New Jersey-based Automatic Data Processing, Inc. (ADP) provides cloud-based human capital management (HCM) solutions. Valued at a market cap of almost $123.7 billion, the company offers payroll, talent management, Human Resources and benefits administration, and time and attendance management services to employers around the world.
Companies valued at over $10 billion are typically classified as “large-cap stocks,” and ADP fits the label perfectly. As a global leader in HCM solutions, the company serves over one million clients in a wide range of industries, including restaurant and hospitality, manufacturing, professional and technical services, construction, financial services, retail, healthcare, government, and educational institutions.
ADP is currently trading 2.5% below its 52-week high of $309.63, reached on Nov. 27. Shares of this tech company gained 11.7% over the past three months, lagging behind the broader Nasdaq Composite’s ($NASX) 15% gains during the same time frame.
Moreover, in the longer term, ADP has gained 29.5% on a YTD basis, underperforming NASX’s 31.2% returns. Shares of ADP are up 30.3% over the past 52 weeks, lagging behind NASX’s 38.4% gains over the same time frame.
Yet, ADP stock has been trading above its 200-day and 50-day moving average since mid-July.
On Oct. 30, ADP shares rose 1.7% following its robust Q1 earnings release. The company’s revenue increased 7% annually to $4.83 billion, and its adjusted earnings of $2.33 per share improved 12% from the year-ago quarter. ADP benefited from solid new business bookings growth, strong client revenue retention, and higher client funds interest revenue.
ADP has surpassed its rival, Paychex, Inc. (PAYX), which gained 15.7% over the past 52 weeks and nearly 19.6% on a YTD basis.
Given ADP’s recent relative underperformance, analysts remain cautious about its prospects. The stock has a consensus rating of “Hold” from the 20 analysts covering it, and as of writing, the company is trading above its mean price target of $294.70
