Automatic Data Processing, Inc. (NASDAQ:ADP) Given Consensus Recommendation of "Hold" by Analysts

Key Points

• Analysts rate ADP “Hold” overall: Eight of 12 brokers are neutral, with three buys and one sell. The average 12-month price target is $273.50.
• ADP exceeded quarterly expectations, reporting $2.64 in EPS and $5.47 billion in revenue, up 6.8% year over year. The company also declared a quarterly dividend of $1.70 per share, representing a 2.4% yield.
• Key concerns include moderating employment growth and valuation: August private payroll gains of 38,000 missed forecasts, while analysts have warned that much of ADP’s recent momentum may already be reflected in its share price. Recent insider sales were conducted under pre-arranged trading plans.

Shares of Automatic Data Processing, Inc. (NASDAQ:ADP - Get Free Report) have been given a consensus rating of "Hold" by the twelve brokerages that are presently covering the firm, Marketbeat.com reports. One equities research analyst has rated the stock with a sell rating, eight have issued a hold rating and three have issued a buy rating on the company. The average twelve-month target price among brokers that have updated their coverage on the stock in the last year is $273.50.

Several equities research analysts recently commented on the company. UBS Group lifted their price objective on Automatic Data Processing from $260.00 to $270.00 and gave the stock a "neutral" rating in a report on Wednesday, July 22nd. BMO Capital Markets upped their target price on shares of Automatic Data Processing from $248.00 to $305.00 and gave the company a "market perform" rating in a research note on Wednesday, July 29th. Citigroup raised their price target on shares of Automatic Data Processing from $230.00 to $287.00 and gave the company a "neutral" rating in a report on Thursday, July 30th. Cantor Fitzgerald lifted their price target on shares of Automatic Data Processing from $295.00 to $310.00 and gave the stock an "overweight" rating in a research note on Monday, August 3rd. Finally, Wells Fargo & Company lifted their price target on shares of Automatic Data Processing from $248.00 to $283.00 and gave the stock an "equal weight" rating in a research note on Thursday, July 30th.

Key Stories Impacting Automatic Data Processing

Here are the key news stories impacting Automatic Data Processing this week:

• Positive Sentiment: ADP declared a quarterly dividend of $1.70 per share, equivalent to $6.80 annually and a yield of approximately 2.4%. The payment reinforces the company’s appeal to income-focused investors and its long record of annual dividend increases. Dividend announcement article
• Neutral Sentiment: ADP’s August employment report showed private-sector payrolls increased by 38,000, while base pay rose 3.2% and gross pay grew 4.7%. The data highlights ADP’s influence as a labor-market information provider, but also points to a moderating hiring environment. ADP August employment report
• Neutral Sentiment: One valuation analysis described ADP as roughly 1% undervalued based on recent labor-market data, while noting that the stock has underperformed the broader technology sector. The limited valuation discount suggests investors may need stronger earnings growth to drive further upside. ADP valuation analysis
• Negative Sentiment: A Seeking Alpha analysis downgraded ADP, arguing that recent operating and market tailwinds are already reflected in the share price. The view adds valuation pressure as ADP trades at a relatively elevated earnings multiple. ADP downgrade analysis
• Negative Sentiment: CEO Maria Black sold 29,810 shares worth about $8.4 million, reducing her direct ownership by roughly 27%. Vice President Joseph Desilva separately sold 631 shares for approximately $178,000. Both transactions were executed under pre-arranged Rule 10b5-1 plans, making them less significant as discretionary bearish signals, though the sales may still weigh on sentiment. ADP insider sales
• Negative Sentiment: August private payroll growth of 38,000 missed the 47,000 forecast and slowed from 44,000 in July. A weaker hiring backdrop could reduce growth in payroll-processing volumes, although lower employment growth may increase expectations for easier Federal Reserve policy. ADP private payrolls report

Automatic Data Processing Price Performance

Shares of NASDAQ ADP opened at $277.62 on Friday. The firm has a market cap of $110.29 billion, a P/E ratio of 25.38, a PEG ratio of 2.57 and a beta of 0.82. Automatic Data Processing has a twelve month low of $188.16 and a twelve month high of $302.68. The company has a quick ratio of 1.05, a current ratio of 1.05 and a debt-to-equity ratio of 0.82. The company has a 50 day moving average of $262.37 and a 200 day moving average of $230.21.

