Automatic Data Processing (ADP) delivered solid fourth-quarter and fiscal 2021 results as the global technology company benefited from sales, product, technology, and digital transformation investments. Revenues in the quarter were up 11% year-over-year to $3.7 billion, beating analysts’ projections of $3.68 billion.
The company reported adjusted diluted earnings per share of $1.20, up 5%, and better than the $1.14 per share expected by analysts. According to the CEO, Carlos Rodriguez, revenue and earnings growth were way ahead of expectations, resulting from excellent business execution. (See Automatic Data Processing stock charts on TipRanks)
For fiscal 2022, Automatic Data Processing is projecting sales growth of between 6% and 7%. Meanwhile, adjusted diluted EPS is expected to grow by between 9% and 11%.
CFO Kathleen Winters stated, “Our new guidance anticipates solid revenue and bookings growth and improved profitability supported by growth in pays-per-control, further gains in sales productivity, and a continued disciplined approach to expenses.”
Yesterday, Jefferies analyst Samad Samana reiterated a Hold rating on the stock but raised his price target to $215 from $200, implying 3.92% upside potential. According to the analyst, a mixed full-year outlook compounded by the recent run-up in shares is likely to trigger short-term breathers. The analyst also expects the company to benefit from an enhanced product lineup and employment recovery in the long term.
Consensus among analysts is a Moderate Buy based on 3 Buys and 3 Holds. The average Automatic Data Processing price target of $205.67 implies that shares are fully priced at current levels.
ADP scores a 9 out of 10 on TipRanks’ Smart Score rating system, indicating that the stock has strong potential to outperform market expectations.
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