Automatic Data Processing, Inc. $ADP is Giverny Capital Inc.'s 5th Largest Position

Key Points

• Giverny Capital increased its ADP stake by 56.2% in the second quarter, making the payroll-services provider approximately 5% of its portfolio and its fifth-largest position. Institutional investors collectively own 80.03% of ADP.
• ADP reported quarterly revenue of $5.47 billion and adjusted earnings of $2.64 per share, exceeding analysts’ estimates; revenue rose 6.8% year over year. The company declared a $1.70 quarterly dividend, equal to a 2.4% annualized yield.
• Analysts maintain a largely cautious outlook, with a consensus “Hold” rating and a $273.50 price target, while weaker-than-expected private payroll growth and recent executive share sales could weigh on sentiment.

Giverny Capital Inc. raised its holdings in shares of Automatic Data Processing, Inc. (NASDAQ:ADP - Free Report) by 56.2% in the 2nd quarter, according to the company in its most recent 13F filing with the Securities and Exchange Commission. The firm owned 654,556 shares of the business services provider's stock after acquiring an additional 235,466 shares during the period. Automatic Data Processing makes up about 5.0% of Giverny Capital Inc.'s portfolio, making the stock its 5th biggest position. Giverny Capital Inc. owned about 0.16% of Automatic Data Processing worth $146,588,000 as of its most recent SEC filing.

Several other large investors have also made changes to their positions in ADP. Amundi boosted its holdings in Automatic Data Processing by 2.7% in the second quarter. Amundi now owns 3,116,800 shares of the business services provider's stock valued at $698,006,000 after purchasing an additional 82,798 shares during the last quarter. Groupe la Francaise raised its stake in shares of Automatic Data Processing by 19.0% during the 2nd quarter. Groupe la Francaise now owns 27,077 shares of the business services provider's stock valued at $6,064,000 after buying an additional 4,315 shares during the last quarter. California State Teachers Retirement System lifted its holdings in shares of Automatic Data Processing by 22,166.8% in the 2nd quarter. California State Teachers Retirement System now owns 140,971,822 shares of the business services provider's stock valued at $31,570,640,000 after buying an additional 140,338,719 shares during the period. Tanager Wealth Management LLP acquired a new position in shares of Automatic Data Processing in the 2nd quarter valued at about $209,000. Finally, Greenland Capital Management LP purchased a new stake in shares of Automatic Data Processing in the second quarter worth about $1,542,000. 80.03% of the stock is owned by hedge funds and other institutional investors.

More Automatic Data Processing News

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

Wall Street Analysts Forecast Growth

Several research analysts recently weighed in on ADP shares. Stifel Nicolaus lifted their price target on Automatic Data Processing from $260.00 to $285.00 and gave the company a "hold" rating in a research report on Thursday, July 30th. Citigroup raised their price objective on shares of Automatic Data Processing from $230.00 to $287.00 and gave the stock a "neutral" rating in a research note on Thursday, July 30th. Morgan Stanley increased their price target on shares of Automatic Data Processing from $240.00 to $286.00 and gave the stock an "equal weight" rating in a report on Thursday, July 30th. TD Cowen lifted their price objective on shares of Automatic Data Processing from $216.00 to $223.00 and gave the company a "hold" rating in a report on Monday, July 6th. Finally, Cantor Fitzgerald increased their target price 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. Three investment analysts have rated the stock with a Buy rating, eight have given a Hold rating and one has issued a Sell rating to the stock. According to MarketBeat, the stock presently has a consensus rating of "Hold" and a consensus target price of $273.50.

Automatic Data Processing Stock Performance

ADP opened at $277.62 on Monday. The firm's fifty day simple moving average is $262.37 and its two-hundred day simple moving average is $230.34. Automatic Data Processing, Inc. has a 52-week low of $188.16 and a 52-week high of $302.68. The company has a market cap of $110.29 billion, a price-to-earnings ratio of 25.38, a PEG ratio of 2.52 and a beta of 0.82. The company has a quick ratio of 1.05, a current ratio of 1.05 and a debt-to-equity ratio of 0.82.

Automatic Data Processing (NASDAQ:ADP - Get Free Report) last released its earnings results on Wednesday, July 29th. The business services provider reported $2.64 EPS for the quarter, topping analysts' consensus estimates of $2.59 by $0.05. Automatic Data Processing had a net margin of 20.11% and a return on equity of 71.34%. The business had revenue of $5.47 billion during the quarter, compared to analysts' expectations of $5.44 billion. During the same quarter in the previous year, the company earned $2.26 earnings per share. The company's quarterly revenue was up 6.8% on a year-over-year basis. Automatic Data Processing has set its FY 2027 guidance at 12.120-12.340 EPS. Equities analysts anticipate that Automatic Data Processing, Inc. will post 12.26 earnings per share for the current fiscal year.

Automatic Data Processing Announces Dividend

The company also recently disclosed a quarterly dividend, which will be paid on Thursday, October 1st. Shareholders of record on Friday, September 11th will be paid a dividend of $1.70 per share. This represents a $6.80 annualized dividend and a yield of 2.4%. The ex-dividend date is Friday, September 11th. Automatic Data Processing's payout ratio is 62.16%.

Insider Transactions at Automatic Data Processing

In other news, VP Joseph Desilva sold 631 shares of the firm's stock in a transaction that occurred on Thursday, September 3rd. The stock was sold at an average price of $282.87, for a total value of $178,490.97. Following the transaction, the vice president owned 18,824 shares in the company, valued at $5,324,744.88. This trade represents a 3.24% decrease in their ownership of the stock. The transaction was disclosed in a legal filing with the SEC, which is available through this link. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. Also, CEO Maria Black sold 29,810 shares of Automatic Data Processing stock in a transaction that occurred on Wednesday, September 2nd. The stock was sold at an average price of $280.91, for a total value of $8,373,927.10. Following the completion of the sale, the chief executive officer directly owned 80,624 shares in the company, valued at $22,648,087.84. This represents a 26.99% decrease in their ownership of the stock. The disclosure for this sale is available in the SEC filing. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. Insiders sold 33,773 shares of company stock worth $9,450,629 over the last three months. 0.20% of the stock is owned by insiders.

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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