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What Awaits Automatic Data Processing (ADP) in Q3 Earnings?

Automatic Data Processing, Inc. ADP is scheduled to release its third-quarter fiscal 2023 results on Apr 26, before market open.

The company has an impressive earnings surprise history, having surpassed the Zacks Consensus Estimate in all the four trailing quarters, with an average surprise of 3.3%.

The Zacks Consensus Estimate for the bottom line is pegged at $2.42, which has been unchanged in the past 60 days.

Automatic Data Processing, Inc. Price and EPS Surprise

 

Automatic Data Processing, Inc. Price and EPS Surprise
Automatic Data Processing, Inc. Price and EPS Surprise

Automatic Data Processing, Inc. price-eps-surprise | Automatic Data Processing, Inc. Quote

Q3 Expectations

The Zacks Consensus Estimate for the top line is pegged at $4.9 billion, suggesting an 8.3% rise from the year-ago actual figure. Our estimate indicates year-over-year revenue growth of 7.8%. The increase can be attributed to improved segmental performances.

Segmental Information

The Zacks Consensus Estimate for the Employer Services segment’s revenues in the to-be-reported quarter is pegged at $3.3 billion, indicating 10% year-over-year growth. The uptick can be associated with the expected healthy demand across the downmarket portfolio, along with a positive international performance, supported by the GlobalView platform.

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Revenues from management solutions are likely to rise 7.3% on a year-over-year basis, the Zacks Consensus Estimate for which is pegged at $1.6 billion. A likely increase in worksite employees and stable demand is anticipated to have been the reason behind the revenue hike.

An improved operating performance is likely to have positively impacted the bottom line. The Zacks Consensus Estimate for earnings indicates 9.5% growth from the year-ago reported figure. Our estimate indicates year-over-year earnings growth of 9.1%.

What Our Model Says

Our proven model does not conclusively predict an earnings beat for ADP this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here. You can uncover the best stocks before they’re reported with our Earnings ESP Filter.

ADP has an Earnings ESP of 0.00% and a Zacks Rank #4 (Sell).

Stocks to Consider

Here are a few stocks from the broader Business Services sector, which according to our model, have the right combination of elements to beat on earnings this season.

Charles River Associates CRAI currently has an Earnings ESP of +4.44% and a Zacks Rank of 3. You can see the complete list of today’s Zacks #1 Rank stocks here.

It is scheduled to report its first-quarter 2023 results on May 4, after market close.

The Zacks Consensus Estimate for the bottom line is pegged at $1.35 per share, suggesting an 11.8% decline from the year-ago reported figure. The consensus mark for revenues is pegged at $152.6 million, indicating a 2.8% hike from the figure reported a year ago. CRAI had an average surprise of 19.8% in the previous four quarters.

Waste Management WM currently has an Earnings ESP of +0.79% and a Zacks Rank of 3. It is scheduled to report its first-quarter 2023 results on Apr 26, after market close.

The Zacks Consensus Estimate for earnings is pegged at $1.27 per share, implying a 1.6% decline from the year-ago reported figure. The consensus mark for revenues is pegged at $4.84 billion, suggesting 3.9% growth from the prior-year reported figure. WM had an average surprise of 4.7% in the previous four quarters.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

Automatic Data Processing, Inc. (ADP) : Free Stock Analysis Report

Charles River Associates (CRAI) : Free Stock Analysis Report

Waste Management, Inc. (WM) : Free Stock Analysis Report

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