Reasons Why Investors Can Consider Buying ADP Stock Now

Core Insights - Automatic Data Processing, Inc. (ADP) is enhancing growth through increased DataCloud penetration and investments in sales and service alignment initiatives, which are improving operational efficiency and supporting margin expansion [1][10] Financial Performance - In Q1 FY26, ADP achieved mid-single-digit growth in revenues, earnings, and EPS, with a strong adjusted EBIT margin of 25.5%, driven by robust new business bookings and high client retention [2][10] - The Zacks Consensus Estimate for Q2 FY26 revenues is $5.3 billion, reflecting a 5.6% increase year-over-year, while the full fiscal year estimate is $21.76 billion, indicating a 5.8% rise [7] - The consensus estimate for Q2 FY26 earnings is $2.58 per share, showing a 9.8% year-over-year growth, and for the full fiscal year, it is $10.93 per share, implying a 9.2% growth from the previous year [8] Strategic Initiatives - ADP is pursuing strategic acquisitions to enhance its product portfolio and global reach, with recent acquisitions like WorkForce Software strengthening its workforce management capabilities [3][10] - The company is focusing on assets that align with its core business to reinforce its long-term growth strategy [3] Shareholder Returns - ADP has raised its dividend for the 51st consecutive year, increasing it by 10% to an annual rate of $6.80 per share, reflecting management's confidence in the company's cash flows and financial resilience [4] Investment Appeal - ADP holds a Zacks Rank of 2 (Buy), indicating attractive investment opportunities [5] - The company has a strong earnings surprise history, surpassing the Zacks Consensus Estimate in the last four quarters with an average surprise of 2.7% [6]