Automatic Data Processing (NASDAQ: ADP) is one of 186 public companies in the “IT Services & Consulting” industry, but how does it contrast to its peers? We will compare Automatic Data Processing to related businesses based on the strength of its earnings, dividends, institutional ownership, valuation, risk, profitability and analyst recommendations.
Institutional and Insider Ownership
78.6% of Automatic Data Processing shares are owned by institutional investors. Comparatively, 61.8% of shares of all “IT Services & Consulting” companies are owned by institutional investors. 0.3% of Automatic Data Processing shares are owned by insiders. Comparatively, 16.9% of shares of all “IT Services & Consulting” companies are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.
Automatic Data Processing pays an annual dividend of $2.28 per share and has a dividend yield of 2.0%. Automatic Data Processing pays out 58.0% of its earnings in the form of a dividend. As a group, “IT Services & Consulting” companies pay a dividend yield of 1.6% and pay out 38.9% of their earnings in the form of a dividend.
Risk and Volatility
Automatic Data Processing has a beta of 0.85, meaning that its share price is 15% less volatile than the S&P 500. Comparatively, Automatic Data Processing’s peers have a beta of 1.15, meaning that their average share price is 15% more volatile than the S&P 500.
This is a summary of current ratings for Automatic Data Processing and its peers, as provided by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Automatic Data Processing||0||12||3||0||2.20|
|Automatic Data Processing Competitors||731||4680||7450||169||2.54|
Automatic Data Processing currently has a consensus target price of $111.15, indicating a potential downside of 2.28%. As a group, “IT Services & Consulting” companies have a potential upside of 3.27%. Given Automatic Data Processing’s peers stronger consensus rating and higher probable upside, analysts clearly believe Automatic Data Processing has less favorable growth aspects than its peers.
This table compares Automatic Data Processing and its peers’ net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Automatic Data Processing||14.08%||42.34%||4.28%|
|Automatic Data Processing Competitors||-20.48%||-271.11%||-4.68%|
Earnings & Valuation
This table compares Automatic Data Processing and its peers top-line revenue, earnings per share and valuation.
|Gross Revenue||Net Income||Price/Earnings Ratio|
|Automatic Data Processing||$12.38 billion||$1.73 billion||28.94|
|Automatic Data Processing Competitors||$2.81 billion||$293.37 million||348.60|
Automatic Data Processing has higher revenue and earnings than its peers. Automatic Data Processing is trading at a lower price-to-earnings ratio than its peers, indicating that it is currently more affordable than other companies in its industry.
Automatic Data Processing peers beat Automatic Data Processing on 8 of the 15 factors compared.
About Automatic Data Processing
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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