Comparing Automatic Data Processing (NASDAQ:ADP) & Insperity (NYSE:NSP)

Insperity (NYSE:NSP) and Automatic Data Processing (NASDAQ:ADP) are both industrials companies, but which is the better investment? We will compare the two companies based on the strength of their institutional ownership, valuation, earnings, risk, dividends, profitability and analyst recommendations.

Dividends

Insperity pays an annual dividend of $2.40 per share and has a dividend yield of 5.2%. Automatic Data Processing pays an annual dividend of $6.80 per share and has a dividend yield of 2.6%. Insperity pays out -558.1% of its earnings in the form of a dividend. Automatic Data Processing pays out 62.2% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Insperity has increased its dividend for 14 consecutive years and Automatic Data Processing has increased its dividend for 49 consecutive years. Insperity is clearly the better dividend stock, given its higher yield and lower payout ratio.

Valuation & Earnings

This table compares Insperity and Automatic Data Processing”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Insperity	$6.81 billion	0.26	-$7.00 million	($0.43)	-107.76
Automatic Data Processing	$21.95 billion	4.65	$4.41 billion	$10.94	23.55

Automatic Data Processing has higher revenue and earnings than Insperity. Insperity is trading at a lower price-to-earnings ratio than Automatic Data Processing, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Insperity and Automatic Data Processing’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Insperity	-0.23%	-19.99%	-0.60%
Automatic Data Processing	20.11%	71.34%	6.73%

Analyst Recommendations

This is a summary of current ratings for Insperity and Automatic Data Processing, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Insperity	2	2	1	0	1.80
Automatic Data Processing	1	8	3	0	2.17

Insperity currently has a consensus target price of $53.33, suggesting a potential upside of 15.10%. Automatic Data Processing has a consensus target price of $273.50, suggesting a potential upside of 6.14%. Given Insperity’s higher possible upside, equities analysts clearly believe Insperity is more favorable than Automatic Data Processing.

Volatility & Risk

Insperity has a beta of 0.54, meaning that its share price is 46% less volatile than the S&P 500. Comparatively, Automatic Data Processing has a beta of 0.83, meaning that its share price is 17% less volatile than the S&P 500.

Insider & Institutional Ownership

93.4% of Insperity shares are owned by institutional investors. Comparatively, 80.0% of Automatic Data Processing shares are owned by institutional investors. 5.8% of Insperity shares are owned by company insiders. Comparatively, 0.2% of Automatic Data Processing shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Summary

Automatic Data Processing beats Insperity on 12 of the 17 factors compared between the two stocks.

About Insperity

Insperity, Inc. engages in the provision of human resources (HR) and business solutions to improve business performance for small and medium-sized businesses primarily in the United States. It offers its HR services through its workforce optimization and workforce synchronization solutions that include a range of human resources functions, such as payroll and employment administration, employee benefits, workers' compensation, government compliance, performance management, and training and development services. The company also provides Insperity Premier, a cloud-based human capital management platform that offers professional employer organization HR outsourcing solutions to its clients; people management services; and employer liability management services, as well as solutions for middle market. In addition, it offers MarketPlace, an e-commerce portal that offers a range of products and services; and Workforce Acceleration, a human capital management and payroll services solution; integrated payroll; benefits administration; HR administration and employee onboarding; time and attendance; performance management; reporting and analytics; recruiting; employment screening; retirement; and insurance services. The company was formerly known as Administaff, Inc. and changed its name to Insperity, Inc. in March 2011. Insperity, Inc. was founded in 1986 and is headquartered in Kingwood, Texas.

About Automatic Data Processing

Automatic Data Processing, Inc. provides cloud-based human capital management solutions worldwide. It operates in two segments, Employer Services and Professional Employer Organization (PEO). The Employer Services segment offers strategic, cloud-based platforms, and human resources (HR) outsourcing solutions. Its offerings include payroll services, benefits administration, talent management, HR management, workforce management, insurance, retirement, and compliance services, as well as integrated HCM solutions. The PEO Services segment provides HR outsourcing solution to businesses through a co-employment model. This segment offers employee benefits, protection and compliance, talent engagement, expertise, comprehensive outsourcing, and recruitment process outsourcing services. Automatic Data Processing, Inc. was founded in 1949 and is headquartered in Roseland, New Jersey.