processing 0 12 3 0 2.20
Automatic Data Processing Competitors 721 4569 7334 166 2.54

Automatic Data Processing currently has a consensus price target of $111.15, indicating a potential upside of 1.03%. As a group, “IT Services & Consulting” companies have a potential upside of 2.25%. Given Automatic Data Processing’s competitors stronger consensus rating and higher probable upside, analysts clearly believe Automatic Data Processing has less favorable growth aspects than its competitors.

Dividends

Automatic Data Processing pays an annual dividend of $2.28 per share and has a dividend yield of 2.1%. Automatic Data Processing pays out 58.0% of its earnings in the form of a dividend. As a group, “IT Services & Consulting” companies pay a dividend yield of 1.6% and pay out 39.6% of their earnings in the form of a dividend.

Insider & Institutional Ownership

78.4% 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, 16.5% 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.

Profitability

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 -20.53% -272.68% -4.78%

Summary

Automatic Data Processing competitors beat Automatic Data Processing 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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