Automatic Data Processing (ADP) Earnings Expected to Grow: Should You Buy?

Earnings Expectations - Wall Street expects Automatic Data Processing (ADP) to report a year-over-year increase in earnings and revenues for the quarter ended December 2024 [1] - The stock price may move higher if the actual results exceed expectations, or lower if they miss, with the earnings report expected on January 29 [2] - The sustainability of the stock price change will depend on management's discussion of business conditions during the earnings call [2] Financial Estimates - ADP is expected to post quarterly earnings of $2.27 per share, representing a year-over-year increase of 6.6% [3] - Revenues are expected to be $4.97 billion, up 6.4% from the year-ago quarter [3] - The consensus EPS estimate has remained unchanged over the last 30 days, reflecting analysts' reassessment of initial estimates [4] Earnings Surprise Prediction - The Zacks Earnings ESP (Expected Surprise Prediction) model compares the Most Accurate Estimate to the Zacks Consensus Estimate, with the former being a more recent version [6] - A positive Earnings ESP indicates a likely deviation of actual earnings from the consensus estimate, with predictive power significant for positive readings only [7] - Stocks with a positive Earnings ESP and a Zacks Rank of 1 (Strong Buy), 2 (Buy), or 3 (Hold) produce a positive surprise nearly 70% of the time [8] ADP's Earnings Outlook - For ADP, the Most Accurate Estimate is higher than the Zacks Consensus Estimate, resulting in an Earnings ESP of +1.15% [10] - The stock currently carries a Zacks Rank of 2, indicating a high likelihood of beating the consensus EPS estimate [11] - ADP has beaten consensus EPS estimates in each of the last four quarters, with a surprise of +5.91% in the last reported quarter [12][13] Investment Considerations - An earnings beat or miss may not be the sole basis for a stock's movement, as other factors can influence investor sentiment [14] - Betting on stocks expected to beat earnings expectations increases the odds of success, making it important to check a company's Earnings ESP and Zacks Rank ahead of its quarterly release [15] - ADP appears to be a compelling earnings-beat candidate, but investors should also consider other factors before making investment decisions [16]