Evertec (NYSE: EVTC) and Automatic Data Processing (NYSE:ADP) are both business services companies, but which is the superior business? We will compare the two companies based on the strength of their valuation, analyst recommendations, risk, dividends, earnings, institutional ownership and profitability.

Valuation & Earnings

This table compares Evertec and Automatic Data Processing’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Evertec $401.15 million 3.33 $157.72 million $1.06 17.41
Automatic Data Processing $12.38 billion 3.76 $2.72 billion N/A N/A

Automatic Data Processing has higher revenue and earnings than Evertec.

Profitability

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

Net Margins Return on Equity Return on Assets
Evertec 19.64% 107.21% 14.29%
Automatic Data Processing 8.67% 26.39% 2.63%

Dividends

Evertec pays an annual dividend of $0.40 per share and has a dividend yield of 2.2%. Automatic Data Processing does not pay a dividend. Evertec pays out 37.7% of its earnings in the form of a dividend. Evertec has raised its dividend for 42 consecutive years.

Institutional and Insider Ownership

80.6% of Evertec shares are owned by institutional investors. 1.4% of Evertec shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Analyst Recommendations

This is a breakdown of current recommendations for Evertec and Automatic Data Processing, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Evertec 0 3 0 0 2.00
Automatic Data Processing 2 10 1 0 1.92

Evertec currently has a consensus price target of $18.33, indicating a potential downside of 0.63%. Automatic Data Processing has a consensus price target of $103.73, indicating a potential downside of 0.91%. Given Evertec’s stronger consensus rating and higher probable upside, analysts clearly believe Evertec is more favorable than Automatic Data Processing.

Summary

Evertec beats Automatic Data Processing on 9 of the 15 factors compared between the two stocks.

Evertec Company Profile

EVERTEC, Inc. is a transaction processing company. The Company provides a range of merchant acquiring, payment processing and business process management services. The Company operates through three segments: Merchant Acquiring, Payment Processing and Business Solutions. As of December 31, 2016, it managed a system of electronic payment networks that processed over two billion transactions annually. It offers a range of services for core bank processing, cash processing and technology outsourcing. It owns and operates the ATH network, which is a personal identification number (PIN) debit network in Latin America. It serves a range of financial institutions, merchants, corporations and government agencies with solutions that enable them to issue, process and accept transactions securely. The Company’s range of services spans the entire transaction processing value chain and includes a range of front-end customer-facing solutions.

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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