The first half of 2022’s trading season was brutal. Perhaps cash was the only investment class that didn’t lose any money during this period. But, hope is on the horizon. Inflation is starting to cool, and traders are starting to dip their feet again into the markets. Over the past month, the S&P 500 is up 12.17%, the Dow Jones is up 9.14%, and the Nasdaq is up 15.56%. That said, all 3 indexes are still down YTD. This may present an opportunity for traders looking to buy low and sell high.
Today, we’ll focus on Barchart Opinions. Unlike analyst opinions, Barchart Opinions offers traders a technical view of a stock's strength. It takes up to 5 years' worth of historical data and runs these prices through thirteen different technical indicators. After each calculation, the company is assigned a buy, sell or hold value for each study, depending on where the price lies about the common interpretation of the study. For example, if the price is above the security's moving average, this is generally considered an upward trend or a buy.
Automatic Data Processing, Inc. (ADP)
Automatic Data Processing, Inc. is a global leader in business outsourcing solutions, offering human resource, payroll, tax, and benefits administration software and services. The company was founded in 1949 by two brothers, Henry and Joe Taub. Today, the company is headquartered in Roseland, New Jersey, with over 60,000 active employees and provides services in more than 140 countries to over 920,000 clients.
The company’s operations are divided into two segments:
The Employer Services division: Offers online-based platforms, human resources (HR) outsourcing solutions, and human capital management services (HCM). This segment has well-known software such as ADP Vantage HCM, ADP Enterprise HR, ADP SmartCompliance, etc., to name a few.
The PEO Services division: Uses a co-employment model to offer small and mid-sized businesses HR outsourcing solutions and software. Some of the most popular programs in this segment are:
- RUN: A web-based software for managing small business payroll and HR.
- ADP TotalSource: A benefits and compliance oversight management technology.
- ADP Mobile Solutions: A mobile application that allows users seamless access to payroll, benefits, and more.
Recent Reports
While the major indexes are down YTD, ADP’s last trading price of $259.71 represents an increase of 6.43% over the same period. And it’s thanks to some good reasons:
- ADP reported 4.128 billion in revenue for the fiscal quarter ending June 30, 2022, representing a 10.45% year-over-year increase. Also, ADP’s annual revenue for 2022 came in at $16.498 billion, an increase of 9.95% from 2021.
- ADP’s earnings per share (EPS) for the June 30, 2022 quarter was $1.50, marking a 19.05% increase compared to the previous year. Also, its annual EPS for 2022 was $7.00, an increase of 15.32% from 2021. The company’s trailing twelve months’ EPS, ending June 30, 2022, was $7.01, a 15.49% increase year-over-year
- ADP’s market cap is $107.9 billion and has a P/E ratio of 36.63, which is higher than its competitors’ P/E ratio of 29.5. This indicates that the stock may be overvalued.
ADP offers shareholders an annual dividend of $4.16, representing a dividend yield of 1.62%. The company also has a healthy dividend payout ratio of 57.44%, which means it has ample room to reinvest profits into other areas.
On August 3, 2022, the company announced its latest quarterly dividend of $1.04 per share payable to shareholders (on record as of August 9, 2022) on October 1, 2022.
ADP has continuously increased its dividends for 47 consecutive years. The company is also listed in the S&P 500 index, making it a dividend aristocrat.
Analyst Ratings
As of August 5th, 2022, ADP's most recent closing stock price was $259.71, about 4.3% higher than its 52-week high stock of $248.96. Also, ADP’s 52-week low stock is $192.26, 26% below the most recent closing price.
Analysts predict that ADP's stock price will rise by the end of the year. With a high estimate of $280, that represents 7.8% upside potential. That said, ADP has a low estimate of $170 and a mean price target of $233.43.
Technical Opinion
The Barchart Technical Opinion rating is a 100% Buy and ranks in the top 1% of all short-term signal directions.
Long-term indicators fully support a continuation of the trend.
However, the market is in highly overbought territory - so, beware of a trend reversal.
What’s More To Like About ADP
Regardless of size, managing companies is challenging. Paying your employees, maintaining compliance, effectively recruiting and hiring, and paying benefits can be tricky if you are not using the right tool or service. Automatic Data Processing, Inc. has made these easier with its award-winning software and solutions.
So far, in the 2nd half of 2022, the tech industry is making a comeback. Being a tech company, ADP provides necessary human capital management (HCM) and human resources (HR) services and solutions. And more importantly, once a company is set up with ADP, barring any significant issue, they are unlikely to leave. This makes revenue “sticky,” which is a good reason for investors to stick around.
More Stock Market News from Barchart
/Intel%20Corp_%20Santa%20Clara%20campus-by%20jejim%20via%20Shutterstock.jpg)
/EV%20in%20showroom%20by%20Robert%20Way%20via%20Shutterstock.jpg)
