Editor's Note: TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model.
NEW YORK (
) has been reiterated by TheStreet Ratings as a buy with a ratings score of A . The company's strengths can be seen in multiple areas, such as its revenue growth, growth in earnings per share, increase in net income, reasonable valuation levels and good cash flow from operations. Although the company may harbor some minor weaknesses, we feel they are unlikely to have a significant impact on results.
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Highlights from the ratings report include:
- The revenue growth came in higher than the industry average of 6.9%. Since the same quarter one year prior, revenues slightly increased by 5.2%. 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 10.4% 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 $2.82 versus $2.51 in the prior year. This year, the market expects an improvement in earnings ($2.93 versus $2.82).
- The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and the IT Services industry average. The net income increased by 6.9% when compared to the same quarter one year prior, going from $241.80 million to $258.40 million.
- Net operating cash flow has slightly increased to $499.10 million or 2.80% when compared to the same quarter last year. In addition, AUTOMATIC DATA PROCESSING has also modestly surpassed the industry average cash flow growth rate of 0.40%.
Automatic Data Processing, Inc. provides business outsourcing solutions. The company operates in three segments: Employer Services, Professional Employer Organization (PEO) Services, and Dealer Services. The company has a P/E ratio of 20.9, equal to the average computer software & services industry P/E ratio and above the S&P 500 P/E ratio of 17.7. Automatic Data Processing has a market cap of $28.52 billion and is part of the
industry. Shares are up 8.1% year to date as of the close of trading on Tuesday.
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--Written by a member of TheStreet Ratings Staff.
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