Automatic Data Processing Beats Up on Analysts Yet Again

Automatic Data Processing (NAS: ADP) reported earnings on Jan. 25. Here are the numbers you need to know.

The 10-second takeaway
For the quarter ended Dec. 31 (Q2), Automatic Data Processing met expectations on revenues and beat slightly on earnings per share.

Compared to the prior-year quarter, revenue increased and earnings per share increased significantly.

Gross margins shrank, operating margins dropped, and net margins increased.

Revenue details
Automatic Data Processing reported revenue of $2.6 billion. The 16 analysts polled by S&P Capital IQ expected to see revenue of $2.6 billion. Sales were 7.4% higher than the prior-year quarter's $2.4 billion.


Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions.

EPS details
Non-GAAP EPS came in at $0.69. The 20 earnings estimates compiled by S&P Capital IQ predicted $0.68 per share on the same basis. GAAP EPS of $0.76 for Q2 were 23% higher than the prior-year quarter's $0.62 per share.


Source: S&P Capital IQ. Quarterly periods. Figures may be non-GAAP to maintain comparability with estimates.

Margin details
For the quarter, gross margin was 49.4%, 180 basis points worse than the prior-year quarter. Operating margin was 18.8%, 10 basis points worse than the prior-year quarter. Net margin was 14.5%, 160 basis points better than the prior-year quarter.

Looking ahead
Next quarter's average estimate for revenue is $2.9 billion. On the bottom line, the average EPS estimate is $0.93.

Next year's average estimate for revenue is $10.7 billion. The average EPS estimate is $2.74.

Investor sentiment
The stock has a four-star rating (out of five) at Motley Fool CAPS, with 1,052 members out of 1,112 rating the stock outperform, and 60 members rating it underperform. Among 380 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 369 give Automatic Data Processing a green thumbs-up, and 11 give it a red thumbs-down.

Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on Automatic Data Processing is outperform, with an average price target of $55.38.

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At the time thisarticle was published Seth Jayson had no position in any company mentioned here at the time of publication. You can view his stock holdings here. He is co-advisor ofMotley Fool Hidden Gems, which provides new small-cap ideas every month, backed by a real-money portfolio. Motley Fool newsletter services have recommended buying shares of Automatic Data Processing. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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