Automatic Data Processing (NASDAQ:ADP) Sets New 1-Year High - Should You Buy?

Key Points

• ADP hit a new 52-week high, reaching $311.89, above its previous close of $306.36.
• Quarterly results slightly beat estimates: adjusted earnings were $2.82 per share versus $2.77 expected, while revenue rose 6.1% year over year to $5.49 billion.
• The company raised its quarterly dividend from $1.70 to $1.90 per share, an annualized $7.60 and a 2.5% yield. Analysts’ consensus rating was Hold, with an average price target of $285.

Automatic Data Processing, Inc. (NASDAQ:ADP - Get Free Report) shares reached a new 52-week high during trading on Thursday. The stock traded as high as $311.89 and last traded at $309.2070, with a volume of 86,786 shares traded. The stock had previously closed at $306.36.

Analyst Ratings Changes

Several equities research analysts have recently weighed in on ADP shares. Jefferies Financial Group upped their price target on shares of Automatic Data Processing from $225.00 to $250.00 and gave the stock an "underperform" rating in a research report on Wednesday, October 28th. Stifel Nicolaus upped their price target on Automatic Data Processing from $285.00 to $305.00 and gave the stock a "hold" rating in a research report on Thursday, October 29th. Weiss Ratings upgraded Automatic Data Processing from a "hold (c)" rating to a "hold (c+)" rating in a report on Tuesday, September 22nd. Wells Fargo & Company raised their price objective on Automatic Data Processing from $248.00 to $283.00 and gave the stock an "equal weight" rating in a research report on Thursday, July 30th. Finally, Morgan Stanley boosted their target price on Automatic Data Processing from $286.00 to $288.00 and gave the stock an "equal weight" rating in a research note on Thursday, October 29th. Three investment analysts have rated the stock with a Buy rating, nine have given a Hold rating and two have given a Sell rating to the company. Based on data from MarketBeat, the company presently has an average rating of "Hold" and an average target price of $285.00.

Automatic Data Processing Stock Performance

The company has a current ratio of 1.03, a quick ratio of 1.03 and a debt-to-equity ratio of 0.98. The firm has a 50-day moving average of $280.31 and a 200-day moving average of $242.61. The stock has a market capitalization of $121.64 billion, a price-to-earnings ratio of 27.37, a P/E/G ratio of 2.74 and a beta of 0.77.

Automatic Data Processing (NASDAQ:ADP - Get Free Report) last issued its earnings results on Wednesday, October 28th. The business services provider reported $2.82 earnings per share (EPS) for the quarter, topping analysts' consensus estimates of $2.77 by $0.05. Automatic Data Processing had a return on equity of 77.01% and a net margin of 20.33%. The company had revenue of $5.49 billion during the quarter, compared to analyst estimates of $5.48 billion. During the same quarter last year, the business posted $2.49 EPS. The firm's quarterly revenue was up 6.1% on a year-over-year basis. As a group, sell-side analysts predict that Automatic Data Processing, Inc. will post 12.38 earnings per share for the current year.

Automatic Data Processing Increases Dividend

The company also recently announced a quarterly dividend, which will be paid on Friday, January 1st. Investors of record on Friday, December 11th will be issued a dividend of $1.90 per share. This represents a $7.60 dividend on an annualized basis and a dividend yield of 2.5%. This is a positive change from Automatic Data Processing's previous quarterly dividend of $1.70. The ex-dividend date of this dividend is Friday, December 11th. Automatic Data Processing's dividend payout ratio is presently 60.28%.

Insider Transactions at Automatic Data Processing

In related news, CEO Maria Black sold 29,810 shares of the stock in a transaction that occurred 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 owned 80,624 shares in the company, valued at approximately $22,648,087.84. This represents a 26.99% decrease in their position. The sale was disclosed in a filing with the Securities & Exchange Commission, which can be accessed through this link. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. Also, VP Jonathan Lehberger sold 770 shares of the firm's stock in a transaction that occurred on Wednesday, November 4th. The stock was sold at an average price of $300.35, for a total transaction of $231,269.50. Following the transaction, the vice president directly owned 4,961 shares of the company's stock, valued at $1,490,036.35. This represents a 13.44% decrease in their ownership of the stock. Additional details regarding this sale are available in the official SEC disclosure. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. Insiders have sold 50,207 shares of company stock valued at $14,522,300 over the last quarter. Company insiders own 0.15% of the company's stock.

Institutional Trading of Automatic Data Processing

Hedge funds and other institutional investors have recently made changes to their positions in the business. E Fund Management Hong Kong Co. Ltd. boosted its holdings in Automatic Data Processing by 46.6% in the third quarter. E Fund Management Hong Kong Co. Ltd. now owns 3,345 shares of the business services provider's stock valued at $863,000 after purchasing an additional 1,064 shares during the last quarter. Rathbones Group PLC grew its position in Automatic Data Processing by 22.5% during the 3rd quarter. Rathbones Group PLC now owns 2,964 shares of the business services provider's stock worth $765,000 after purchasing an additional 544 shares during the period. TIAA CREF Individual & Institutional Services LLC raised its stake in shares of Automatic Data Processing by 0.5% during the 3rd quarter. TIAA CREF Individual & Institutional Services LLC now owns 25,029 shares of the business services provider's stock valued at $6,459,000 after buying an additional 123 shares during the last quarter. Saranac Partners Ltd raised its stake in shares of Automatic Data Processing by 98.8% during the 3rd quarter. Saranac Partners Ltd now owns 2,137 shares of the business services provider's stock valued at $551,000 after buying an additional 1,062 shares during the last quarter. Finally, Advisors Asset Management Inc. acquired a new position in shares of Automatic Data Processing in the 3rd quarter valued at about $15,689,000. Institutional investors and hedge funds own 80.03% of the company's stock.

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.

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