Wolfe Upgrades ADP Rating on Small Business Revenue Exposure

🌥️Trending News

Wolfe Research has recently upgraded Automatic Data Processing ($NASDAQ:ADP) (ADP) from “in-line” to “outperform”, citing the company’s strong revenue exposure to small businesses. ADP is a leading global technology company providing comprehensive human capital management solutions to employers around the world. It offers cloud-based human resources, payroll and tax, benefits administration, and time and attendance management services. The company also provides various services such as strategic human resource consulting, employment law compliance assistance, and analytics and decision support services.

Wolfe’s upgrade is based on its observation that ADP has a very strong revenue exposure to small businesses. This is significantly higher than the other major players in this market, who have a much lower revenue exposure to small businesses. Wolfe also noted that the company’s focus on small businesses is likely to benefit from the accelerating US economic recovery in 2021.

Earnings

Wolfe recently upgraded its rating for AUTOMATIC DATA PROCESSING due to its increased exposure to small business revenue. AUTOMATIC DATA PROCESSING’s total revenue for fiscal year 2024 Q1 ending on September 30 2021 was recorded at 3731.2M USD, and net income was reported at 700.5M USD. This is a 8.4% decrease in total revenue and 10.1% decrease in net income compared to the same period last year. Despite the decreases, AUTOMATIC DATA PROCESSING has seen an increase in total revenue from 3731.2M USD to 4310.7M USD in the last 3 years, leading to Wolfe’s upgrade in its rating.

About the Company

Income Snapshot

Below shows the total revenue, net income and net margin for ADP. More…

Cash Flow Snapshot

Below shows the cash from operations, investing and financing for ADP. More…

Balance Sheet Snapshot

Below shows the total assets, liabilities and book value per share for ADP. More…

Key Ratios Snapshot

Some of the financial key ratios for ADP are shown below. More…

Stock Price

Wolfe Research upgraded its rating of AUTOMATIC DATA PROCESSING (ADP) stock on Thursday, citing the company’s strong exposure to small business revenue. The stock opened at $234.0 and closed at $233.7, up 0.5% from its previous closing price of $232.5. The analyst believes that ADP’s exposure to the small business market, which is expected to pick up in the near future, will help ADP’s stock perform well in the long run. The analyst also pointed out that ADP has been able to successfully transition its services to cloud computing and other digital platforms. Live Quote…

Analysis

We at GoodWhale have conducted an analysis of Automatic Data Processing’s fundamentals. Based on the Star Chart, we can see that Automatic Data Processing has a high health score of 8/10 with regard to its cashflows and debt, indicating it is capable to sustain future operations in times of crisis. Furthermore, it is strong in profitability, and medium in asset, dividend, and growth. As such, we classify Automatic Data Processing as a ‘gorilla’, a type of company we conclude that achieved stable and high revenue or earning growth due to its strong competitive advantage. Investors who are looking for companies that offer secure cashflows and debt levels, along with excellent profitability should consider investing in Automatic Data Processing. Furthermore, those who are looking for companies that offer sustainable growth and dividend returns should also consider Automatic Data Processing. This is due to its strong competitive advantage, and its ability to sustain operations during times of crisis. More…

Peers

The competition in the payroll processing and human resources management industry is fierce. Automatic Data Processing Inc (ADP) is the largest player in the industry, with a market share of over 26%. Its closest competitors are Paychex Inc, Insperity Inc, and Trucept Inc, which have market shares of around 10%, 7%, and 6%, respectively. While all four companies offer similar services, ADP has a clear advantage in terms of size and scale.

– Paychex Inc ($NASDAQ:PAYX)

Paychex Inc is a human resource consulting and payroll processing company headquartered in Rochester, New York. As of May 2019, Paychex serves over 650,000 small and medium sized businesses. The company has a market cap of $40.17B as of 2022 and a Return on Equity of 38.35%. Paychex was founded in 1971 by B. Thomas Golisano and Robert C.risk.

– Insperity Inc ($NYSE:NSP)

Inspriety Inc is a business services provider located in the United States. The company offers a suite of human resources and business solutions designed to help businesses improve their productivity and bottom line. Inspriety’s services include payroll processing, benefits administration, and talent management. The company serves over 100,000 businesses of all sizes across the United States.

– Trucept Inc ($OTCPK:TREP)

Trucept Inc is a publicly traded company with a market capitalization of 221.15 thousand as of 2022. The company has a return on equity of 42.12%. Trucept Inc is a provider of cloud-based software solutions for small and medium-sized businesses. The company’s software solutions include accounting, human resources, customer relationship management, and e-commerce.

Summary

Wolfe Research recently upgraded their rating on Automatic Data Processing (ADP), citing the company’s potential to benefit from revenue exposure to small businesses. ADP provides cloud-based, digital solutions for businesses of all sizes, including human capital management, payroll services, and time and attendance tracking. By investing in ADP, investors have the potential to benefit from increased demand for cloud-based solutions as more businesses opt for digital services. ADP is uniquely positioned to capitalize on this growth and Wolfe Research believes they will experience strong revenue growth in the near future.