Automatic Data Processing, Inc. (NASDAQ:ADP) Second-Quarter Results: Here's What Analysts Are Forecasting For This Year

Investors in Automatic Data Processing, Inc. (NASDAQ:ADP) had a good week, as its shares rose 2.5% to close at US$303 following the release of its quarterly results. Automatic Data Processing reported in line with analyst predictions, delivering revenues of US$5.0b and statutory earnings per share of US$2.35, suggesting the business is executing well and in line with its plan. 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. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

View our latest analysis for Automatic Data Processing

Taking into account the latest results, the current consensus from Automatic Data Processing's 15 analysts is for revenues of US$20.4b in 2025. This would reflect a reasonable 2.7% increase on its revenue over the past 12 months. Per-share earnings are expected to accumulate 2.8% to US$9.94. Before this earnings report, the analysts had been forecasting revenues of US$20.4b and earnings per share (EPS) of US$9.95 in 2025. So it's pretty clear that, although the analysts have updated their estimates, there's been no major change in expectations for the business following the latest results.

It will come as no surprise then, to learn that the consensus price target is largely unchanged at US$306. 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$325 per share, while the most bearish prices it at US$281. With such a narrow range of valuations, the analysts apparently share similar views on what they think the business is worth.

One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. We would highlight that Automatic Data Processing's revenue growth is expected to slow, with the forecast 5.4% annualised growth rate until the end of 2025 being well below the historical 7.2% p.a. growth over the last five years. Compare this to the 139 other companies in this industry with analyst coverage, which are forecast to grow their revenue at 6.2% per year. Factoring in the forecast slowdown in growth, it looks like Automatic Data Processing is forecast to grow at about the same rate as the wider industry.

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. Happily, there were no real changes to revenue forecasts, with the business still expected to grow in line with the overall 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.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have estimates - from multiple Automatic Data Processing analysts - going out to 2027, and you can see them free on our platform here.

It might also be worth considering whether Automatic Data Processing's debt load is appropriate, using our debt analysis tools on the Simply Wall St 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.