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Automatic Data Processing (ADP) Q2 Earnings: What's in Store?

Zacks Equity Research

Automatic Data Processing, Inc. ADP is scheduled to report second-quarter fiscal 2019 results on Jan 30, before market open.

Over the past year, shares of ADP have gained 11.7% against 0.9% fall of the industry it belongs to. The Zacks S&P 500 composite has declined 7.9% in the same time frame.

 

Let's check out how things are shaping up for the announcement.

Top Line to Improve Year Over Year

The Zacks Consensus Estimate for second-quarter fiscal 2019 revenues stands at $3.44 billion, indicating year-over-year growth of 6.2%. The top line is expected to benefit from acquisitions, the company’s Service Alignment Initiative, client migrations, and transformation initiatives. In first-quarter fiscal 2019, total revenues of $3.32 billion increased 8% year over year.

Going by segments, the consensus estimate for PEO Services revenues is pegged at $1.02 billion, indicating year-over-year growth of 8.4%. The consensus mark for Employer Services segment revenues stands at $2.41 billion, indicating year-over-year decline of 1.1%.

Automatic Data Processing, Inc. Revenue (TTM)

 

Automatic Data Processing, Inc. Revenue (TTM) | Automatic Data Processing, Inc. Quote

Earnings Likely to Rise on Tax Reform

The Zacks Consensus Estimate for earnings per share is $1.18, indicating year-over-year growth of 19.2%. Lower effective tax rate (as a result of Tax Cuts and Jobs Act) and improved operating performance are likely to boost ADP’s bottom line.

In first-quarter fiscal 2019, adjusted earnings per share of $1.20 increased 27.6% year over year.

What Our Model Says

Please note that according to the Zacks model, a company with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) has a good chance of beating estimates if it also has a positive Earnings ESP . Zacks Rank #4 (Sell) or 5 (Strong Sell) stocks are best avoided, especially when the company is seeing negative estimate revisions. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter .

ADP has an Earnings ESP of 0.00% and a Zacks Rank #3.

Automatic Data Processing, Inc. Price and EPS Surprise

 

Automatic Data Processing, Inc. Price and EPS Surprise | Automatic Data Processing, Inc. Quote

Stocks to Consider

Here are a few stocks from the broader Zacks Business Services sector that investors may consider as our model shows that these have the right combination of elements to beat on earnings:

Booz Allen Hamilton BAH has an Earnings ESP of +4.22% and a Zacks Rank #2. The company is slated to release third-quarter fiscal 2019 results on Feb 1. You can see the complete list of today’s Zacks #1 Rank stocks here.

First Data FDC has an Earnings ESP of +6.29% and a Zacks Rank #3. The company is scheduled to release third-quarter 2018 results on Feb 7.

IQVIA Holdings IQV has an Earnings ESP of +1.04% and a Zacks Rank #3. The company is expected to report third-quarter 2018 results on Feb 13.

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