Trade-Ideas LLC identified

Automatic Data Processing

(

ADP

) as an unusual social activity candidate. In addition to specific proprietary factors, Trade-Ideas identified Automatic Data Processing as such a stock due to the following factors:

  • ADP has 11x the normal benchmarked social activity for this time of the day compared to its average of 1.06 mentions/day.
  • ADP has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $190.5 million.

Identifying stocks with 'Unusual Social Activity' tends to be a valuable process for traders looking to capitalize on the 'talk of the town' stocks that are basking in far more attention from the StockTwits financial community than normal. Good press? Bad press? It ultimately doesn't matter if it's good or bad if you know how to trade around the sentiment. Certain hedge funds use such data for their proprietary algorithms and it is not uncommon to see shared social sentiment play itself out in a stock's price trend.

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More details on ADP:

Automatic Data Processing, Inc., together with its subsidiaries, provides business process outsourcing services worldwide. The company operates through two segments, Employer Services and Professional Employer Organization (PEO) Services. The stock currently has a dividend yield of 2.6%. ADP has a PE ratio of 27. Currently there are 4 analysts that rate Automatic Data Processing a buy, 2 analysts rate it a sell, and 11 rate it a hold.

The average volume for Automatic Data Processing has been 1.7 million shares per day over the past 30 days. Automatic Data Processing has a market cap of $36.9 billion and is part of the technology sector and computer software & services industry. The stock has a beta of 0.86 and a short float of 0.9% with 1.83 days to cover. Shares are down 4.5% year-to-date as of the close of trading on Tuesday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Automatic Data Processing as a

buy

. The company's strengths can be seen in multiple areas, such as its revenue growth, growth in earnings per share, increase in net income, largely solid financial position with reasonable debt levels by most measures and notable return on equity. We feel its strengths outweigh the fact that the company has had lackluster performance in the stock itself.

Highlights from the ratings report include:

  • The revenue growth came in higher than the industry average of 19.9%. Since the same quarter one year prior, revenues slightly increased by 5.8%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • AUTOMATIC DATA PROCESSING has improved earnings per share by 16.1% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, AUTOMATIC DATA PROCESSING increased its bottom line by earning $2.91 versus $2.58 in the prior year. This year, the market expects an improvement in earnings ($3.25 versus $2.91).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the IT Services industry. The net income increased by 14.0% when compared to the same quarter one year prior, going from $295.20 million to $336.60 million.
  • The current debt-to-equity ratio, 0.43, is low and is below the industry average, implying that there has been successful management of debt levels. Even though the company has a strong debt-to-equity ratio, the quick ratio of 0.18 is very weak and demonstrates a lack of ability to pay short-term obligations.
  • Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. In comparison to other companies in the IT Services industry and the overall market on the basis of return on equity, AUTOMATIC DATA PROCESSING has underperformed in comparison with the industry average, but has greatly exceeded that of the S&P 500.

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