Group 1 - Automatic Data Processing, Inc. (ADP) has seen its stock price decline from $329 to $283, prompting discussions about its performance and future outlook [1] - Jim Cramer expressed confidence in ADP, suggesting investors should hold onto their shares despite recent negative research [1] - The company is recognized for its cloud-based human capital management solutions, which automate payroll, HR, and workforce functions [2] Group 2 - Since a recent comment by Cramer, ADP's stock has dropped over 4.5%, indicating market volatility and investor sentiment [2] - There is a belief that certain AI stocks may present better investment opportunities compared to ADP, highlighting a competitive landscape in the tech sector [3]

Core Insights - ADP is set to release its first-quarter fiscal 2026 results on October 29, with a history of surpassing earnings estimates, averaging a surprise of 3.7% over the last four quarters [1] Revenue Expectations - The Zacks Consensus Estimate for ADP's revenue is $5.1 billion, reflecting a year-over-year growth of 6.1% [2] - Employer Services revenue is expected to be $3.4 billion, indicating a 5% increase from the previous year [2] - Professional Employer Organization (PEO) services are projected to generate $1.7 billion in revenue, suggesting a 7.3% year-over-year growth [3] Earnings Projections - Interest on funds held for clients is estimated at $294.4 million, representing a 16.3% increase from the prior year [3] - The average paid PEO worksite employees for the quarter is projected to be 759, with a 1% change in pay per control anticipated [4] - Earnings per share (EPS) is estimated at $2.44, indicating a year-over-year growth of 4.7% [4] Earnings Prediction Model - The current model does not predict a definitive earnings beat for ADP, with an Earnings ESP of +1.80% and a Zacks Rank of 4 (Sell) [5] Comparison with Other Companies - Western Digital is expected to report revenues of $2.7 billion, a 34% year-over-year decline, with an EPS consensus of $1.58, reflecting an 11.2% decrease [7] - Seagate Technology anticipates revenues of $2.5 billion, indicating a 16.7% year-over-year increase, with an EPS consensus of $2.36, suggesting a 49.4% growth [10]

Core Viewpoint - Wall Street analysts anticipate Automatic Data Processing (ADP) to report quarterly earnings of $2.44 per share, reflecting a year-over-year increase of 4.7%, with revenues expected to reach $5.13 billion, up 6.1% from the previous year [1] Earnings Projections - The consensus EPS estimate for the quarter has been revised downward by 0.1% over the past 30 days, indicating a collective reassessment by analysts [1][2] - Revisions to earnings projections are crucial for predicting investor behavior and are linked to short-term stock price performance [2] Revenue Estimates - The consensus estimate for 'Segment revenues- Employer Services' is $3.45 billion, showing a year-over-year change of +5.7% [4] - 'Revenues- Interest on funds held for clients' is estimated at $281.99 million, indicating a year-over-year change of +11.3% [4] - 'Revenues- PEO revenues' are projected to reach $1.67 billion, reflecting a year-over-year change of +6.3% [4] - 'Segment revenues- PEO Services' are forecasted to be $1.68 billion, with a year-over-year change of +6.7% [5] - 'Revenues, other than interest on funds held for clients and PEO revenues' are expected to total $3.17 billion, indicating a year-over-year change of +5.3% [5] Key Metrics - The average paid PEO worksite employees during the period is estimated to be 757, compared to 737 in the previous year [6] - ADP shares have decreased by 2.5% in the past month, contrasting with the Zacks S&P 500 composite's increase of 1.3% [6] - ADP holds a Zacks Rank 4 (Sell), suggesting expected underperformance relative to the overall market in the near term [6]

Core Insights - The Federal Reserve faces unprecedented challenges in setting interest rates due to a lack of available economic data, exacerbated by a government shutdown that halted the release of key statistics [1] - The loss of ADP's internal data, which covered about one-fifth of the private sector workforce, has left the Fed without a crucial real-time measure of employment conditions [1][2] - The absence of reliable data increases the risk of significant policy missteps, as the Fed may either over-tighten or under-tighten monetary policy [1][3] Group 1 - ADP had been providing anonymous payroll and income data to the Fed since at least 2018, which helped economists construct weekly employment trend indicators [2] - Following a public mention of this data by Fed Governor Waller, ADP abruptly suspended access, prompting concerns about the implications for monetary policy [2] - The potential reasons for ADP's decision include methodological issues with their data or internal pressures regarding the perception of their relationship with the Fed [3] Group 2 - The timing of the data loss is particularly problematic as the Federal Open Market Committee (FOMC) prepares to decide on interest rate cuts amid a lack of official employment, unemployment, and wage data [4] - In the absence of real-time data, the Fed is relying on alternative sources such as state unemployment claims and regional bank surveys, which are deemed useful but incomplete [4] - There is a call for the Bureau of Labor Statistics to secure multi-year funding to maintain operations even during government shutdowns, highlighting the critical need for a robust statistical system [4]

Core Insights - The Federal Reserve is facing an unprecedented data shortage ahead of its policy meeting on October 28-29, primarily due to the ongoing government shutdown, which has hindered access to critical official economic statistics [1][3] - A significant third-party employment data source, ADP, has ceased supplying data to the Federal Reserve, further complicating the already unclear economic landscape in the U.S. [3] Group 1: Data Shortage Impact - The government shutdown has resulted in a lack of key economic statistics, making it difficult for policymakers to make informed decisions regarding monetary policy [1] - The interruption of ADP's data supply exacerbates the situation, as employment data is a core consideration for monetary policy [3] Group 2: ADP's Data Supply Suspension - ADP has stopped providing aggregated management data to the Federal Reserve, citing its commitment to public service and the need to protect client confidentiality [3] - Efforts by Federal Reserve Chairman Jerome Powell to persuade ADP to resume data sharing have not yet been successful [3] - Powell has previously indicated that while private data sources cannot fully replace official statistics, ADP serves as a reasonable alternative in the employment data sector [3]

