Automatic Data Processing Inc

CoStar Group was the weakest performer among nine data and business process services stocks tracked in the second quarter, while EXL led the group with the biggest analyst estimate beat and highest full-year guidance raise. CoStar reported revenues of $925 million, up 18.4% year over year and in line with expectations, but delivered the weakest guidance update and weakest full-year guidance update among its peers. EXL posted revenues of $594.8 million, up 15.6% year over year and beating estimates by 3.5%, with full-year revenue guidance also above expectations. Equifax reported revenues of $1.7 billion, up 10.6% year over year and in line with estimates, but slightly missed full-year EPS guidance. TransUnion reported revenues of $1.31 billion, up 14.9% year over year and beating estimates by 1.8%, while ADP reported revenues of $5.47 billion, up 6.8% year over year and beating estimates by 0.7%. As a group, revenues beat consensus estimates by 1% while next quarter's revenue guidance was 1.3% below, and share prices are up 7.8% on average since the latest earnings results.

ADP reported that U.S. private employers added an average of 11,750 jobs per week for the four weeks ending August 8, 2026, according to its NER Pulse update. Hiring increased for the second consecutive week, with the four-week moving average rising from 9,500 jobs in the prior week. The figures are preliminary and may be revised as new data is added. The NER Pulse is produced by ADP Research in collaboration with the Stanford Digital Economy Lab and publishes every Tuesday at 8:15 a.m. ET.

ADP stock has gained 13.4% in a month, outperforming the industry's 1.6% growth and the Zacks S&P 500 Composite's 2.4% return. The company reported adjusted EBIT increased 13% year over year to $1.37 billion in the fourth quarter of 2026, with adjusted EBIT margin expanding 140 basis points to 25.1% and adjusted net earnings rising 14% to $1.05 billion. ADP had a cash balance of $4.2 billion at the end of the fourth quarter of fiscal 2026 against total long-term debt of $4.9 billion, and operating cash flow of $5.4 billion for the same period. The company distributed $1.6 billion, $1.7 billion, $1.9 billion and $2.6 billion in dividends in fiscal 2023, 2024, 2025 and 2026, respectively. ADP currently carries a Zacks Rank #3 (Hold).

Automatic Data Processing is drawing fresh attention after better-than-expected Q4 2026 earnings and guidance, along with a rebound in hiring data from its National Employment Report, prompted investors to reassess the stock. The company's recent Q4 2026 earnings beat and guidance, together with firmer hiring data, have helped drive a 22.03% three-month share price return, though the one-year total shareholder return declined 9.46%. Adoption of next-generation products like Lyric HCM and Workforce Now Next Gen, plus integration of acquisitions such as WorkForce Software, is accelerating demand for advanced cloud-based and AI-driven HR solutions, supporting higher average revenue per user and margin expansion. The stock last closed at $269.31 against a narrative fair value of $286.67, suggesting it is about 6.1% undervalued. Risks include slower bookings on large complex deals and rising zero-margin PEO pass-through revenues that could pressure profitability.

Automatic Data Processing declared a regular quarterly dividend of US$1.70 per share, payable on October 1, 2026, to shareholders of record as of September 11, 2026, while its latest National Employment Report signaled a rebound in U.S. private-sector hiring. The company also reported stronger-than-expected Q4 2026 results and issued guidance for revenue, EPS, and margin expansion in fiscal 2027. The maintained payout and improving labor-market data reinforce confidence in ADP's payroll and employment analytics franchise, though the key catalyst remains adoption of Next Gen products like Workforce Now Next Gen and Lyric. ADP's narrative projects $25.9 billion revenue and $5.6 billion earnings by 2029, requiring 5.7% yearly revenue growth and about a $1.2 billion earnings increase from $4.4 billion today.

Automatic Data Processing has increased its dividend for 51 straight years, most recently raising the quarterly payout by 10% in November 2025 to $1.70 per share. The company generated $5.44 billion in operating cash flow during fiscal 2026, up from $4.94 billion a year earlier, while paying $2.63 billion in dividends and spending $2.08 billion on share repurchases. Fourth-quarter revenue grew 7% year over year to $5.47 billion, and adjusted EPS climbed to $2.64 from $2.26. Management expects revenue to increase 5% to 6% in fiscal 2027, with adjusted EPS growth of 9% to 11%, which should support continued dividend increases.

Automatic Data Processing reported fiscal 2026 revenue of $21.9 billion, a 7% increase year over year, with adjusted diluted EPS of $11.12, up 11%. Employer Services new business bookings reached $2.2 billion, growing 6%, while client retention held at 92.1%. For fiscal 2027, the company forecasts consolidated revenue growth of 5% to 6%, adjusted diluted EPS growth of 9% to 11%, and adjusted EBIT margin expansion of 70 to 90 basis points. The outlook assumes stable macroeconomic conditions and includes client funds interest revenue of $1.54 billion to $1.56 billion based on an anticipated average yield of 3.7%. CEO Maria Black highlighted that AI is reshaping work rather than eliminating jobs at scale, with the ADP Assist agent handling 12 million conversations and The Zone service platform reaching 48% of service associates.

Automatic Data Processing reported second-quarter fiscal 2026 revenue of $5.47 billion, exceeding analyst estimates of $5.44 billion and marking a 6.8% year-on-year increase. Adjusted earnings per share came in at $2.64, 1.6% above the consensus estimate of $2.60. CEO Maria Black attributed the performance to strong new business bookings, robust client retention, and widespread adoption of AI-powered tools such as ADP Assist and The Zone, which drove productivity gains and reduced client contact volume. International bookings contributed significantly, with new deals for the Lyric HCM platform closed in France and the UK, while Employer Services retention held at 92.1%. Looking ahead, management expects continued margin expansion from AI-driven efficiencies and balanced growth across client segments, though it remains cautious about potential retention headwinds from macroeconomic and regulatory shifts.

