Automatic Data Processing (NASDAQ:ADP – Get Free Report) and Kelly Services (NASDAQ:KELYA – Get Free Report) are both industrials companies, but which is the superior stock? We will contrast the two businesses based on the strength of their analyst recommendations, valuation, dividends, risk, profitability, earnings and institutional ownership.
Dividends
Automatic Data Processing pays an annual dividend of $6.80 per share and has a dividend yield of 2.6%. Kelly Services pays an annual dividend of $0.30 per share and has a dividend yield of 1.8%. Automatic Data Processing pays out 62.2% of its earnings in the form of a dividend. Kelly Services pays out -3.8% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Automatic Data Processing has raised its dividend for 49 consecutive years. Automatic Data Processing is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Analyst Recommendations
This is a breakdown of recent ratings and target prices for Automatic Data Processing and Kelly Services, as provided by MarketBeat.com.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Automatic Data Processing | 1 | 8 | 3 | 0 | 2.17 |
| Kelly Services | 1 | 1 | 1 | 0 | 2.00 |
Risk and Volatility
Automatic Data Processing has a beta of 0.82, indicating that its stock price is 18% less volatile than the S&P 500. Comparatively, Kelly Services has a beta of 0.87, indicating that its stock price is 13% less volatile than the S&P 500.
Profitability
This table compares Automatic Data Processing and Kelly Services’ net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| Automatic Data Processing | 20.11% | 71.34% | 6.73% |
| Kelly Services | -6.73% | 2.69% | 1.19% |
Institutional and Insider Ownership
80.0% of Automatic Data Processing shares are owned by institutional investors. Comparatively, 76.3% of Kelly Services shares are owned by institutional investors. 0.2% of Automatic Data Processing shares are owned by insiders. Comparatively, 5.4% of Kelly Services shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.
Earnings and Valuation
This table compares Automatic Data Processing and Kelly Services”s revenue, earnings per share and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| Automatic Data Processing | $21.95 billion | 4.75 | $4.41 billion | $10.94 | 23.99 |
| Kelly Services | $4.06 billion | 0.14 | -$254.10 million | ($7.81) | -2.09 |
Automatic Data Processing has higher revenue and earnings than Kelly Services. Kelly Services is trading at a lower price-to-earnings ratio than Automatic Data Processing, indicating that it is currently the more affordable of the two stocks.
Summary
Automatic Data Processing beats Kelly Services on 13 of the 17 factors compared between the two stocks.
About Automatic Data Processing
Automatic Data Processing, Inc. provides cloud-based human capital management solutions worldwide. It operates in two segments, Employer Services and Professional Employer Organization (PEO). The Employer Services segment offers strategic, cloud-based platforms, and human resources (HR) outsourcing solutions. Its offerings include payroll services, benefits administration, talent management, HR management, workforce management, insurance, retirement, and compliance services, as well as integrated HCM solutions. The PEO Services segment provides HR outsourcing solution to businesses through a co-employment model. This segment offers employee benefits, protection and compliance, talent engagement, expertise, comprehensive outsourcing, and recruitment process outsourcing services. Automatic Data Processing, Inc. was founded in 1949 and is headquartered in Roseland, New Jersey.
About Kelly Services
Kelly Services, Inc., together with its subsidiaries, provides workforce solutions to various industries. The company operates through five segments: Professional & Industrial; Science, Engineering & Technology; Education; Outsourcing & Consulting; and International. The Professional & Industrial segment delivers staffing, outcome-based, and permanent placement services providing administrative, accounting, and finance; light industrial; contact center staffing; and other workforce solutions. The Science, Engineering & Technology segment offers staffing, outcome-based, and permanent placement services in the areas of science and clinical research, engineering, technology, and telecommunications specialties. The Education segment provides staffing, permanent placement, and executive search services to pre-K-12 school districts and education organizations. The Outsourcing & Consulting segment offers managed service provider, recruitment process outsourcing, payroll process outsourcing, and executive coaching programs to customers on a global basis that includes its RocketPower brand. The International segment provides staffing, recruitment process outsourcing, and permanent placement services. The company serves customers in the United States, Canada, Mexico, Puerto Rico, France, Switzerland, Portugal, Russia, Italy, rest of Europe, and the Asia-Pacific region. Kelly Services, Inc. was founded in 1946 and is headquartered in Troy, Michigan.
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