Automatic Data Processing (ADP): Today's Featured Computer Software & Services Laggard

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 Computer Software & Services industry lower today making it today's featured Computer Software & Services laggard. The industry as a whole closed the day down 0.6%. By the end of trading, Automatic Data Processing fell $0.72 (-1.0%) to $69.77 on average volume. Throughout the day, 1,424,416 shares of Automatic Data Processing exchanged hands as compared to its average daily volume of 1,831,400 shares. The stock ranged in price between $69.50-$70.20 after having opened the day at $70.00 as compared to the previous trading day's close of $70.49. Other companies within the Computer Software & Services industry that declined today were: Intelligent Systems ( INS), down 11.6%, Bridgeline Digital ( BLIN), down 9.2%, Top Image Systems ( TISA), down 8.4% and Helios and Matheson Analytics ( HMNY), down 6.9%.
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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 $33.9 billion and is part of the technology sector. The company has a P/E ratio of 24.3, above the S&P 500 P/E ratio of 17.7. Shares are up 22.7% year to date as of the close of trading on Tuesday. Currently there are 10 analysts that rate Automatic Data Processing a buy, 2 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, solid stock price performance, growth in earnings per share, increase in net income and largely solid financial position with reasonable debt levels by most measures. We feel these strengths outweigh the fact that the company shows weak operating cash flow.

On the positive front, Perfect World ( PWRD), down 13.9%, Mitek Systems ( MITK), down 8.6%, Active Network ( ACTV), down 7.4% and Tangoe ( TNGO), down 6.2% , were all gainers within the computer software & services industry with Check Point Software Technologies ( CHKP) being today's featured computer software & services industry leader.

For investors not wanting singular stock exposure, ETFs may be of interest. Investors who are bullish on the computer software & services industry could consider iShares S&P NA Tech Software Idx ( IGV) while those bearish on the computer software & services industry could consider ProShares Ultra Short Technology ( REW).

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