Roseland, New Jersey-based Automatic Data Processing, Inc. (ADP) provides cloud-based human capital management (HCM) solutions. Valued at a market cap of $121.4 billion, the company offers a comprehensive range of services, including payroll processing, HR management, benefits administration, talent management, tax and compliance support, and workforce analytics.
Companies valued at $10 billion or more are typically classified as “large-cap stocks,” and ADP fits the label perfectly, with its market cap exceeding this threshold, underscoring its size, influence, and dominance within the software - application industry. The company is recognized for its innovation in cloud-based platforms, strong client service, and expertise in regulatory compliance. It serves businesses of all sizes, from small firms to large multinational corporations, helping them streamline HR operations and improve employee engagement.
Despite its notable strength, this HCM services provider has slipped 9.1% from its 52-week high of $329.93, reached on Jun. 6. Moreover, shares of ADP have declined 8% over the past three months, considerably underperforming the Industrial Select Sector SPDR Fund’s (XLI) 5.6% return during the same time frame.
In the longer term, ADP has gained 8.7% over the past 52 weeks, lagging behind XLI's 14.5% uptick over the same time period. Moreover, on a YTD basis, shares of ADP are up 2.4%, compared to XLI’s 14.3% surge.
To confirm its bearish trend, ADP has been trading below its 200-day moving average since early August, with minor fluctuations, and it is trading below its 50-day moving average since mid-June, with slight fluctuations.
On Jul. 30, ADP reported better-than-expected Q4 results, giving its stock a marginal boost. The company’s revenue improved 7.5% year-over-year to $5.1 billion, beating consensus estimates by 1.6%. Moreover, its adjusted EPS came in at $2.26, up 8.1% from the year-ago quarter and 1.8% ahead of Wall Street’s estimates. The quarterly performance was aided by continued strength in ADP’s employer services and Professional Employer Organization (PEO) segments.
ADP has outperformed its rival, Paychex, Inc. (PAYX), which gained 3.6% over the past 52 weeks and dropped 3% on a YTD basis.
Given ADP’s recent underperformance, analysts remain cautious about its prospects. The stock has a consensus rating of "Hold” from the 18 analysts covering it, and the mean price target of $324.21 suggests an 8.2% premium to its current price levels.
On the date of publication, Neharika Jain did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
