ADP Stock Analysis FY2017 – Pershing Square’s Interference is Not Warranted

Summary

  • This ADP Stock Analysis is based on FY 2017 results as at June 30, 2017 and FY2018 projections.
  • ADP is currently the 3rd most heavily shorted company in the data processing and outsourced services sector.
  • Pershing Square Capital Management L.P. has accumulated an 8% stake and has put forth an amended proposal in an effort to gain 3 seats on ADP’s Board.
  • ADP has a history of 42 consecutive years of dividend growth and its shares have appreciated considerably in value over the long-term.
  • I view ADP shares as expensive at the moment. I do not, however, have any intention of selling our shares even though wealthy influential investors feel a correction is overdue.

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Automatic Data Processing Stock Analysis – Too Expensive

Summary

  • This Automatic Data Processing stock analysis is based on Q2 2017 results and outlook for the remainder of fiscal 2017 which were released February 1, 2017.
  • Revenues increased 6% to $3.0B, 7% on a constant dollar basis.
  • Adjusted diluted EPS from continuing operations increased 20% to $0.87, 19% on a constant dollar basis.
  • Fiscal 2017 share repurchases of $1.2B – $1.4B to be funded by existing balance sheet cash vs. prior forecast of $1.0B – to $1.4B.
  • ADP’s stock price is still too rich for my liking. I will wait for ADP to drop to $92ish.

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Automatic Data Processing Stock Analysis: A Wonderful Company. Less Than Wonderful Valuation

 

Summary

  • This Automatic Data Processing stock analysis is based on Q1 2017 results and forecast for the remainder of fiscal 2017 released November 2, 2016.
  • ADP has increased its dividend each year for 42 years making the company a dividend aristocrat.
  • While ADP has aptly rewarded shareholders over the years it is expensive at current levels.
  • I would be prepared to add to my existing ADP holdings if the price drops below $92.

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