Automatic Data Processing (ADP): Today's Highlighted Laggard In Technology

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.

Automatic Data Processing ( ADP) pushed the Technology sector lower today making it today's featured Technology laggard. The sector as a whole closed the day down 0.6%. By the end of trading, Automatic Data Processing fell 95 cents (-1.5%) to $63.77 on average volume. Throughout the day, 1.7 million shares of Automatic Data Processing exchanged hands as compared to its average daily volume of 1.9 million shares. The stock ranged in price between $63.30-$64.11 after having opened the day at $64.10 as compared to the previous trading day's close of $64.72. Other companies within the Technology sector that declined today were: Deltathree ( DDDC), down 30%, Radware ( RDWR), down 22.6%, F5 Networks ( FFIV), down 19%, and Authentidate Holding Corporation ( ADAT), down 10.7%.
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Automatic Data Processing, Inc. and its subsidiaries provide business outsourcing solutions. The company operates in three segments: Employer Services, Professional Employer Organization (PEO) Services, and Dealer Services. Automatic Data Processing has a market cap of $31.4 billion and is part of the computer software & services industry. The company has a P/E ratio of 23.2, above the S&P 500 P/E ratio of 17.7. Shares are up 13.7% year to date as of the close of trading on Thursday. Currently there are 10 analysts that rate Automatic Data Processing a buy, two analysts rate it a sell, and 12 rate it a hold.

TheStreet Ratings rates Automatic Data Processing as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, increase in net income, good cash flow from operations, largely solid financial position with reasonable debt levels by most measures and solid stock price performance. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity.

On the positive front, Innovative Solutions and Support ( ISSC), up 27.2%, NII Holdings ( NIHD), up 20.7%, Dataram Corporation ( DRAM), up 17.9%, and eOn Communications Corporation ( EONC), up 16.9%, were all gainers within the technology sector with Check Point Software Technologies ( CHKP) being today's featured technology sector leader.

For investors not wanting singular stock exposure, ETFs may be of interest. Investors who are bullish on the technology sector could consider Technology Select Sector SPDR ( XLK) while those bearish on the technology sector could consider ProShares Ultra Short Technology ( REW).

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