Analysts Have Made A Financial Statement On Automatic Data Processing, Inc.'s (NASDAQ:ADP) Third-Quarter Report

Investors in Automatic Data Processing, Inc. (NASDAQ:ADP) had a good week, as its shares rose 4.0% to close at US$304 following the release of its quarterly results. The result was positive overall - although revenues of US$5.6b were in line with what the analysts predicted, Automatic Data Processing surprised by delivering a statutory profit of US$3.06 per share, modestly greater than expected. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.

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Taking into account the latest results, the current consensus from Automatic Data Processing's 15 analysts is for revenues of US$21.6b in 2026. This would reflect a credible 7.0% increase on its revenue over the past 12 months. Statutory earnings per share are predicted to grow 10% to US$10.84. In the lead-up to this report, the analysts had been modelling revenues of US$21.6b and earnings per share (EPS) of US$10.84 in 2026. The consensus analysts don't seem to have seen anything in these results that would have changed their view on the business, given there's been no major change to their estimates.

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There were no changes to revenue or earnings estimates or the price target of US$309, suggesting that the company has met expectations in its recent result. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. Currently, the most bullish analyst values Automatic Data Processing at US$350 per share, while the most bearish prices it at US$284. Even so, with a relatively close grouping of estimates, it looks like the analysts are quite confident in their valuations, suggesting Automatic Data Processing is an easy business to forecast or the the analysts are all using similar assumptions.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Automatic Data Processing's past performance and to peers in the same industry. We would highlight that Automatic Data Processing's revenue growth is expected to slow, with the forecast 5.6% annualised growth rate until the end of 2026 being well below the historical 7.4% p.a. growth over the last five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 7.0% annually. So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than Automatic Data Processing.

The Bottom Line

The most important thing to take away is that there's been no major change in sentiment, with the analysts reconfirming that the business is performing in line with their previous earnings per share estimates. On the plus side, there were no major changes to revenue estimates; although forecasts imply they will perform worse than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.

With that in mind, we wouldn't be too quick to come to a conclusion on Automatic Data Processing. Long-term earnings power is much more important than next year's profits. At Simply Wall St, we have a full range of analyst estimates for Automatic Data Processing going out to 2027, and you can see them free on our platform here..

You can also see whether Automatic Data Processing is carrying too much debt, and whether its balance sheet is healthy, for free on our platform here.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.