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Automatic Data Processing, Inc. (NASDAQ:ADP) came out with its quarterly results last week, and we wanted to see how the business is performing and what industry forecasters think of the company following this report. Results were roughly in line with estimates, with revenues of US$5.0b and statutory earnings per share of US$2.35. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.
View our latest analysis for Automatic Data Processing
After the latest results, the 15 analysts covering Automatic Data Processing are now predicting revenues of US$20.4b in 2025. If met, this would reflect a reasonable 2.7% improvement in revenue compared to the last 12 months. Per-share earnings are expected to rise 2.8% to US$9.94. In the lead-up to this report, the analysts had been modelling revenues of US$20.4b and earnings per share (EPS) of US$9.95 in 2025. So it's pretty clear that, although the analysts have updated their estimates, there's been no major change in expectations for the business following the latest results.
It will come as no surprise then, to learn that the consensus price target is largely unchanged at US$308. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. The most optimistic Automatic Data Processing analyst has a price target of US$350 per share, while the most pessimistic values it at US$281. This is a very narrow spread of estimates, implying either that Automatic Data Processing is an easy company to value, or - more likely - the analysts are relying heavily on some key assumptions.
One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. We would highlight that Automatic Data Processing's revenue growth is expected to slow, with the forecast 5.4% annualised growth rate until the end of 2025 being well below the historical 7.2% p.a. growth over the last five years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 6.2% annually. So it's pretty clear that, while Automatic Data Processing's revenue growth is expected to slow, it's expected to grow roughly in line with the industry.