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ADP Q1 Earnings Beat on Recurring Revenues, Strong Clientele

Automatic Data Processing, Inc.’s ADP first-quarter fiscal 2024 earnings beat failed to impress the market as the shares declined 1% since the earnings release on Oct 25.

The company reported quarterly adjusted earnings per share of $2.08, which beat the consensus estimate by 2.5% and grew 11.8% year over year. Adjusted EBIT increased 7% from the year-ago fiscal quarter’s reading to $1.1 billion. Adjusted EBIT margin expanded 10 basis points to 24.2%.

Automatic Data Processing, Inc. Price, Consensus and EPS Surprise

Automatic Data Processing, Inc. Price, Consensus and EPS Surprise
Automatic Data Processing, Inc. Price, Consensus and EPS Surprise

Automatic Data Processing, Inc. price-consensus-eps-surprise-chart | Automatic Data Processing, Inc. Quote

The impressive bottom-line performance was aided by healthy demand for the company’s innovative and mission-critical HCM solutions that serve more than one million diverse clients across the world and a highly recurring revenue business model.

Employer Services’ revenues in the reported quarter increased 9% year over year on a reported and 8% on an organic constant-currency basis to $2.84 billion. This compares to our estimate of $3.02 billion. Pays per control increased 2% year over year.

PEO Services’ revenues were up 3% year over year to $1.47 billion but missed our estimate of $1.48 billion. Average worksite employees paid by PEO Services were 717,000, up 2% from the year-ago fiscal quarter’s figures.

Interest on funds held for clients increased 43% to $201.7 million and exceeded our estimated $201.6 million. ADP’s average client funds balance increased 6% to $31.1 billion. Average interest yield on client funds expanded 70 basis points to 2.6%.

Currently, ADP carries a Zacks Rank #3 (Hold).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Recent Earnings Snapshots

The Interpublic Group of Companies, Inc.’s IPG third-quarter 2023 earnings and revenues missed the Zacks Consensus Estimate.

IPG’s adjusted earnings were 70 cents per share, which lagged the consensus estimate by 6.7% but increased 11.1% on a year-over-year basis. Net revenues of $2.31 billion missed the consensus estimate by 3.3%. In the year-ago quarter, IPG’s net revenues were $2.3 billion. Total revenues of $2.68 billion increased 1.5% year over year.

Equifax Inc. EFX reported lower-than-expected third-quarter 2023 results. Adjusted earnings (excluding 45 cents from non-recurring items) were $1.76 per share, missing the Zacks Consensus Estimate by 1.1% but increasing 1.7% from the year-ago figure.

EFX’s total revenues of $1.32 billion missed the consensus estimate by 0.7% and increased 6% from the year-ago figure on a reported basis and 6.5% on a local-currency basis.

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Automatic Data Processing, Inc. (ADP) : Free Stock Analysis Report

Interpublic Group of Companies, Inc. (The) (IPG) : Free Stock Analysis Report

Equifax, Inc. (EFX) : Free Stock Analysis Report

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