Automatic Data Processing (ADP) Lowered to “Hold” at Zacks Investment Research

Zacks Investment Research downgraded shares of Automatic Data Processing (NASDAQ:ADP) from a buy rating to a hold rating in a report published on Wednesday.

According to Zacks, “ADP is a provider of human capital management solutions and integrated computing solutions to vehicle dealers. The stock has outperformed the industry over the past one year. The company also raised fiscal 2018 guidance for revenues and earnings. We note that ADP holds a dominant position in the payroll processing and human capital management (HCM) market, primarily owing to its robust product portfolio. Moreover, activist investor Bill Ackman recently failed to get a position in the company's board. The overwhelming shareholder support for the existing board reflects strong confidence over management’s strategies, which is expected to drive share price in the near term. Nevertheless, we expect investments in new initiatives will continue to weigh on the company’s bottom-line results. Moreover, rising unemployment levels will negatively impact the company. Further, increasing competition is a major headwind.”

Several other equities research analysts have also recently weighed in on ADP. BidaskClub cut shares of Automatic Data Processing from a buy rating to a hold rating in a research note on Friday, September 15th. Royal Bank of Canada reiterated a hold rating and issued a $95.00 target price on shares of Automatic Data Processing in a research note on Friday, September 15th. Stifel Nicolaus reiterated a hold rating and issued a $108.00 target price on shares of Automatic Data Processing in a research note on Wednesday, October 4th. Bank of America increased their target price on shares of Automatic Data Processing from $111.00 to $114.00 and gave the company a neutral rating in a research note on Friday, October 13th. Finally, Barclays increased their target price on shares of Automatic Data Processing from $105.00 to $115.00 and gave the company an equal weight rating in a research note on Thursday, October 26th. One analyst has rated the stock with a sell rating, eleven have issued a hold rating and five have given a buy rating to the company’s stock. The stock currently has an average rating of Hold and an average price target of $115.21.

Automatic Data Processing (ADP) traded up $1.29 during midday trading on Wednesday, hitting $118.47. 1,644,451 shares of the company traded hands, compared to its average volume of 1,950,000. The company has a current ratio of 1.10, a quick ratio of 1.10 and a debt-to-equity ratio of 0.51. Automatic Data Processing has a twelve month low of $94.11 and a twelve month high of $121.77. The company has a market capitalization of $52,540.00, a PE ratio of 30.07, a PEG ratio of 2.93 and a beta of 0.85.

Automatic Data Processing (NASDAQ:ADP) last released its earnings results on Thursday, November 2nd. The business services provider reported $0.91 earnings per share for the quarter, beating the Thomson Reuters’ consensus estimate of $0.85 by $0.06. Automatic Data Processing had a net margin of 14.08% and a return on equity of 42.34%. The business had revenue of $3.08 billion during the quarter, compared to analysts’ expectations of $3.06 billion. During the same quarter last year, the company earned $0.86 earnings per share. The firm’s revenue was up 5.6% on a year-over-year basis. sell-side analysts predict that Automatic Data Processing will post 3.91 earnings per share for the current year.

The firm also recently declared a quarterly dividend, which was paid on Monday, January 1st. Shareholders of record on Friday, December 8th were paid a dividend of $0.63 per share. This is a boost from Automatic Data Processing’s previous quarterly dividend of $0.57. The ex-dividend date was Thursday, December 7th. This represents a $2.52 dividend on an annualized basis and a yield of 2.13%. Automatic Data Processing’s dividend payout ratio (DPR) is currently 63.96%.

In other news, insider Michael A. Bonarti sold 3,900 shares of Automatic Data Processing stock in a transaction that occurred on Tuesday, January 2nd. The shares were sold at an average price of $116.03, for a total value of $452,517.00. The transaction was disclosed in a legal filing with the Securities & Exchange Commission, which is accessible through the SEC website. Also, CEO Carlos A. Rodriguez sold 95,756 shares of Automatic Data Processing stock in a transaction that occurred on Thursday, January 4th. The shares were sold at an average price of $118.09, for a total transaction of $11,307,826.04. Following the completion of the transaction, the chief executive officer now owns 124,722 shares of the company’s stock, valued at approximately $14,728,420.98. The disclosure for this sale can be found here. In the last 90 days, insiders have sold 115,505 shares of company stock valued at $13,612,788. Corporate insiders own 0.25% of the company’s stock.

Several large investors have recently bought and sold shares of the company. Vanguard Group Inc. increased its holdings in shares of Automatic Data Processing by 2.4% in the second quarter. Vanguard Group Inc. now owns 34,999,981 shares of the business services provider’s stock valued at $3,586,099,000 after purchasing an additional 811,960 shares in the last quarter. BlackRock Inc. increased its holdings in shares of Automatic Data Processing by 0.8% in the second quarter. BlackRock Inc. now owns 29,869,208 shares of the business services provider’s stock valued at $3,060,398,000 after purchasing an additional 237,439 shares in the last quarter. Pershing Square Capital Management L.P. increased its holdings in shares of Automatic Data Processing by 402.5% in the third quarter. Pershing Square Capital Management L.P. now owns 8,798,442 shares of the business services provider’s stock valued at $961,846,000 after purchasing an additional 7,047,575 shares in the last quarter. Polen Capital Management LLC increased its holdings in shares of Automatic Data Processing by 2.3% in the third quarter. Polen Capital Management LLC now owns 6,813,929 shares of the business services provider’s stock valued at $744,899,000 after purchasing an additional 152,027 shares in the last quarter. Finally, Wells Fargo & Company MN increased its holdings in shares of Automatic Data Processing by 2.9% in the second quarter. Wells Fargo & Company MN now owns 6,794,660 shares of the business services provider’s stock valued at $696,182,000 after purchasing an additional 190,717 shares in the last quarter. Institutional investors own 78.67% of the company’s stock.

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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.

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