ADP Set To Report Q4 Earnings: Disappointment In Store?
Zacks Investment Research | Jul 23, 2017 10:50PM ET
Automatic Data Processing Inc. (NASDAQ:ADP) is set to release fourth-quarter fiscal 2017 earnings on Jul 27. Notably, the company has beaten the Zacks Consensus Estimate in all of the trailing four quarters, with an average positive surprise of 7.15%.
In the last quarter, ADP delivered a positive earnings surprise of 6.50%. Adjusted earnings from continuing operations of $1.31 per share increased 12% on a year-over-year basis. However, revenues of $3.41 billion missed the Zacks Consensus Estimate of $3.43 billion but grew 5% on a year-over-year basis.
Management now expects new business bookings to decline year over year in fiscal 2017. Earlier, the company anticipated new business bookings to remain flat on a year-over-year basis. The decline in management’s expectation primarily reflects growing competition from the likes of Paychex (NASDAQ:PAYX) , Equifax (NYSE:EFX) and The Ultimate Software Group.
We note that ADP has underperformed the S&P 500 on a year-to-date basis. While the index gained 10.7%, the stock has returned 1.8%.
Let’s see how things are shaping up for this announcement.
Factors to Consider
Apart from stiff competition, we expect ADP’s investments in new initiatives to weigh on near-term earnings. Moreover, the divestiture of Consumer Health Spending Account (CHSA) and Consolidated Omnibus Reconciliation Act (COBRA) businesses will impact top-line growth.
Automatic Data Processing, Inc. Price and EPS Surprise
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