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Automatic Data Processing (ADP) Q1 Earnings: What's in Store?
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Automatic Data Processing, Inc. (ADP - Free Report) is scheduled to report first-quarter fiscal 2019 results on Oct 31, before market open.
While we expect the top line to be driven by acquisitions and favorable foreign currency movements, the bottom line is likely to grow on the back of lower tax rate.
So far this year, shares of ADP have gained 16.4%, significantly outperforming the 5.1% rally of the industry it belongs to. The Zacks S&P 500 Composite Index has declined 0.4% decline in the same time frame.
Let's check out the expectations in detail.
Top Line to Improve Year Over Year
The Zacks Consensus Estimate for first-quarter fiscal 2019 revenues stands at $3.28 billion, indicating year-over-year growth of 6.7%. The top line is expected to benefit from acquisitions, favorable foreign currency movements and strength across PEO Services segment.
The consensus estimate for PEO Services segment revenues is pegged at $975 million, indicating year-over-year growth of 7.9%. Revenues are likely to be driven by an increase in the average number of paid PEO worksite employees, which is estimated at 524,000, indicating year-over-year growth of 8.3%. In fourth-quarter fiscal 2018, segment revenues of $976.7 million increased 10% year over year. Average worksite employees paid by PEO Services were about 523,000.
The consensus mark for Employer Services segment revenues stands at $2.31 billion, indicating an year-over-year decline of 0.4%. Revenues are expected to be hurt by the impact of the disposition of COBRA and CHSA businesses, which is likely to be partially offset by growth in new business bookings and increase in the number of employees on ADP clients'. In fourth-quarter, revenues of $2.49 billion increased 7% year over year on a reported basis and 4% on an organic constant-currency basis.
In fourth-quarter fiscal 2018, total revenues of $3.32 billion increased 8% year over year on a reported basis and 6% on an organic constant currency basis.
Earnings Likely to Rise on Tax Reform
The Zacks Consensus Estimate for earnings per share in the to-be-reported quarter is pegged at $1.10, indicating year-over-year growth of 20.9%. Lower effective tax rate (as a result of Tax Cuts and Jobs Act) which reduced corporate tax rates significantly are likely to boost ADP’s bottom line.
In fourth-quarter fiscal 2018, adjusted earnings per share of 92 cents increased 39.4% year over year.
Our Model Doesn't Suggest a Beat
Please note that according to the Zacks model, a company with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) has a good chance of beating estimates if it also has a positive Earnings ESP. Zacks Rank #4 (Sell) or 5 (Strong Sell) stocks are best avoided, especially when the company is seeing negative estimate revisions. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter.
ADP has an Earnings ESP of +2.73% but a Zacks Rank #4.
Automatic Data Processing, Inc. Price and EPS Surprise
Here are a few stocks from the broader Business Services sector that investors may consider as our model shows that these have the right combination of elements to beat on earnings in third-quarter 2018:
Clean Harbors (CLH - Free Report) has an Earnings ESP of +1.22% and a Zacks Rank #1. The company is scheduled to report results on Oct 31.
WEX (WEX - Free Report) has an Earnings ESP of +0.15% and a Zacks Rank #2. The company is slated to release results on Oct 31.
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020.
Image: Bigstock
Automatic Data Processing (ADP) Q1 Earnings: What's in Store?
Automatic Data Processing, Inc. (ADP - Free Report) is scheduled to report first-quarter fiscal 2019 results on Oct 31, before market open.
While we expect the top line to be driven by acquisitions and favorable foreign currency movements, the bottom line is likely to grow on the back of lower tax rate.
So far this year, shares of ADP have gained 16.4%, significantly outperforming the 5.1% rally of the industry it belongs to. The Zacks S&P 500 Composite Index has declined 0.4% decline in the same time frame.
Let's check out the expectations in detail.
Top Line to Improve Year Over Year
The Zacks Consensus Estimate for first-quarter fiscal 2019 revenues stands at $3.28 billion, indicating year-over-year growth of 6.7%. The top line is expected to benefit from acquisitions, favorable foreign currency movements and strength across PEO Services segment.
The consensus estimate for PEO Services segment revenues is pegged at $975 million, indicating year-over-year growth of 7.9%. Revenues are likely to be driven by an increase in the average number of paid PEO worksite employees, which is estimated at 524,000, indicating year-over-year growth of 8.3%. In fourth-quarter fiscal 2018, segment revenues of $976.7 million increased 10% year over year. Average worksite employees paid by PEO Services were about 523,000.
The consensus mark for Employer Services segment revenues stands at $2.31 billion, indicating an year-over-year decline of 0.4%. Revenues are expected to be hurt by the impact of the disposition of COBRA and CHSA businesses, which is likely to be partially offset by growth in new business bookings and increase in the number of employees on ADP clients'. In fourth-quarter, revenues of $2.49 billion increased 7% year over year on a reported basis and 4% on an organic constant-currency basis.
In fourth-quarter fiscal 2018, total revenues of $3.32 billion increased 8% year over year on a reported basis and 6% on an organic constant currency basis.
Earnings Likely to Rise on Tax Reform
The Zacks Consensus Estimate for earnings per share in the to-be-reported quarter is pegged at $1.10, indicating year-over-year growth of 20.9%. Lower effective tax rate (as a result of Tax Cuts and Jobs Act) which reduced corporate tax rates significantly are likely to boost ADP’s bottom line.
In fourth-quarter fiscal 2018, adjusted earnings per share of 92 cents increased 39.4% year over year.
Our Model Doesn't Suggest a Beat
Please note that according to the Zacks model, a company with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) has a good chance of beating estimates if it also has a positive Earnings ESP. Zacks Rank #4 (Sell) or 5 (Strong Sell) stocks are best avoided, especially when the company is seeing negative estimate revisions. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter.
ADP has an Earnings ESP of +2.73% but a Zacks Rank #4.
Automatic Data Processing, Inc. Price and EPS Surprise
Automatic Data Processing, Inc. Price and EPS Surprise | Automatic Data Processing, Inc. Quote
Stocks to Consider
Here are a few stocks from the broader Business Services sector that investors may consider as our model shows that these have the right combination of elements to beat on earnings in third-quarter 2018:
Cardtronics has an Earnings ESP of +3.20% and a Zacks Rank #1. The company is slated to release results on Nov 1. You can see the complete list of today’s Zacks #1 Rank stocks here.
Clean Harbors (CLH - Free Report) has an Earnings ESP of +1.22% and a Zacks Rank #1. The company is scheduled to report results on Oct 31.
WEX (WEX - Free Report) has an Earnings ESP of +0.15% and a Zacks Rank #2. The company is slated to release results on Oct 31.
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020.
Click here for the 6 trades >>