Automatic Data Processing (NASDAQ:ADP) Posts Earnings Results, Beats Estimates By $0.05 EPS

Automatic Data Processing (NASDAQ:ADP) posted its quarterly earnings results on Wednesday. The business services provider reported $2.64 EPS for the quarter, topping analysts’ consensus estimates of $2.59 by $0.05, FiscalAI reports. The firm had revenue of $5.47 billion for the quarter, compared to analysts’ expectations of $5.44 billion. Automatic Data Processing had a net margin of 20.12% and a return on equity of 68.82%. The business’s revenue for the quarter was up 6.8% on a year-over-year basis. During the same period in the prior year, the business posted $2.26 earnings per share. 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 Up 5.7%

Shares of NASDAQ:ADP traded up $15.10 during trading hours on Wednesday, hitting $279.27. The company’s stock had a trading volume of 977,148 shares, compared to its average volume of 3,134,194. Automatic Data Processing has a 52 week low of $188.16 and a 52 week high of $315.98. The company has a debt-to-equity ratio of 0.63, a current ratio of 1.04 and a quick ratio of 1.04. The company has a market capitalization of $111.63 billion, a price-to-earnings ratio of 26.05 and a beta of 0.83. The firm’s fifty day moving average price is $233.13 and its 200 day moving average price is $224.26.

Hedge Funds Weigh In On Automatic Data Processing

A number of hedge funds and other institutional investors have recently modified their holdings of ADP. Wellington Management Group LLP increased its holdings in Automatic Data Processing by 8.0% during the fourth quarter. Wellington Management Group LLP now owns 7,374,504 shares of the business services provider’s stock valued at $1,896,944,000 after buying an additional 544,210 shares during the period. Charles Schwab Investment Management Inc. raised its stake in Automatic Data Processing by 1.4% in the fourth quarter. Charles Schwab Investment Management Inc. now owns 2,414,096 shares of the business services provider’s stock worth $621,184,000 after buying an additional 33,701 shares in the last quarter. Amundi lifted its holdings in Automatic Data Processing by 9.2% during the fourth quarter. Amundi now owns 2,375,070 shares of the business services provider’s stock worth $610,940,000 after buying an additional 201,075 shares during the period. First Trust Advisors LP lifted its holdings in Automatic Data Processing by 6.7% during the fourth quarter. First Trust Advisors LP now owns 2,248,504 shares of the business services provider’s stock worth $578,383,000 after buying an additional 140,378 shares during the period. Finally, Fayez Sarofim & Co boosted its position in Automatic Data Processing by 1.4% during the 4th quarter. Fayez Sarofim & Co now owns 1,371,761 shares of the business services provider’s stock valued at $352,858,000 after acquiring an additional 19,185 shares in the last quarter. 80.03% of the stock is currently owned by institutional investors.

Wall Street Analysts Forecast Growth

Several research firms have issued reports on ADP. Stifel Nicolaus boosted their price objective on shares of Automatic Data Processing from $240.00 to $260.00 and gave the company a “hold” rating in a research report on Wednesday, July 8th. Cantor Fitzgerald lifted their price target on shares of Automatic Data Processing from $244.00 to $295.00 and gave the company an “overweight” rating in a research note on Wednesday, July 22nd. Jefferies Financial Group dropped their price objective on Automatic Data Processing from $230.00 to $190.00 in a research note on Thursday, April 30th. Guggenheim restated a “buy” rating and set a $270.00 price objective on shares of Automatic Data Processing in a report on Tuesday, July 21st. Finally, BMO Capital Markets decreased their target price on Automatic Data Processing from $281.00 to $234.00 and set a “market perform” rating for the company in a research report on Tuesday, April 7th. Three analysts have rated the stock with a Buy rating, nine have assigned a Hold rating and one has issued a Sell rating to the company’s stock. Based on data from MarketBeat, the company currently has an average rating of “Hold” and an average target price of $256.00.

More Automatic Data Processing News

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.

Automatic Data Processing Company Profile

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.