ADP Reports Strong Q2 Earnings, Exceeds Expectations

ADP shows solid performance with strong Q2 earnings, reporting a profit of $963.2 million and revenue growth of 8%. Investors taking note of its upward trajectory as EPS expectations rise.

Date: 19-02-2025

AI Rating: 7

Earnings Per Share (EPS): ADP reported an EPS of $2.35, exceeding Wall Street's expectations of $2.27 per share. The company's EPS growth projection for the current fiscal year is 8.2%, bringing it to $9.93 on a diluted basis. This increase indicates positive momentum and investor confidence in the stock.

Revenue Growth: For Q2, ADP's revenue was $5.05 billion, surpassing analysts' expectations of $4.97 billion and reflecting an 8% year-over-year growth. The affirmation of revenue growth projection for fiscal 2025 between 6% to 7% further solidifies investor interest.

Profit Margins: The adjusted EBIT margin rose by 60 basis points to 25.2%, showcasing operational efficiency and profitability improvements. This margin expansion could positively affect investor sentiment regarding the company's financial health.

Although ADP shares have slightly outperformed the broader market with a 22.8% increase over the past year, the stock has lagged behind the tech-focused iShares Expanded Tech-Software Sector ETF, indicating potential pressure from sector competition.

Analysts maintain a consensus rating of “Hold” for ADP, suggesting that while the company's outlook is stable, there may be limited immediate upside. Current price targets range from $306, indicating a premium, to a Street-high target of $350, signaling some potential upside for investors.

Stocks: ADP