Automatic Data Processing, Inc. (NASDAQ:ADP) Second-Quarter Results Just Came Out: Here's What Analysts Are Forecasting For This Year
Investors in Automatic Data Processing, Inc. (NASDAQ:ADP) had a good week, as its shares rose 4.7% to close at US$247 following the release of its second-quarter results. Automatic Data Processing reported in line with analyst predictions, delivering revenues of US$4.7b and statutory earnings per share of US$2.13, suggesting the business is executing well and in line with its plan. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.
View our latest analysis for Automatic Data Processing
Taking into account the latest results, the most recent consensus for Automatic Data Processing from 17 analysts is for revenues of US$19.1b in 2024. If met, it would imply an okay 3.0% increase on its revenue over the past 12 months. Statutory earnings per share are predicted to accumulate 5.4% to US$9.13. In the lead-up to this report, the analysts had been modelling revenues of US$19.1b and earnings per share (EPS) of US$9.12 in 2024. So it's pretty clear that, although the analysts have updated their estimates, there's been no major change in expectations for the business following the latest results.
It will come as no surprise then, to learn that the consensus price target is largely unchanged at US$253. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. There are some variant perceptions on Automatic Data Processing, with the most bullish analyst valuing it at US$280 and the most bearish at US$227 per share. This is a very narrow spread of estimates, implying either that Automatic Data Processing is an easy company to value, or - more likely - the analysts are relying heavily on some key assumptions.
Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. We can infer from the latest estimates that forecasts expect a continuation of Automatic Data Processing'shistorical trends, as the 6.1% annualised revenue growth to the end of 2024 is roughly in line with the 6.1% annual growth over the past five years. Juxtapose this against our data, which suggests that other companies (with analyst coverage) in the industry are forecast to see their revenues grow 6.4% per year. It's clear that while Automatic Data Processing's revenue growth is expected to continue on its current trajectory, it's only expected to grow in line with the industry itself.
The Bottom Line
The most important thing to take away is that there's been no major change in sentiment, with the analysts reconfirming that the business is performing in line with their previous earnings per share estimates. Happily, there were no real changes to revenue forecasts, with the business still expected to grow in line with the overall industry. The consensus price target held steady at US$253, with the latest estimates not enough to have an impact on their price targets.
Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have forecasts for Automatic Data Processing going out to 2026, and you can see them free on our platform here.
You can also view our analysis of Automatic Data Processing's balance sheet, and whether we think Automatic Data Processing is carrying too much debt, for free on our platform here.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