Automatic Data Processing (NASDAQ:ADP - Get Free Report) last issued its earnings results on Wednesday, July 29th. The business services provider reported $2.64 EPS for the quarter, beating the consensus estimate of $2.59 by $0.05. The business had revenue of $5.47 billion for the quarter, compared to the consensus estimate of $5.44 billion. Automatic Data Processing had a return on equity of 71.34% and a net margin of 20.11%.The company's revenue was up 6.8% compared to the same quarter last year. During the same period last year, the business posted $2.26 EPS. Automatic Data Processing has set its FY 2027 guidance at 12.120-12.340 EPS. As a group, research analysts expect that Automatic Data Processing will post 12.26 EPS for the current fiscal year.

Automatic Data Processing Announces Dividend

The business also recently announced a quarterly dividend, which will be paid on Thursday, October 1st. Investors of record on Friday, September 11th will be issued a $1.70 dividend. The ex-dividend date is Friday, September 11th. This represents a $6.80 annualized dividend and a yield of 2.4%. Automatic Data Processing's dividend payout ratio (DPR) is currently 62.16%.

Insider Activity at Automatic Data Processing

In other Automatic Data Processing news, VP David Kwon sold 798 shares of the business's stock in a transaction on Thursday, August 20th. The shares were sold at an average price of $280.00, for a total transaction of $223,440.00. Following the completion of the sale, the vice president directly owned 13,193 shares in the company, valued at approximately $3,694,040. The trade was a 5.70% decrease in their position. The sale was disclosed in a filing with the Securities & Exchange Commission, which is accessible through this hyperlink. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. Also, CEO Maria Black sold 29,810 shares of the stock in a transaction on Wednesday, September 2nd. The shares were sold at an average price of $280.91, for a total value of $8,373,927.10. Following the transaction, the chief executive officer directly owned 80,624 shares in the company, valued at $22,648,087.84. The trade was a 26.99% decrease in their ownership of the stock. The SEC filing for this sale provides additional information. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. In the last 90 days, insiders sold 33,773 shares of company stock worth $9,450,629. Company insiders own 0.20% of the company's stock.

Institutional Inflows and Outflows

Several institutional investors and hedge funds have recently bought and sold shares of ADP. Brighton Jones LLC boosted its holdings in shares of Automatic Data Processing by 92.1% in the fourth quarter. Brighton Jones LLC now owns 10,026 shares of the business services provider's stock worth $2,935,000 after buying an additional 4,808 shares during the last quarter. Bison Wealth LLC increased its holdings in Automatic Data Processing by 22.8% during the fourth quarter. Bison Wealth LLC now owns 3,664 shares of the business services provider's stock valued at $1,073,000 after buying an additional 681 shares during the last quarter. Schnieders Capital Management LLC. raised its position in Automatic Data Processing by 21.8% in the second quarter. Schnieders Capital Management LLC. now owns 1,259 shares of the business services provider's stock worth $388,000 after acquiring an additional 225 shares during the period. Osterweis Capital Management Inc. bought a new position in Automatic Data Processing in the second quarter worth approximately $108,000. Finally, Diversify Advisory Services LLC boosted its stake in shares of Automatic Data Processing by 17.5% during the 2nd quarter. Diversify Advisory Services LLC now owns 5,477 shares of the business services provider's stock worth $1,641,000 after acquiring an additional 815 shares during the last quarter. 80.03% of the stock is owned by hedge funds and other institutional investors.

About Automatic Data Processing

Automatic Data Processing, Inc (ADP) is a global provider of cloud-based human capital management (HCM) and payroll solutions. Founded in 1949 and headquartered in Roseland, New Jersey, ADP began as a payroll processing company and has evolved into a diversified provider of workforce management, HR, benefits administration, tax and compliance services, and analytics for employers of all sizes.

ADP's product portfolio includes payroll processing and tax filing, time and attendance systems, benefits administration, talent management, and HR outsourcing.

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