Automatic Data Processing, Inc. posted third-quarter fiscal 2022 results that were better than expected by the Zacks Consensus Estimate.
The payroll and HR services company’s adjusted earnings climbed +16.9% from the year-ago quarter to $2.21 a share, surpassing the Zacks Consensus Estimate by 6.8%.
Total revenues of $4.51 billion beat the consensus mark by 1.2% and grew +10% year over year on a reported basis and +11% on an organic constant-currency basis.
Employer Services revenues increased 8% on a reported basis and 9% on an organic constant-currency basis. PEO Services revenues grew 14% year over year to $1.51 billion. Average worksite employees paid by PEO Services were 688,000, up 16% year over year.
Adjusted EBIT rose +12% year over year to $1.2 billion. Adjusted EBIT margin expanded 50 basis points to 26.8%, on the back of higher revenues, which were partially offset by increased expenses related to selling, implementation and service, and higher PEO pass-through expenses.
For fiscal 2022, ADP now expects revenues to experience 9-10% growth compared with prior forecast of 8-9%. Adjusted EPS forecast is 15-17% growth compared with the expected prior growth rate of 12-14%.
The company now expects Employer Services revenues growth at a rate of about 7% compared with the expected prior growth rate of about 6%. It projects PEO Services revenues growth of 14-15% compared with prior expectation of 13% to 15%.
ADP may jump back above the lower band and head toward the middle band. Traders may consider buying the stock or exploring call options. In of 34 cases where ADP's price broke its lower Bollinger Band, its price rose further in the following month. The odds of a continued upward trend are .
Following a 3-day Advance, the price is estimated to grow further. Considering data from situations where ADP advanced for three days, in of 344 cases, the price rose further within the following month. The odds of a continued upward trend are .
The Stochastic Oscillator may be shifting from an upward trend to a downward trend. In of 71 cases where ADP's Stochastic Oscillator exited the overbought zone, the price fell further within the following month. The odds of a continued downward trend are .
The Momentum Indicator moved below the 0 level on May 26, 2023. You may want to consider selling the stock, shorting the stock, or exploring put options on ADP as a result. In of 102 cases where the Momentum Indicator fell below 0, the stock fell further within the subsequent month. The odds of a continued downward trend are .
The Moving Average Convergence Divergence Histogram (MACD) for ADP turned negative on May 25, 2023. This could be a sign that the stock is set to turn lower in the coming weeks. Traders may want to sell the stock or buy put options. Tickeron's A.I.dvisor looked at 48 similar instances when the indicator turned negative. In of the 48 cases the stock turned lower in the days that followed. This puts the odds of success at .
ADP moved below its 50-day moving average on May 24, 2023 date and that indicates a change from an upward trend to a downward trend.
Following a 3-day decline, the stock is projected to fall further. Considering past instances where ADP declined for three days, the price rose further in of 62 cases within the following month. The odds of a continued downward trend are .
The Aroon Indicator for ADP entered a downward trend on May 05, 2023. This could indicate a strong downward move is ahead for the stock. Traders may want to consider selling the stock or buying put options.
The Tickeron Profit vs. Risk Rating rating for this company is (best 1 - 100 worst), indicating low risk on high returns. The average Profit vs. Risk Rating rating for the industry is 81, placing this stock better than average.
The Tickeron SMR rating for this company is (best 1 - 100 worst), indicating very strong sales and a profitable business model. SMR (Sales, Margin, Return on Equity) rating is based on comparative analysis of weighted Sales, Income Margin and Return on Equity values compared against S&P 500 index constituents. The weighted SMR value is a proprietary formula developed by Tickeron and represents an overall profitability measure for a stock.
The Tickeron Seasonality Score of (best 1 - 100 worst) indicates that the company is slightly undervalued in the industry. The Tickeron Seasonality score describes the variance of predictable price changes around the same period every calendar year. These changes can be tied to a specific month, quarter, holiday or vacation period, as well as a meteorological or growing season.
The Tickeron Price Growth Rating for this company is (best 1 - 100 worst), indicating fairly steady price growth. ADP’s price grows at a lower rate over the last 12 months as compared to S&P 500 index constituents.
The Tickeron PE Growth Rating for this company is (best 1 - 100 worst), pointing to average earnings growth. The PE Growth rating is based on a comparative analysis of stock PE ratio increase over the last 12 months compared against S&P 500 index constituents.
The Tickeron Valuation Rating of (best 1 - 100 worst) indicates that the company is slightly overvalued in the industry. This rating compares market capitalization estimated by our proprietary formula with the current market capitalization. This rating is based on the following metrics, as compared to industry averages: P/B Ratio (23.529) is normal, around the industry mean (7.865). P/E Ratio (26.882) is within average values for comparable stocks, (28.072). Projected Growth (PEG Ratio) (2.300) is also within normal values, averaging (1.980). Dividend Yield (0.022) settles around the average of (0.037) among similar stocks. ADP's P/S Ratio (5.171) is slightly higher than the industry average of (1.517).
The average fundamental analysis ratings, where 1 is best and 100 is worst, are as follows