Automatic Data Processing Inc. Earnings Cheat Sheet: Revenue Increase Helps Margin, Net Income Climbs

S&P 500 (NYSE:SPY) component Automatic Data Processing Inc. (NASDAQ:ADP) reported its results for the first quarter. Automatic Data Processing 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 First Quarter

Results: Net income for the business software and services company rose to $302.7 million (61 cents per share) vs. $278.5 million (56 cents per share) in the same quarter a year earlier. This marks a rise of 8.7% from the year earlier quarter.

Revenue: Rose 13% to $2.52 billion from the year earlier quarter.

Actual vs. Wall St. Expectations: ADP fell in line with the mean analyst estimate of 61 cents per share. It beat the average revenue estimate of $2.44 billion.

Quoting Management: Commenting on the results, Mr. Butler said, “I am pleased with ADP’s results for the first quarter of fiscal 2012. The increase in new business sales during fiscal 2011 and the acquisitions closed last fiscal year contributed to the strong revenue growth in the quarter. As anticipated, the year-over-year pretax margin comparison was negatively impacted by the decline in high-margin client interest revenues resulting from lower interest rates and the impact of last year’s acquisitions.”

Key Stats:

The company has now seen net income rise in three straight quarters. In the fourth quarter of the last fiscal year, net income rose 16.3% and in the third quarter of the last fiscal year, the figure rose 5%.

Revenue has risen the past four quarters. Revenue increased 15.6% to $2.37 billion in the fourth quarter of the last fiscal year. The figure rose 12.8% in the third quarter of the last fiscal year from the year earlier and climbed 9.6% in the second quarter of the last fiscal year from the year-ago quarter.

The company has now fallen in line with estimates for the past two quarters. It reported net income of 48 cents in the fourth quarter of the last fiscal year and net income of 85 cents in the third quarter of the last fiscal year.

Looking Forward: Analysts appear increasingly optimistic about the company’s results for the next quarter. The average estimate for the second quarter has moved up from 67 cents a share to 68 cents over the last ninety days. The average estimate for the fiscal year is $2.74 per share, a rise from $2.72 ninety days ago.

Competitors to Watch: Paychex, Inc. (NASDAQ:PAYX), CBIZ, Inc. (NYSE:CBZ), Equifax Inc. (NYSE:EFX), McMillan Shakespeare Ltd. (NYSE:MMS), Blue Tax Group SA (NYSE:BTG), Colliers SA Holdings Ltd. (NYSE:COL).

Investing Insights: Here’s Why Chipotle’s Stock Keeps Winning.

(Source: Xignite Financials)