Stock Momentum for Automatic Data Processing

Shares of Automatic Data Processing (NASDAQ:ADP) have been showing a strong momentum as shares again appreciate today.  Shares have appreciated some 31% over the past 6 months, and the stock appears to maintaining that head of steam upwards. 

On the fundamental side, the most recent quarterly earnings report was slightly higher than analysts’ consensus forecast as earnings came in at $0.60/share (estimate was $0.58/share).  This is moderately positive for investors.  Earnings growth in the past year was +5.3% and has decelerated moderately compared to earnings growth in the past five years of 6.4%. This has a moderately negative connotation for the stock.  On the positive side, analysts have raised their earnings estimates for the company from 60 days ago to $0.85/share, up from $0.84.

In reviewing valuation of the company, the price-to-earnings multiple for ADP is 21.4 and slightly above the S&P average of 20.4, which indicates the stock is an average value in the universe of stocks.  However, the industry average is 29.9, making ADP more attractive in terms of value when compared to its peers. A positive for ADP is the price-to-sales multiple is 2.70, which is slightly higher than the S&P average of 2.21.

Automatic Data Processing, Inc. (ADP) is engaged in providing business outsourcing solutions. ADP offers a range of human resource (HR), payroll, tax and benefits administration solutions from a single source. ADP is also a provider of integrated computing solutions to automotive, truck, motorcycle, marine, recreational vehicle and heavy machinery dealers worldwide.