Automatic Data Second Quarter Earnings Sneak Peek

S&P 500 (NYSE:SPY) component Automatic Data (NASDAQ:ADP) will unveil its latest earnings on Tuesday, February 5, 2013. 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 analyst estimate is for profit of 71 cents per share, a rise of 4.4% from the company’s actual earnings for the year-ago quarter. During the past three months, the average estimate has moved down from 72 cents. Between one and three months ago, the average estimate moved down. It has been unchanged at 71 cents during the last month. Analysts are projecting profit to rise by 6.6% versus last year to $2.92.

Past Earnings Performance: The company met estimates last quarter after beating the forecasts in the prior two. In the first quarter, the company reported net income of 62 cents per share versus a mean estimate of profit of 62 cents per share. In the fourth quarter of the last fiscal year, the company beat estimates by 0 cents.

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Wall St. Revenue Expectations: Analysts predict a rise of 5.4% in revenue from the year-earlier quarter to $2.72 billion.

Stock Price Performance: Between November 30, 2012 and January 30, 2013, the stock price had risen $2.73 (4.8%), from $56.74 to $59.47. The stock price saw one of its best stretches over the last year between June 1, 2012 and June 8, 2012, when shares rose for six straight days, increasing 5.4% (+$2.76) over that span. It saw one of its worst periods between December 20, 2012 and December 28, 2012 when shares fell for six straight days, dropping 3.5% (-$2.04) over that span.

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.

Key Stats:

This upcoming earnings announcement will be a chance to build on positive earnings momentum over the last three quarters. Net income rose 6.7% in the third quarter of the last fiscal year and 6.9% in the fourth quarter of the last fiscal year before increasing again in the first quarter.

On the top line, the company is looking to build on four-straight revenue increases heading into this earnings announcement. Revenue rose 8.3% in the second quarter of the last fiscal year, 12.9% in the third quarter of the last fiscal year and 11.2% in the fourth quarter of the last fiscal year before increasing again in the first quarter.

The company upped its gross margin by 2.6 percentage points in the in the first quarter. Revenue rose 9.9% while cost of sales rose 5.3% to $1.59 billion from a year earlier.

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.

A Look Back: In the first quarter, profit rose 0.9% to $305.3 million (63 cents a share) from $302.7 million (61 cents a share) the year earlier, meeting analyst expectations.

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