[ACCESSWIRE]
Upcoming AWS Coverage on Cognizant Technology Solutions Post-Earnings Results
LONDON, UK / ACCESSWIRE / February 14, 2017 / Active Wall St. announces its post-earnings coverage on Automatic Data Processing, Inc. (NASDAQ: ADP). The Company reported its second quarter fiscal 2017 financial results on February 01, 2017. The payroll and human resources Company surpassed earnings expectations. Register with us now for your free membership at: http://www.activewallst.com/register/.
One of Automatic Data Processing's competitors within the Business Software & Services space, Cognizant Technology Solutions Corp. (NASDAQ: CTSH), reported its earnings results for Q4 2016 on Wednesday, February 08, 2017. AWS will be initiating a research report on Cognizant Technology Solutions in the coming days.
Today, AWS is promoting its earnings coverage on ADP; touching on CTSH. Get our free coverage by signing up to http://www.activewallst.com/register/.
Earnings Reviewed
For the quarter ended December 31, 2016, ADP's revenues grew 6% to $2.99 billion, or 7% on a constant dollar basis, compared to revenue of $2.81 billion in Q2 FY16. The Company's revenue numbers came in slightly below analysts' consensus forecasts of $2.02 billion. The Company's combined worldwide new business bookings declined 5% on a y-o-y basis.
During Q2 FY17, ADP's adjusted EBIT grew 17% to $593 million, 16% on a constant dollar basis. Adjusted EBIT margin increased about 180 basis points in the reported quarter to 19.8% driven by operational efficiencies and slower growth in its selling expenses.
For Q2 FY17, ADP's net earnings from continuing operations grew 50% to $511 million compared to net earnings of $341.4 million in Q2 FY16. The Company's diluted earnings per share from continuing operations increased to $1.13, representing growth of 53% on a reported and constant dollar basis compared to $0.74 per share in the year earlier comparable quarter. ADP's adjusted diluted earnings per share from continuing operations increased 20% to $0.87, 19% on a constant dollar basis, and included a $0.01 tax benefit related to the adoption of new stock-based compensation accounting guidance. The Company's earnings number surpassed analysts' consensus of $0.81 per share.
Segment Results
During Q2 FY17, ADP's Employer Services, that offers a comprehensive range of HCM and human resources outsourcing solutions, reported that revenues increased 4% on a reported and constant dollar basis to $2.31 billion compared to Q2 FY16 revenues of $2.21 billion. The number of employees on ADP clients' payrolls in the United States increased 2.3% for the reported quarter when measured on a same-store-sales basis for a subset of clients ranging from small to large businesses. During the reported quarter, the Company's Employer Services client revenue retention was up 10 basis points compared to the year earlier quarter. Employer Services segment margin increased approximately 150 basis points on a y-o-y basis.
For Q2 FY17, ADP's PEO Services which provides employment administration outsourcing solutions through a co-employment relationship reported a 12% increase in revenue to $822.9 million compared to $737.4 million in Q2 FY16. The segment's margin increased approximately 120 basis points compared to the year earlier corresponding quarter. During Q2 FY17, average worksite employees paid by PEO Services increased 12% to approximately 452,000.
ADP reported that during Q2 FY17, Interest on Funds Held for Clients increased 3% to $92 million from $89 million in the year ago same period. In the reported quarter, average client funds' balances increased 2% to $20.9 billion compared to $20.5 billion a year ago. The average interest yield on client funds was 1.8% which was about flat compared to a year ago.
Fiscal 2017 Outlook
For FY17, ADP now assumes worldwide new business bookings to be about flat with the $1.75 billion sold in FY16 compared to the prior forecast of 4% to 6% growth. ADP now expects full year revenue growth of about 6% compared to its prior forecast of 7% to 8% growth. ADP continues to expect FY17 diluted earnings per share from continuing operations to grow 15% to 17%, and adjusted diluted earnings per share growth of 11% to 13%. For the Employer Services segment, ADP now anticipates revenue growth of approximately 3% to 4% compared to the prior forecast of approximately 4% to 5%. For the PEO Services segment, ADP now anticipates approximately 13% revenue growth compared to the prior forecast of 14% to 16%. For FY17, Interest on funds held for clients is expected to increase $15 million, or about 4%, compared to the prior forecast of $5 to $10 million, or 2% to 3%. This is based on anticipated growth in average client funds balances of approximately 3% from $22.4 billion in FY16 and an average yield which is anticipated to be about flat at 1.7% compared to the FY16 average yield.
Balance Sheet
As of December 31, 2016, ADP had cash and cash equivalents worth approximately $2.71 billion compared to $3.19 billion as on June 30, 2016. Long-term debt was approximately $2.00 billion at the end of Q2 FY17.
In a separate press release on January 17, 2017, ADP's board of directors declared a regular quarterly dividend of $0.57 per share payable April 01, 2017 to shareholders of record on March 10, 2017.
Stock Performance
On Monday, February 13, 2017, the stock closed the trading session at $98.58, marginally up 0.78% from its previous closing price of $97.82. A total volume of 1.50 million shares have exchanged hands. Automatic Data Processing's stock price advanced 8.51% in the last three months, 10.68% in the past six months, and 23.56% in the previous twelve months. The stock is trading at a PE ratio of 26.43 and has a dividend yield of 2.31%.
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