Automatic Data Processing reported fiscal fourth quarter and full year 2026 results that exceeded consensus expectations on revenue and earnings, alongside issuing guidance for fiscal 2027 and highlighting continued AI investment. The stock has surged 21.51% over the past month and 28.98% over three months, even as the one-year total shareholder return declined 9.64%. A narrative-based fair value estimate pegs ADP at about $257.53, implying the stock is roughly 6.1% overvalued after closing at $273.37, while a Simply Wall St discounted cash flow model suggests a fair value of $394.55, indicating potential undervaluation of about 30.7%. Key risks include slower bookings growth in complex deals and rising zero-margin PEO pass-through revenue that could pressure profitability.

Automatic Data Processing Inc reported a strong fourth quarter with 7% revenue growth and 17% adjusted EPS growth. Employer Services retention remained strong at 92.1%, exceeding expectations for the fiscal year. The company's retirement services business achieved a major milestone of $1 billion in annual revenue for the first time. ADP experienced broad-based new business bookings growth, particularly in small business, HR outsourcing, enterprise, and international markets. The fiscal 2027 outlook anticipates a slight decline in Employer Services retention by 10 to 30 basis points and a slight headwind from foreign exchange.

Automatic Data Processing reported fiscal fourth-quarter revenue of $5.47 billion, up 6.8% year over year, and earnings per share of $2.64, compared to $2.26 a year ago. Revenue exceeded the Zacks Consensus Estimate of $5.43 billion by 0.87%, while EPS beat the consensus of $2.59 by 1.93%. Employer Services segment revenue came in at $3.7 billion, slightly above the $3.67 billion analyst estimate, and PEO Services revenue was $1.78 billion, matching estimates. Interest on funds held for clients rose 15.5% to $355.4 million, also topping the $340.62 million consensus.

Automatic Data Processing is drawing investor attention as expectations build for a modest fiscal fourth-quarter beat and the release of fresh 2027 guidance. The stock has gained 10.98% over the past month and 28.69% over three months, though its one-year total shareholder return is down 14.94%. The most-followed valuation narrative pegs fair value at $246.80, slightly below the last close of $251.05, implying a narrow 1.7% overvaluation, while a discounted cash flow model suggests significant undervaluation with a fair value estimate of $572.81. Adoption of next-generation products such as Lyric HCM and Workforce Now Next Gen, along with acquisitions like WorkForce Software, is seen accelerating demand for cloud-based and AI-driven HR solutions.

Two Dividend Kings—stocks with over 50 consecutive years of dividend increases—are highlighted as long-term buys. Payroll processor Automatic Data Processing, with 51 years of dividend growth, is trading more than 25% off its 2025 highs and offers a 2.7% yield, having raised its dividend through past recessions with unemployment as high as 14.8%. Consumer health company Kenvue, spun off from Johnson & Johnson in 2023, inherited Dividend King status and yields 4.3%, while paper products giant Kimberly-Clark, another Dividend King yielding 4.5%, is seeking regulatory approval to merge with Kenvue later this year. If the merger proceeds, Kenvue shareholders would receive $3.50 in cash and roughly one-seventh of a Kimberly-Clark share per Kenvue share, preserving the combined entity’s Dividend King status.

Automatic Data Processing entered into new revolving credit facilities totaling US$9.20 billion in late June, comprising a US$5.70 billion 364-day agreement and a US$3.50 billion five-year agreement. The new arrangements replace prior facilities and provide committed multi-currency funding for general corporate purposes, with an accordion feature and term-out option that materially increase financial flexibility for working capital and potential acquisitions. The expanded capacity does not alter the core investment debate around payroll growth and PEO margins, but it gives ADP more room to fund operations and M&A without immediately tapping equity or longer-term debt markets.

Zacks Investment Research recommends holding Automatic Data Processing shares, citing AI-driven efficiency gains, pricing power, and a strong balance sheet. ADP Assist Payroll saved 30 minutes per payroll, while Smart Actions search reduced clicks and time by nearly 80% for common HR actions. The company expects a 70-80 basis point expansion in its adjusted EBIT margin for fiscal 2026, and adjusted diluted EPS growth of 10-11%. ADP ended the third quarter of fiscal 2026 with $3.2 billion in cash and no current debt, though it faces risks from PEO segment margin compression and softening volume growth.

U.S. private employers added an average of 30,750 jobs per week for the four weeks ending June 6, 2026, according to the ADP National Employment Report Pulse. This marks the first increase in hiring since the four-week period ending May 2, 2026, when the average stood at 40,750 jobs per week. The preliminary, seasonally adjusted figures are based on a four-week moving average and are subject to revision as new data becomes available. The NER Pulse, produced by ADP Research in collaboration with the Stanford Digital Economy Lab, provides a weekly estimate of employment trends using high-frequency payroll data.

StockStory identified IonQ, ADP, and Brown & Brown as three services stocks with durable advantages for long-term investors. IonQ, a quantum computing developer, posted 172% annual revenue growth over the last two years and is projected to grow revenue 53.2% in the next 12 months. ADP, which processes one in six U.S. paychecks, has grown revenue at an 8.1% annual rate over five years on a $21.6 billion base and generates a 21.3% free cash flow margin. Brown & Brown, an insurance brokerage, is forecast to grow revenue 11.5% in the next 12 months and has expanded earnings per share by 18.5% annually over five years with a 23.2% free cash flow margin.