ADP Beats Revenue Expectations in Second Quarter 2024
Automatic Data Processing, Inc (ADP) has reported strong second-quarter results, with revenues of $4.67 billion beating analyst consensus of $4.66 billion. This represents a 6% year-over-year increase in revenues. The company also surpassed expectations for earnings per share (EPS), reporting adjusted EPS of $2.13 compared to the analyst consensus of $2.10.
ADP’s adjusted EBIT (earnings before interest and taxes) increased by 7% to $1.1 billion, and the adjusted EBIT margin rose to 24.6%. Net earnings increased by 8% to $878.4 million, and adjusted net earnings also rose by 8% to $880.5 million.
The company ended the quarter with cash and equivalents worth $1.64 billion. ADP’s CEO, Maria Black, expressed satisfaction with the company’s performance, highlighting their focus on providing exceptional human capital management (HCM) products and outstanding service. Black also emphasized their commitment to investing in technology and people to strengthen existing client partnerships and build new ones.
Looking ahead, ADP reiterated its revenue growth outlook for the fiscal year 2024, expecting a 6% to 7% increase or $19.09 billion to $19.27 billion. The company also anticipates adjusted diluted EPS growth of 10% to 12% or $9.05 to $9.22. This outlook is slightly higher than analyst consensus for revenue but in line with expectations for EPS.
In terms of segment performance, ADP expects Employer Services revenue to grow by 7% to 8% and PEO Services revenue to grow by 3% to 4% in fiscal year 2024.
Following the positive earnings report, ADP’s stock price rose by 3.37% to $246.64. However, when considering the stock’s future trajectory, investors should take into account various factors such as future earnings expectations and performance against a benchmark.
ADP’s revenue has grown at an average rate of 6.44% annually over the past five years. Analysts have set an average 1-year price target of $242.67, suggesting a potential downside of -1.31% in 2025.
Investors should also consider the stock’s historical performance compared to both a benchmark index and the company’s peers. ADP has delivered an annualized return of 15.06%, outperforming the S&P 500 index by 5.78%. In comparison, the overall Industrials sector has grown by 11.85%. ADP has a beta of 0.91, indicating a lower level of volatility compared to the market.
In conclusion, ADP’s second-quarter results have exceeded expectations, with strong revenue growth and beating analyst consensus for EPS. The company’s outlook for fiscal year 2024 remains positive, and ADP continues to focus on providing exceptional HCM products and service to drive client satisfaction. Investors should consider ADP’s historical performance and future earnings expectations when assessing the stock’s potential trajectory.
