Contrasting Automatic Data Processing (NASDAQ:ADP) & Insperity (NYSE:NSP)

Automatic Data Processing (NASDAQ:ADP) and Insperity (NYSE:NSP) are both industrials companies, but which is the superior stock? We will contrast the two businesses based on the strength of their valuation, analyst recommendations, dividends, earnings, profitability, risk and institutional ownership.

Insider and Institutional Ownership

80.0% of Automatic Data Processing shares are held by institutional investors. Comparatively, 93.4% of Insperity shares are held by institutional investors. 0.2% of Automatic Data Processing shares are held by insiders. Comparatively, 5.8% of Insperity shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Valuation & Earnings

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Automatic Data Processing	$21.95 billion	4.65	$4.41 billion	$10.94	23.55
Insperity	$6.81 billion	0.26	-$7.00 million	($0.43)	-107.76

Automatic Data Processing has higher revenue and earnings than Insperity. Insperity 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.

Analyst Recommendations

This is a breakdown of current ratings and recommmendations for Automatic Data Processing and Insperity, 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
Insperity	2	2	1	0	1.80

Automatic Data Processing currently has a consensus target price of $273.50, indicating a potential upside of 6.14%. Insperity has a consensus target price of $53.33, indicating a potential upside of 15.10%. Given Insperity’s higher probable upside, analysts plainly believe Insperity is more favorable than Automatic Data Processing.

Volatility & Risk

Automatic Data Processing has a beta of 0.83, meaning that its share price is 17% less volatile than the S&P 500. Comparatively, Insperity has a beta of 0.54, meaning that its share price is 46% less volatile than the S&P 500.

Dividends

Automatic Data Processing pays an annual dividend of $6.80 per share and has a dividend yield of 2.6%. Insperity pays an annual dividend of $2.40 per share and has a dividend yield of 5.2%. Automatic Data Processing pays out 62.2% of its earnings in the form of a dividend. Insperity pays out -558.1% 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 and Insperity has raised its dividend for 14 consecutive years. Insperity is clearly the better dividend stock, given its higher yield and lower payout ratio.

Profitability

This table compares Automatic Data Processing and Insperity’s 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%
Insperity	-0.23%	-19.99%	-0.60%

Summary

Automatic Data Processing beats Insperity on 12 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 Insperity

Insperity, Inc. engages in the provision of human resources (HR) and business solutions to improve business performance for small and medium-sized businesses primarily in the United States. It offers its HR services through its workforce optimization and workforce synchronization solutions that include a range of human resources functions, such as payroll and employment administration, employee benefits, workers' compensation, government compliance, performance management, and training and development services. The company also provides Insperity Premier, a cloud-based human capital management platform that offers professional employer organization HR outsourcing solutions to its clients; people management services; and employer liability management services, as well as solutions for middle market. In addition, it offers MarketPlace, an e-commerce portal that offers a range of products and services; and Workforce Acceleration, a human capital management and payroll services solution; integrated payroll; benefits administration; HR administration and employee onboarding; time and attendance; performance management; reporting and analytics; recruiting; employment screening; retirement; and insurance services. The company was formerly known as Administaff, Inc. and changed its name to Insperity, Inc. in March 2011. Insperity, Inc. was founded in 1986 and is headquartered in Kingwood, Texas.