ADP - Embedded Expectations Analysis - 2021 03 23
Automatic Data Processing, Inc. (ADP:USA) currently trades at a recent high relative to UAFRS-based (Uniform) earnings, with a 30.2x Uniform P/E. At these levels, the market is pricing in bullish expectations for the firm, but management may be concerned about bookings declines, digital marketing costs, and potential macroeconomic headwindsSpecifically, management may lack confidence in their ability to maintain their product investments, manage their digital marketing costs, and mitigate declines in Employer Services segment bookings, particularly in Southern California. Additionally, they may have concerns about the sustainability of the company's underlying growth trends, the potential for further pandemic-related headwinds, and the accuracy of their bookings forecast based on macroeconomic indicators. Furthermore, they may lack confidence in their ability to retain clients by providing free additional services and expand to new addressable markets with the Celergo acquisition
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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- GAAP and IFRS have failed to provide rules for reliable financial statement reporting
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