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What Awaits Automatic Data Processing (ADP) in Q4 Earnings?

Zacks Equity Research

Automatic Data Processing, Inc. ADP is scheduled to report fourth-quarter fiscal 2019 results on Jul 31, before market open.

So far this year, shares of ADP have gained 29.1% compared with 32.3% rise of the industry it belongs to and 19.4% increase of the Zacks S&P 500 composite.

 

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

Top Line to Improve Year Over Year

ADP’s top line is expected to benefit from acquisitions, continued strong retention and business from New Business Bookings, which is likely to be partially offset by foreign currency movements.The Zacks Consensus Estimate for fourth-quarter fiscal 2019 revenues stands at $3.50 billion, indicating growth of 5.6% from the year-ago reported figure. In third-quarter fiscal 2019, total revenues of $3.85 billion increased 4% year over year.

Going by segments, the consensus estimate for PEO Services revenues is pegged at $1.06 billion, indicating year-over-year growth of 8.6%. The expected growth is likely to be driven by increase in the average number of worksite employees.

The consensus mark for Employer Services segment revenues stands at $2.43 billion, indicating decline of 2.6% from the year-ago period reported figure. The expected decline is likely to be due to unfavorable foreign currency movements, which are likely to be partially offset by contributions from new business started from New Business Bookings, solid retention, acquisitions and interest earned on funds held for clients.

Bottom Line to Rise as Well

ADP’s bottom line is expected to benefit from continued strength in margin performance, lower adjusted effective tax rate and fewer shares outstanding.The Zacks Consensus Estimate for fourth-quarter fiscal 2019 earnings per share is pegged at $1.13, indicating growth of 22.8% year over year. In third-quarter fiscal 2019, adjusted earnings per share of $1.77 increased 13% year over year.

What Our Model Says

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 a Zacks Rank #4 and an Earnings ESP of 0.00%.

Automatic Data Processing, Inc. Price and EPS Surprise

 

Automatic Data Processing, Inc. Price and EPS Surprise

Automatic Data Processing, Inc. price-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 second-quarter 2019 earnings:

Clean Harbors CLH has an Earnings ESP of +3.23% and a Zacks Rank #3. The company is slated to report results on Jul 31. You can see the complete list of today’s Zacks #1 Rank stocks here.

Green Dot GDOT has an Earnings ESP of +0.89% and a Zacks Rank #3. The company is slated to release results on Aug 7.

Verisk VRSK has an Earnings ESP of +0.10% and a Zacks Rank #3.  The company is slated to report results on Jul 30.

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Verisk Analytics, Inc. (VRSK) : Free Stock Analysis Report
 
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