ADP - Embedded Expectations Analysis - 2020 09 04
Automatic Data Processing, Inc. (ADP:USA) currently trades above corporate averages relative to UAFRS-based (Uniform) earnings, with a 26.7x Uniform P/E. At these levels, the market has bullish expectations for the firm, but management may be concerned about clients' headcount and hours worked, pays per control measurement, and PEO segment valueSpecifically, management may lack confidence in their ability to sustain elevated volumes, sell high involvement decision products, and meet their average yield guidance earned from their client fund investments. Moreover, they may have concerns about the impact of changes in clients' headcount and hours worked, their measurement of pays per control and its impact on fees, and the effectiveness of the paycheck protection loan program. Furthermore, management may be exaggerating their value to clients as a Human Capital Management (HCM) partner and the value of the PEO segment during recessions. Also, they may be concerned about companies going inactive permanently, further out-of-business losses, and their salesforce still trying to sell
Automatic Data Processing is a provider of cloud-based human capital management (HCM) solutions to employers, providing solutions to businesses of various sizes. The company's two reportable business segments are Employer Services, which provides a range of technology-based HCM solutions, including payroll services, benefits administration, talent management, HR management, workforce management, compliance services, insurance services and retirement services; and Professional Employer Organization, which provides clients with employment administration outsourcing solutions through a relationship in which employees who work for a client are co-employed by the company and the client.
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