Head-To-Head Comparison: Automatic Data Processing (ADP) vs. Its Peers

Automatic Data Processing (NASDAQ: ADP) is one of 187 public companies in the “IT Services & Consulting” industry, but how does it compare to its peers? We will compare Automatic Data Processing to related companies based on the strength of its dividends, valuation, risk, institutional ownership, earnings, analyst recommendations and profitability.

Volatility and Risk

Automatic Data Processing has a beta of 0.88, indicating that its stock price is 12% less volatile than the S&P 500. Comparatively, Automatic Data Processing’s peers have a beta of 1.11, indicating that their average stock price is 11% more volatile than the S&P 500.

Valuation and Earnings

This table compares Automatic Data Processing and its peers top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue NetIncome Price/Earnings Ratio
Automatic Data Processing $12.38 billion $1.73 billion 27.97
Automatic Data Processing Competitors $2.79 billion $290.25 million 294.38

Automatic Data Processing has higher revenue and earnings than its peers. Automatic Data Processing is trading at a lower price-to-earnings ratio than its peers, indicating that it is currently more affordable than other companies in its industry.

Institutional and Insider Ownership

78.4% of Automatic Data Processing shares are owned by institutional investors. Comparatively, 62.6% of shares of all “IT Services & Consulting” companies are owned by institutional investors. 0.3% of Automatic Data Processing shares are owned by company insiders. Comparatively, 15.9% of shares of all “IT Services & Consulting” companies are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Dividends

Automatic Data Processing pays an annual dividend of $2.28 per share and has a dividend yield of 2.1%. Automatic Data Processing pays out 57.9% of its earnings in the form of a dividend. As a group, “IT Services & Consulting” companies pay a dividend yield of 1.6% and pay out 37.3% of their earnings in the form of a dividend.

Analyst Ratings

This is a summary of recent ratings for Automatic Data Processing and its peers, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Automatic Data Processing 0 12 3 0 2.20
Automatic Data Processing Competitors 725 4634 7408 166 2.54

Automatic Data Processing currently has a consensus price target of $111.15, suggesting a potential upside of 0.86%. As a group, “IT Services & Consulting” companies have a potential upside of 3.12%. Given Automatic Data Processing’s peers stronger consensus rating and higher probable upside, analysts clearly believe Automatic Data Processing has less favorable growth aspects than its peers.

Profitability

This table compares Automatic Data Processing and its peers’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Automatic Data Processing 14.08% 42.34% 4.28%
Automatic Data Processing Competitors -20.37% -82.43% -4.64%

Summary

Automatic Data Processing peers beat Automatic Data Processing on 8 of the 15 factors compared.

Automatic Data Processing Company Profile

Automatic Data Processing, Inc. (ADP) is a provider of human capital management (HCM) solutions to employers, offering solutions to businesses of various sizes. The Company also provides business process outsourcing solutions. Its segments include Employer Services and Professional Employer Organization (PEO) Services. The Employer Services segment offers a range of human resources (HR) business process outsourcing and technology-enabled HCM solutions. These offerings include payroll services, benefits administration, talent management, HR management, time and attendance management, insurance services, retirement services, and tax and compliance services. ADP TotalSource, ADP’s PEO business, offers small and mid-sized businesses a HR outsourcing solution through a co-employment model. As a PEO, ADP TotalSource provides HR management services while the client continues to direct the day-to-day job-related duties of the employees.

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