Automatic Data Processing Earnings: Strong New Business Sales Growth

S&P 500 (NYSE:SPY) component Automatic Data Processing, Inc. (NASDAQ:ADP) reported its results for the third quarter. Automatic Data Processing, Inc. offers human resource, payroll, tax and benefits administration solutions to a wide range of clients.

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Automatic Data Processing Earnings Cheat Sheet for the Third Quarter

Results: Net income for Automatic Data Processing, Inc. rose to $423.8 million (85 cents/share) vs. $403.6 million (80 cents/share) in the same quarter a year earlier. A rise of 5% from the year earlier quarter.

Revenue: Rose 19.3% to $2.74 billion YoY.

Actual vs. Wall St. Expectations: ADP fell in line with the mean analyst estimate of 85 cents/share. Estimates ranged from 82 cents per share to 87 cents per share.

Quoting Management: Commenting on the results, Mr. Butler said, “I am quite pleased with ADP’s third quarter results. We achieved strong new business sales growth for Employer Services and PEO Services, and client revenue retention during this critical calendar year-end period was very strong. Pays per control, PEO worksite employees, and client funds balances continued to increase as well. I am delighted with our acquisition activity, closing two additional transactions during the third quarter. In Dealer Services, it appears that the worst is behind us and the automotive marketplace continued to steadily recover.”

Key Stats: From the second quarter, the company’s current liabilities rose to $33.97 billion from $25.49 billion.

Last quarter’s profit increase breaks a streak of three consecutive quarters of year-over-year profit decreases. In the second quarter, net income fell 1.8% from the year earlier while the figure dropped 2% three quarters ago and 41% four quarters ago.

Over the last five quarters, revenue has increased 4.5% on average year over year. The biggest increase came in the third quarter of the last fiscal year, when revenue rose 21.8% from the year earlier quarter.

Competitors to Watch: Paychex, Inc. (NASDAQ:PAYX), CBIZ, Inc. (NYSE:CBZ), Equifax Inc. (NYSE:EFX), Moody’s (NYSE:MCO), The Dun & Bradstreet (NYSE:DNB), McMillan Shakespeare Ltd. (NYSE:MMS), Blue Tax Group SA (NYSE:BTG), Hilan Tech Ltd. (HLTC), and Colliers SA Holdings Ltd. (NYSE:COL)

Stock Performance: Shares of ADP are trading at $54.50 as of May 2, 2011 at 4:34 PM ET, down 0.37% from the today’s closing price of $54.70.


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