ADP - Embedded Expectations Analysis - 2021 07 19
Automatic Data Processing, Inc. (ADP:USA) currently trades at a recent high relative to UAFRS-based (Uniform) earnings, with a 32.3x Uniform P/E. At these levels, the market is pricing in bullish expectations for the firm, but management may be concerned about driving incremental productivity improvements, customer retention rates, and the potential of the Next Gen Payroll engine.Specifically, management may lack confidence in their ability to drive incremental productivity improvements in the long run, remain above the industry benchmark for retention rates, and improve client funds interest revenues. Moreover, they may have concerns about the potential of the Next Gen Payroll engine, the launch of their Roll app, and the extension of their portfolio duration. Management may also lack confidence in their ability to improve client satisfaction and increase shareholder returns. Finally, they may be exaggerating the accelerated recovery of their clients' buying decisions, and they may have concerns about their business's overall growth potential.
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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