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Monday, January 25, 2021

When Will Automatic Data Processing Inc. (ADP) Slow Down

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Automatic Data Processing Inc. (ADP) shares are trading at higher $174.67 and the avg recommendation for the stock is Moderate Buy, while the current analyst price target stands at $167.65.

To add more color to this target, the company’s high over the last year is $182.32 and the low is $103.11. Over the last 52 weeks, ADP is up 3.61% while the S&P 500 is up 17.45%. The catalyst for this interesting swing was the company’s recent earnings report.

A Notable Earnings Report

In the last quarter, ADP reported a profit of $1.44 billion. Automatic Data Processing Inc. also saw revenues increase to $3.47 billion. In addition, ADP has free cash flow of $438.4 million as of 09-2020. The company’s EBITDA came in at $1.13 billion which compares well with its peers.

ADP booked profit margins of 17.10%, its Return on Equity (ROE) is 44.40%, and its Return on Assets is 5.70%. All told, it is clear that, ADP needs to be on your watchlist.

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Of course, we must look beyond the financials and question how well those numbers represent the sustainable earnings power of the business. Investors need to know how sustainable this current run. ADP has a short ratio of 2.01 and outstanding shares of 428.60M.

Company Outlook

ADP has seen increased volume after this news and investors are putting their support behind the value proposition. Furthermore, 10-day volume stands at 1.44 million and more growth is possible in the weeks ahead. Traders will also note the company’s earnings per share came in at 5.75. Automatic Data Processing Inc. ADP also noted assets of $42.39 billion at the end of the last quarter. Investors should also keep an eye on sector updates as ADP has historically followed its peers on positive news.

All told, Automatic Data Processing Inc. ADP has strung together solid data and demonstrated underlying fundamentals. At its current valuation, ADP represents an interesting risk/reward case. Traders should stay tuned to see if this recent report will push the stock to test recent resistance levels.

Automatic Data Processing Inc. ADP is now commanding a market cap of 74.40B and a float of 427.71M. ADP is increasing its credibility in this sector and that could lead to more upside down the line. Sign-up for continuing coverage on shares of ADP stock, as well as other hot stock picks, get our free newsletter today and get our next breakout pick!

Disclosure: we hold no position in ADP, either long or short, and we have not been compensated for this article.

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