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Automatic Data Processing First Quarter Earnings
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ADP
Automatic Data Processing (Nasdaq:ADP) announced its results for the first quarter on November 1, 2012. Automatic Data Processing offers human resource, payroll, tax, and benefits administration solutions to a wide range of clients.
Investors should care about a company's quarterly earnings because it shows the state of the business over the past 90 days and provides guidance for the following 90 days. SEE: Earnings: Quality Means Everything
The Numbers: Automatic Data Processing's EPS fell in line with analyst expectations of 62 cents per share while revenue of $2.64 billion missed estimates of $2.92 billion. EPS rose 1.6% while revenue climbed 5% from the same period last year. Automatic Data Processing's profit for the first quarter was $305.3 million. This is 0.9% higher than the year-ago quarter. Last quarter marked the third in a row of rising net income.
Management Quote: Commenting on the results, Mr. Rodriguez said, "ADP's first quarter results were in-line with our expectations. Each of our business segments performed very well driving solid revenue growth and pretax margin expansion excluding acquisitions. I am particularly pleased with the 15% worldwide new business sales growth in Employer Services and PEO Services where strong sales execution and gains in productivity continued. We also saw continued strength in growth in the number of employees on our clients' payrolls, and client revenue retention is solid, even though down from a year ago."
A Look Back: Net income has increased 8.8% year-over-year on average across the last five quarters. The biggest gain came in the second quarter of the last fiscal year, when income climbed 20.9% from the year-earlier quarter.
Looking Ahead: When earnings estimates stay consistent leading up to earnings season, this usually shows analysts accurately predicted earnings estimates and business is stable. Be cautious though as this may also be a warnings sign that earnings could come at a huge surprise to the upside or downside as analyst did not correctly predict earnings. Steady earnings estimates mean there is not enough change going on with the company to make analysts change their opinions. When earning estimates are steady, investors can look at the revenue trend for a more fundamental indicator. The average estimate hasn't changed from $2.93 per share for the fiscal year.
Investors should care about a company's quarterly earnings because it shows the state of the business over the past 90 days and provides guidance for the following 90 days. SEE: Earnings: Quality Means Everything
The Numbers: Automatic Data Processing's EPS fell in line with analyst expectations of 62 cents per share while revenue of $2.64 billion missed estimates of $2.92 billion. EPS rose 1.6% while revenue climbed 5% from the same period last year. Automatic Data Processing's profit for the first quarter was $305.3 million. This is 0.9% higher than the year-ago quarter. Last quarter marked the third in a row of rising net income.
Management Quote: Commenting on the results, Mr. Rodriguez said, "ADP's first quarter results were in-line with our expectations. Each of our business segments performed very well driving solid revenue growth and pretax margin expansion excluding acquisitions. I am particularly pleased with the 15% worldwide new business sales growth in Employer Services and PEO Services where strong sales execution and gains in productivity continued. We also saw continued strength in growth in the number of employees on our clients' payrolls, and client revenue retention is solid, even though down from a year ago."
A Look Back: Net income has increased 8.8% year-over-year on average across the last five quarters. The biggest gain came in the second quarter of the last fiscal year, when income climbed 20.9% from the year-earlier quarter.
Looking Ahead: When earnings estimates stay consistent leading up to earnings season, this usually shows analysts accurately predicted earnings estimates and business is stable. Be cautious though as this may also be a warnings sign that earnings could come at a huge surprise to the upside or downside as analyst did not correctly predict earnings. Steady earnings estimates mean there is not enough change going on with the company to make analysts change their opinions. When earning estimates are steady, investors can look at the revenue trend for a more fundamental indicator. The average estimate hasn't changed from $2.93 per share for the fiscal year.
by
Investopedia Staff
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