Pre-Market Laggard: Automatic Data Processing (ADP)
Trade-Ideas LLC identified Automatic Data Processing ( ADP) as a pre-market laggard candidate. In addition to specific proprietary factors, Trade-Ideas identified Automatic Data Processing as such a stock due to the following factors:
- ADP has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $173.6 million.
- ADP traded 16,271 shares today in the pre-market hours as of 9:29 AM.
- ADP is down 2.1% today from yesterday's close.
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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 2.4%. ADP has a PE ratio of 28. Currently there are 4 analysts that rate Automatic Data Processing a buy, 3 analysts rate it a sell, and 10 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 $40.9 billion and is part of the technology sector and computer software & services industry. The stock has a beta of 0.82 and a short float of 1.2% with 2.69 days to cover. Shares are up 4.8% year-to-date as of the close of trading on Tuesday.
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Analysis:
rates Automatic Data Processing as a
. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, growth in earnings per share, increase in net income and notable return on equity. We feel its strengths outweigh the fact that the company shows weak operating cash flow. Highlights from the ratings report include:
- The revenue growth came in higher than the industry average of 8.7%. Since the same quarter one year prior, revenues slightly increased by 7.4%. Growth in the company's revenue appears to have helped boost the earnings per share.
- The current debt-to-equity ratio, 0.45, is low and is below the industry average, implying that there has been successful management of debt levels.
- AUTOMATIC DATA PROCESSING has improved earnings per share by 12.5% 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 $2.90 versus $2.58 in the prior year. This year, the market expects an improvement in earnings ($3.24 versus $2.90).
- The company, on the basis of net income growth from the same quarter one year ago, has significantly outperformed against the S&P 500 and exceeded that of the IT Services industry average. The net income increased by 8.8% when compared to the same quarter one year prior, going from $489.60 million to $532.50 million.
- 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.
- You can view the full Automatic Data Processing Ratings Report.
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