Automatic Data Processing (NASDAQ:ADP) and Fidelity National Information Servcs (NYSE:FIS) are both large-cap business services companies, but which is the better business? We will contrast the two companies based on the strength of their valuation, risk, dividends, analyst recommendations, profitability, institutional ownership and earnings.
Dividends
Automatic Data Processing pays an annual dividend of $3.64 per share and has a dividend yield of 2.6%. Fidelity National Information Servcs pays an annual dividend of $1.40 per share and has a dividend yield of 1.0%. Automatic Data Processing pays out 61.5% of its earnings in the form of a dividend. Fidelity National Information Servcs pays out 25.0% 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 increased its dividend for 1 consecutive years and Fidelity National Information Servcs has increased its dividend for 1 consecutive years.
Valuation & Earnings
This table compares Automatic Data Processing and Fidelity National Information Servcs' top-line revenue, earnings per share and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio |
|---|
| Automatic Data Processing | $14.59 billion | 4.11 | $2.47 billion | $5.92 | 23.58 |
| Fidelity National Information Servcs | $10.33 billion | 8.62 | $298 million | $5.61 | 25.64 |
Automatic Data Processing has higher revenue and earnings than Fidelity National Information Servcs. Automatic Data Processing is trading at a lower price-to-earnings ratio than Fidelity National Information Servcs, indicating that it is currently the more affordable of the two stocks.
Analyst Ratings
This is a breakdown of recent ratings and price targets for Automatic Data Processing and Fidelity National Information Servcs, as provided by MarketBeat.com.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score |
|---|
| Automatic Data Processing | 3 | 9 | 3 | 0 | 2.00 |
| Fidelity National Information Servcs | 0 | 3 | 22 | 1 | 2.92 |
Automatic Data Processing presently has a consensus price target of $158.6364, suggesting a potential upside of 13.65%. Fidelity National Information Servcs has a consensus price target of $161.16, suggesting a potential upside of 12.06%. Given Automatic Data Processing's higher possible upside, research analysts clearly believe Automatic Data Processing is more favorable than Fidelity National Information Servcs.
Risk & Volatility
Automatic Data Processing has a beta of 0.75, meaning that its share price is 25% less volatile than the S&P 500. Comparatively, Fidelity National Information Servcs has a beta of 0.68, meaning that its share price is 32% less volatile than the S&P 500.
Institutional & Insider Ownership
79.8% of Automatic Data Processing shares are held by institutional investors. Comparatively, 90.0% of Fidelity National Information Servcs shares are held by institutional investors. 0.3% of Automatic Data Processing shares are held by insiders. Comparatively, 0.7% of Fidelity National Information Servcs shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.
Profitability
This table compares Automatic Data Processing and Fidelity National Information Servcs' net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets |
|---|
| Automatic Data Processing | 16.91% | 46.66% | 6.05% |
| Fidelity National Information Servcs | 0.25% | 6.60% | 3.91% |
Summary
Automatic Data Processing beats Fidelity National Information Servcs on 9 of the 17 factors compared between the two stocks.
