S&P 500 (NYSE:SPY) component Automatic Data (NASDAQ:ADP) will unveil its latest earnings on Wednesday, August 1, 2012. Automatic Data Processing offers human resource, payroll, tax, and benefits administration solutions to a wide range of clients.
Automatic Data Earnings Preview Cheat Sheet
Wall St. Earnings Expectations: The average estimate of analysts is for net income of 53 cents per share, a rise of 10.4% from the company’s actual earnings for the same quarter a year ago. During the past three months, the average estimate has moved down from 54 cents. Between one and three months ago, the average estimate moved down. It has been unchanged at 53 cents during the last month. For the year, analysts are projecting profit of $2.74 per share, a rise of 8.7% from last year.
Past Earnings Performance: The company topped forecasts last quarter after being in line with estimates the quarter prior. In the third quarter, it reported net income of 92 cents per share versus a mean estimate of 91 cents. Two quarters ago, it reported profit of 68 cents per share.
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Stock Price Performance: Between May 30, 2012 and July 26, 2012, the stock price had risen $4.01 (7.6%), from $52.51 to $56.52. The stock price saw one of its best stretches over the last year between October 3, 2011 and October 12, 2011, when shares rose for eight straight days, increasing 10.2% (+$4.75) over that span. It saw one of its worst periods between November 15, 2011 and November 23, 2011 when shares fell for seven straight days, dropping 8.7% (-$4.58) over that span.
A Look Back: In the third quarter, profit rose 6.7% to $452.4 million (92 cents a share) from $423.8 million (85 cents a share) the year earlier, exceeding analyst expectations. Revenue rose 12.9% to $2.92 billion from $2.59 billion.
Balance Sheet Analysis: The company’s current ratio of assets to liabilities came in at 1.07 last quarter. The current ratio is an indication of a firm’s liquidity and ability to meet creditor demands and generally, for every dollar the company owes in the short term, it has that figure available in assets that can be converted to cash in the short term. The company regressed in this liquidity measure from 1.08 in the second quarter to the last quarter driven in part by an increase in liabilities. Current liabilities increased 26.7% to $31.42 billion while assets rose 25.5% to $33.55 billion.
This upcoming earnings announcement will be a chance to build on positive earnings momentum over the last three quarters. Net income rose 8.7% in the first quarter and 20.9% in the second quarter before increasing again in the third quarter.
On the top line, the company is looking to build on four-straight revenue increases heading into this earnings announcement. Revenue rose 15.6% in the fourth quarter of the last fiscal year, 14.2% in the first quarter and 8.3% in the second quarter before increasing again in the third quarter.
Wall St. Revenue Expectations: Analysts are projecting a rise of 6% in revenue from the year-earlier quarter to $2.66 billion.
Analyst Ratings: With 10 analysts rating the stock as a buy, two rating it as a sell and 12 rating it as a hold, there are indications of a bullish outlook.
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(Company fundamentals by Xignite Financials. Earnings estimates provided by Zacks)
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