Automatic Data Processing (ADP): Today's Featured Technology 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 Technology sector lower today making it today's featured Technology laggard. The sector as a whole closed the day down 1.2%. By the end of trading, Automatic Data Processing fell $1.11 (-1.6%) to $67.86 on average volume. Throughout the day, 1,692,403 shares of Automatic Data Processing exchanged hands as compared to its average daily volume of 1,808,700 shares. The stock ranged in price between $67.79-$68.90 after having opened the day at $68.63 as compared to the previous trading day's close of $68.97. Other companies within the Technology sector that declined today were: Renewable Energy Trade Board ( EBOD), down 37.5%, Authentidate Holding Corporation ( ADAT), down 14.7%, ChyronHego ( CHYR), down 12.6% and Cimatron ( CIMT), down 11.1%.
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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 $33.7 billion and is part of the computer software & services industry. The company has a P/E ratio of 24.2, above the S&P 500 P/E ratio of 17.7. Shares are up 22.2% 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, ChinaNet Online Holdings ( CNET), down 15.2%, Netlist ( NLST), down 11.2%, FAB Universal ( FU), down 6.9% and Juniper Networks ( JNPR), down 6.6% , were all gainers within the technology sector with Yelp Inc Class A ( YELP) 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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