Automatic Data Processing (NASDAQ:ADP) Issues Earnings Results

Automatic Data Processing (NASDAQ:ADP) released its quarterly earnings results on Wednesday. The business services provider reported $2.64 EPS for the quarter, topping the consensus estimate of $2.59 by $0.05, FiscalAI reports. Automatic Data Processing had a return on equity of 68.82% and a net margin of 20.12%.The business had revenue of $5.47 billion during the quarter, compared to analyst estimates of $5.44 billion. During the same period last year, the business posted $2.26 earnings per share. The company’s quarterly revenue was up 6.8% on a year-over-year basis. Automatic Data Processing updated its FY 2027 guidance to 12.120-12.340 EPS.

Here are the key takeaways from Automatic Data Processing’s conference call:

• Strong fiscal 2026 performance: ADP reported fourth-quarter revenue growth of 7%, adjusted EBIT margin expansion of 140 basis points, and adjusted EPS growth of 17%. Full-year results also landed at the high end of updated guidance, with $21.9 billion in revenue and 11% adjusted EPS growth.
• Employer Services bookings rose 6% to more than $2.2 billion, while retention remained near record levels at 92.1% and client satisfaction reached a third consecutive annual record. Management cited broad-based demand across small business, enterprise, international, outsourcing, and retirement offerings.
• ADP highlighted rapid adoption of its AI capabilities: ADP Assist is available to nearly all of its more than 1.1 million clients, while its Zone platform expanded to 48% of the service workforce and contributed to lower contacts per client and improved productivity. Management expects further efficiency and margin benefits as deployment expands.
• For fiscal 2027, ADP guided to consolidated revenue growth of 5%–6%, adjusted EBIT margin expansion of 70–90 basis points, and adjusted EPS growth of 9%–11%. The outlook assumes broadly stable economic conditions, flat-to-1% U.S. pays-per-control growth, a slight foreign-exchange headwind, and continued growth in client funds interest revenue.
• PEO margins contracted in fiscal 2026 and are expected to decline further in fiscal 2027 as zero-margin pass-through revenue grows faster than total PEO revenue, with higher healthcare, workers’ compensation, and selling expenses also weighing on profitability. Employer Services retention is likewise expected to decline modestly by 10–30 basis points from the near-record 92.1% level.

Automatic Data Processing Stock Performance

NASDAQ ADP traded up $16.32 during trading hours on Wednesday, hitting $280.49. The company had a trading volume of 1,031,407 shares, compared to its average volume of 3,134,926. The company has a debt-to-equity ratio of 0.63, a quick ratio of 1.04 and a current ratio of 1.04. Automatic Data Processing has a 1-year low of $188.16 and a 1-year high of $315.98. The company has a market cap of $112.12 billion, a PE ratio of 26.10 and a beta of 0.83. The business has a 50 day moving average of $233.13 and a 200-day moving average of $224.26.

Analyst Upgrades and Downgrades

Several equities research analysts recently issued reports on ADP shares. Citigroup cut their price objective on Automatic Data Processing from $265.00 to $230.00 and set a “neutral” rating on the stock in a report on Thursday, April 30th. TD Cowen increased their price target on shares of Automatic Data Processing from $216.00 to $223.00 and gave the stock a “hold” rating in a research report on Monday, July 6th. Stifel Nicolaus boosted their price target on shares of Automatic Data Processing from $240.00 to $260.00 and gave the stock a “hold” rating in a research note on Wednesday, July 8th. Mizuho cut their price target on Automatic Data Processing from $332.00 to $305.00 in a report on Thursday, April 30th. Finally, BMO Capital Markets decreased their price objective on Automatic Data Processing from $281.00 to $234.00 and set a “market perform” rating for the company in a research note on Tuesday, April 7th. Three investment analysts have rated the stock with a Buy rating, nine have assigned a Hold rating and one has assigned a Sell rating to the stock. According to data from MarketBeat, the stock currently has an average rating of “Hold” and a consensus target price of $256.00.

Automatic Data Processing News Roundup

Here are the key news stories impacting Automatic Data Processing this week:

• Positive Sentiment: Earnings and revenue exceeded estimates: ADP reported fiscal Q4 adjusted earnings of $2.64 per share, ahead of the $2.59 consensus and up from $2.26 a year earlier. Revenue increased 6.8% year over year to $5.47 billion, also topping expectations of $5.44 billion. Automatic Data Processing Tops Q4 Earnings and Revenue Estimates
• Positive Sentiment: Growth continued across key businesses: Management said both employer services and human resources outsourcing produced growth, and expects revenue and earnings to continue rising in fiscal 2027. ADP Targets More Gains Ahead After Quarterly Growth
• Positive Sentiment: Fiscal 2027 outlook is broadly in line with expectations: ADP projected earnings of $12.12–$12.34 per share versus a $12.19 consensus estimate, and revenue of $23.0–$23.3 billion versus expectations of $23.1 billion. The midpoint implies continued growth, though the guidance was not materially above forecasts. ADP Reports Fourth Quarter and Fiscal 2026 Results
• Neutral Sentiment: ADP’s preliminary employment report showed U.S. private employers adding an average of 15,000 jobs per week for the four weeks ended July 11. A cooling labor market could eventually weigh on payroll volumes, but the report is not a direct measure of ADP’s financial performance. ADP National Employment Report Preliminary Estimate
• Negative Sentiment: Potential overhangs include recent insider selling and several analyst price targets below the stock’s current trading level, suggesting some investors view the shares as fully valued after the advance.

Hedge Funds Weigh In On Automatic Data Processing

Several institutional investors have recently added to or reduced their stakes in the stock. Imprint Wealth LLC purchased a new stake in shares of Automatic Data Processing during the 3rd quarter worth $25,000. Prosperity Bancshares Inc acquired a new position in shares of Automatic Data Processing during the 4th quarter worth approximately $33,000. Wilkerson Advisory Group LLC acquired a new position in shares of Automatic Data Processing in the fourth quarter worth $36,000. Kemnay Advisory Services Inc. acquired a new stake in shares of Automatic Data Processing during the fourth quarter valued at $41,000. Finally, Swiss RE Ltd. purchased a new stake in Automatic Data Processing during the 4th quarter worth about $43,000. Institutional investors and hedge funds own 80.03% of the company’s stock.

About Automatic Data Processing

Automatic Data Processing, Inc (ADP) is a global provider of cloud-based human capital management (HCM) and payroll solutions. Founded in 1949 and headquartered in Roseland, New Jersey, ADP began as a payroll processing company and has evolved into a diversified provider of workforce management, HR, benefits administration, tax and compliance services, and analytics for employers of all sizes.

ADP’s product portfolio includes payroll processing and tax filing, time and attendance systems, benefits administration, talent management, and HR outsourcing.