Core Insights - The Federal Reserve has lost access to employment data provided by ADP, which has been a key source of information since 2018, covering 20% of the private sector workforce [1] - The cessation of data sharing occurred after a speech by Fed Governor Waller in August, which raised public attention regarding the Fed's reliance on ADP data [1] - The specific reasons for ADP's decision to stop providing data to the Fed remain unclear [1] Summary by Categories Employment Data Access - ADP has been supplying the Federal Reserve with a dataset containing anonymous employment and income information, allowing for timely assessments of the labor market [1] - The Fed typically received this data with about a one-week delay, making it a comprehensive measure of employment conditions [1] Impact of Waller's Speech - Waller's remarks included a footnote referencing ADP data, which highlighted concerns about a slowdown in the labor market [1] - The footnote indicated that preliminary estimates showed a continued deterioration in hiring conditions over the summer, beyond the latest government data coverage [1]

Core Insights - ADP reported strong fourth-quarter fiscal 2025 results with earnings per share of $2.26, exceeding consensus estimates by 1.8% and reflecting an 8.1% year-over-year increase. Total revenues reached $5.1 billion, surpassing estimates by 1.5% and growing 5.7% year-over-year [1][10]. Business Strategy - The company employs a three-tier business strategy that enhances its position as a human capital management (HCM) technology and services provider, offering a comprehensive suite of cloud-based HCM and HR Outsourcing (HRO) solutions [2]. - ADP is expanding its global HCM and HRO businesses through established local software solutions and cloud-based multi-country solutions [2]. Operational Initiatives - The company has increased DataCloud penetration and investment in inside sales, mid-market migrations, and service alignment initiatives, leveraging ongoing transformation efforts [3]. - Continuous innovation and operational improvements are aimed at expanding margins and enhancing forward-thinking capabilities [3]. Financial Performance - ADP has consistently paid dividends, with payouts of $2.4 billion in fiscal 2025, up from $2.2 billion in 2024, indicating a commitment to returning value to shareholders and confidence in business stability [4]. - The current ratio at the end of Q4 fiscal 2025 was 1.05, an improvement from 1.02 in the previous quarter and 1.01 a year ago, suggesting the company can easily cover short-term obligations [5]. Expenditure Trends - The company has seen a notable increase in expenditures due to acquisitions and transformation projects, with increases of 6.8% and 6.2% in fiscal 2025 and 2024, respectively [6]. - Historical expenditure increases of 8% and 10% in fiscal 2023 and 2022 indicate ongoing pressure on ADP's bottom-line performance [6]. Competitive Landscape - ADP faces significant competition across its product lines, particularly in Employer Services and PEO Services, which compete with independent business outsourcing companies [7]. - The company has experienced a decline in its retention rate, leading to increased competition and migration from its legacy business [7].

Core Viewpoint - Automatic Data Processing, Inc. (NASDAQ: ADP) is set to announce its Q1 '26 earnings on October 29, indicating a significant upcoming event for investors and analysts to monitor [1]. Group 1 - The company is expected to provide insights into its financial performance, which may influence investor sentiment and stock valuation [1]. - The author emphasizes a long-term investment strategy, focusing on a mix of growth, value, and dividend-paying stocks, with a particular inclination towards value investments [1].

Core Insights - Automatic Data Processing, Inc. (ADP) is a leading provider of cloud-based human capital management solutions with a market capitalization of $117.8 billion [1] - The company is expected to report an adjusted profit of $2.44 per share for Q1, reflecting a 4.7% increase from the previous year [2] - ADP has a strong earnings surprise history, having exceeded analysts' bottom-line estimates in the last four quarters [2] Financial Performance - For the full fiscal year 2026, ADP's adjusted EPS is projected to be $10.92, a 9.1% increase from $10.01 in 2025 [3] - In fiscal 2027, earnings are anticipated to rise further by 9.5% year-over-year to $11.96 per share [3] - In Q4 of fiscal 2025, ADP reported net revenues of $5.1 billion, marking a 7.5% year-over-year increase and exceeding expectations by 1.5% [5] Stock Performance - Over the past 52 weeks, ADP's stock has decreased by 65 basis points, underperforming the Technology Select Sector SPDR Fund's 25.9% increase and the S&P 500 Index's 16.3% returns [4] - Following the release of strong Q4 results, ADP's stock experienced a slight uptick [5] Analyst Sentiment - The overall consensus rating for ADP is "Hold," with 17 analysts providing coverage: three "Strong Buys," 13 "Holds," and one "Strong Sell" [6] - The mean price target for ADP is $318.54, indicating an 11.4% upside potential from current price levels [6]

Group 1 - The primary goal of the "High Income DIY Portfolios" Marketplace service is to provide high income with low risk and capital preservation for DIY investors [1] - The service offers seven portfolios designed for income investors, including retirees or near-retirees, featuring three buy-and-hold portfolios, three rotational portfolios, and a conservative NPP strategy portfolio [1] - The portfolios include two high-income portfolios, two dividend growth investing (DGI) portfolios, and a conservative NPP strategy portfolio aimed at low drawdowns and high growth [1] Group 2 - The article is part of a monthly series on dividend stocks, analyzing approximately 7,500 stocks listed on U.S. exchanges [2] - The author has disclosed beneficial long positions in a variety of companies, indicating a vested interest in the stocks mentioned [2]