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

Automatic Data Processing (NASDAQ:ADP) posted its 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. The business had revenue of $5.47 billion during the quarter, compared to analysts’ expectations of $5.44 billion. Automatic Data Processing had a return on equity of 68.82% and a net margin of 20.12%.The firm’s revenue was up 6.8% on a year-over-year basis. During the same period in the previous year, the business earned $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 Price Performance

Shares of ADP stock traded down $13.87 during trading hours on Thursday, hitting $259.50. 307,374 shares of the company’s stock were exchanged, compared to its average volume of 3,139,845. The company has a market capitalization of $103.73 billion, a PE ratio of 24.24 and a beta of 0.83. The company has a current ratio of 1.04, a quick ratio of 1.04 and a debt-to-equity ratio of 0.63. Automatic Data Processing has a 12-month low of $188.16 and a 12-month high of $315.26. The business’s 50 day simple moving average is $234.18 and its 200-day simple moving average is $224.32.

Analyst Upgrades and Downgrades

ADP has been the subject of a number of research analyst reports. Wells Fargo & Company lifted their price target on Automatic Data Processing from $214.00 to $248.00 and gave the company an “equal weight” rating in a research report on Thursday, July 9th. BMO Capital Markets upped their price objective on shares of Automatic Data Processing from $248.00 to $305.00 and gave the stock a “market perform” rating in a research report on Wednesday. Argus lowered their target price on shares of Automatic Data Processing from $300.00 to $240.00 and set a “buy” rating on the stock in a research note on Tuesday, May 5th. Weiss Ratings upgraded shares of Automatic Data Processing from a “hold (c-)” rating to a “hold (c)” rating in a research report on Tuesday, July 21st. Finally, Robert W. Baird cut their price target on shares of Automatic Data Processing from $300.00 to $270.00 in a research note on Thursday, April 30th. Three research analysts have rated the stock with a Buy rating, nine have issued a Hold rating and one has issued a Sell rating to the company. Based on data from MarketBeat, the stock has an average rating of “Hold” and a consensus target price of $263.21.

Hedge Funds Weigh In On Automatic Data Processing

Several institutional investors and hedge funds have recently made changes to their positions in the business. T. Rowe Price Investment Management Inc. lifted its stake in shares of Automatic Data Processing by 106.4% in the 4th quarter. T. Rowe Price Investment Management Inc. now owns 7,355 shares of the business services provider’s stock valued at $1,892,000 after acquiring an additional 3,791 shares during the last quarter. Axxcess Wealth Management LLC grew its position in Automatic Data Processing by 8.3% during the 4th quarter. Axxcess Wealth Management LLC now owns 35,790 shares of the business services provider’s stock worth $9,206,000 after acquiring an additional 2,737 shares during the last quarter. Corient Private Wealth LLC increased its stake in Automatic Data Processing by 4.4% in the 4th quarter. Corient Private Wealth LLC now owns 417,189 shares of the business services provider’s stock worth $106,805,000 after purchasing an additional 17,732 shares during the period. Strive Financial Group LLC purchased a new position in Automatic Data Processing in the 4th quarter worth approximately $1,741,000. Finally, Ameriflex Group Inc. lifted its position in Automatic Data Processing by 583.3% in the fourth quarter. Ameriflex Group Inc. now owns 205 shares of the business services provider’s stock valued at $53,000 after purchasing an additional 175 shares during the last quarter. Institutional investors own 80.03% of the company’s stock.

More Automatic Data Processing News

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

• Positive Sentiment: Quarterly results exceeded expectations. ADP reported fiscal Q4 adjusted earnings of $2.64 per share versus the $2.59 consensus estimate, while revenue reached $5.47 billion, ahead of the $5.44 billion forecast. Revenue increased 6.8% year over year, and EPS rose from $2.26 in the prior-year quarter. Broad-based growth, productivity gains and higher client-funds income supported margins and profits. ADP Q4 Earnings Beat Estimates on Revenue Growth, Margin Gains
• Positive Sentiment: Management expects growth to continue in fiscal 2027. ADP forecast adjusted EPS of $12.12–$12.34 and revenue of $23.0–$23.3 billion, broadly in line with Wall Street expectations. The outlook points to continued expansion in employer services and human-resources outsourcing. ADP Reports Fourth Quarter and Fiscal 2026 Results
• Positive Sentiment: Some analysts view the shares favorably after the earnings rally. A Seeking Alpha analysis described ADP as still attractive despite the post-results valuation re-rating, while BMO raised its price target to $305 from $248, maintaining a “market perform” rating. Automatic Data Processing: Post-Earnings Rally Closed The Valuation Gap, Still A Buy
• Neutral Sentiment: Valuation has become a key debate. After a roughly 44% five-year gain, ADP trades near $273 and at approximately 25.5 times earnings. Commentary suggests the stock now looks reasonable rather than clearly discounted, making future gains more dependent on execution and guidance upgrades. Automatic Data Processing Stock Looks Reasonable After Its 44% Five Year Run
• Negative Sentiment: Macro and trading signals remain potential headwinds. A broader market sell-off tied to surging oil prices, U.S.-Iran tensions and interest-rate uncertainty could pressure defensive growth stocks. Separately, recent disclosed ADP insider activity showed sales and no purchases, a modest negative signal for sentiment.

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.