Reviewing Automatic Data Processing (NASDAQ:ADP) & Science Applications International (NASDAQ:SAIC)

Science Applications International (NASDAQ:SAIC) and Automatic Data Processing (NASDAQ:ADP) are both industrials companies, but which is the better business? We will compare the two companies based on the strength of their earnings, risk, institutional ownership, profitability, valuation, analyst recommendations and dividends.

Earnings and Valuation

This table compares Science Applications International and Automatic Data Processing”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Science Applications International	$7.40 billion	0.86	$358.00 million	$8.55	17.75
Automatic Data Processing	$22.26 billion	5.39	$4.41 billion	$11.28	26.94

Automatic Data Processing has higher revenue and earnings than Science Applications International. Science Applications International 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.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Science Applications International	5.13%	34.68%	9.45%
Automatic Data Processing	20.33%	77.01%	6.67%

Analyst Recommendations

This is a breakdown of recent ratings for Science Applications International and Automatic Data Processing, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Science Applications International	1	8	2	0	2.09
Automatic Data Processing	2	9	3	0	2.07

Science Applications International currently has a consensus target price of $125.22, indicating a potential downside of 17.51%. Automatic Data Processing has a consensus target price of $285.00, indicating a potential downside of 6.22%. Given Automatic Data Processing’s higher probable upside, analysts clearly believe Automatic Data Processing is more favorable than Science Applications International.

Volatility & Risk

Science Applications International has a beta of 0.27, meaning that its share price is 73% less volatile than the S&P 500. Comparatively, Automatic Data Processing has a beta of 0.77, meaning that its share price is 23% less volatile than the S&P 500.

Institutional & Insider Ownership

76.0% of Science Applications International shares are held by institutional investors. Comparatively, 80.0% of Automatic Data Processing shares are held by institutional investors. 0.7% of Science Applications International shares are held by company insiders. Comparatively, 0.2% of Automatic Data Processing shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.

Dividends

Science Applications International pays an annual dividend of $1.48 per share and has a dividend yield of 1.0%. Automatic Data Processing pays an annual dividend of $6.80 per share and has a dividend yield of 2.2%. Science Applications International pays out 17.3% of its earnings in the form of a dividend. Automatic Data Processing pays out 60.3% 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.

Summary

Automatic Data Processing beats Science Applications International on 13 of the 17 factors compared between the two stocks.

About Science Applications International

Science Applications International Corporation (SAIC) provides technology, engineering, and mission support services primarily to the U.S. federal government. Its customers include defense, intelligence, space, and civilian agencies. The company’s services include systems integration, enterprise information technology, cloud computing, cybersecurity, data analytics, artificial intelligence, engineering, logistics, and training. SAIC also supports the development, modernization, and operation of government systems and missions.

About Automatic Data Processing

Automatic Data Processing, Inc. (ADP) provides payroll processing and human resources technology and services to businesses of varying sizes. Its offerings include payroll administration, tax filing, benefits administration, workforce management, talent management, and human capital management software. ADP also provides services such as compliance support and professional employer organization solutions, which help businesses manage employment responsibilities. Its products combine software with payroll and HR services to support organizations’ workforce operations.