Automatic Data Processing Inc. Earnings: Profit Rises for Fourth Straight Quarter

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

Results: Net income for Automatic Data Processing Inc. rose to $375 million (76 cents per share) vs. $310.1 million (62 cents per share) in the same quarter a year earlier. This marks a rise of 20.9% from the year earlier quarter.

Revenue: Rose 7.4% to $2.58 billion from the year earlier quarter.

Actual vs. Wall St. Expectations: ADP reported adjusted net income of 68 cents per share. By that measure, the company fell in line with the mean estimate of 68 cents per share. Analysts were expecting revenue of $2.58 billion.

Quoting Management: Commenting on the results, Mr. Rodriguez said, “ADP’s results were solid for the second quarter. I am particularly pleased with our sales execution that drove strong new business sales growth for Employer Services and PEO Services for the quarter. As anticipated, ADP’s year-over-year pretax margin comparison continued to be negatively impacted by the decline in high-margin client interest revenues resulting from lower interest rates, and the impact of recent acquisitions. New business sales for Dealer Services were also strong and better than anticipated during the quarter.

Key Stats:

The company has now seen net income rise in three straight quarters. In the first quarter, net income rose 8.7% and in the fourth quarter of the last fiscal year, the figure rose 16.3%.

The company has now fallen in step with estimates for the last three quarters. It reported net income of 61 cents in the first quarter, 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: Over the past ninety days, the average estimate for the third quarter has fallen from 94 cents per share to 93 cents, indicating that analysts are growing pessisimistic about the company’s performance next quarter. The average estimate hasn’t changed from $2.74 per share for the fiscal year.

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) and Colliers SA Holdings Ltd. (NYSE:COL).

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(Company fundamentals provided by Xignite Financials. Earnings estimates provided by Zacks)

To contact the reporter on this story: Derek Hoffman at staff.writers@wallstcheatsheet.com

To contact the editor responsible for this story: Damien Hoffman at editors@wallstcheatsheet.com