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ADP is poised for another quarter of growth

by SuperiorInvest

Key things

  • ADP is likely to post adjusted earnings per share of $1.94 for the 1st quarter of fiscal 2023, up from $1.65 in the prior-year quarter.
  • Revenue could rise 9% to $4.4 billion.
  • ADP has seen consistent improvement in recent quarters as labor market and unemployment data have been strong despite inflation, high interest rates and other headwinds.

Human resources software company ADP Inc. (ADP) are likely to say the company’s second-quarter fiscal 2023 earnings and revenue rose amid a strong labor market.

ADP is likely to report net income of $805.1 million when it reports earnings after markets close on Jan. 25. Edited earnings per share (EPS) likely up roughly 18% year-over-year to $1.94. Revenue is expected to improve 9% to $4.4 billion, according to Visible Alpha estimates.

Key ADP Stats
Estimate for Q2 FY2023 Current for Q2 FY2022 Current for Q2 FY2021
Adjusted EPS ($) 1.94 1.65 1.52
Sales ($B) 4.4 4.0 3.7

Source: Visible Alpha

ADP’s business has been strong in recent quarters as nonfarm payrolls have grown faster than expected and unemployment has remained low. Labor market performance matched healthy demand for ADP’s HR products and services, despite headwinds including a series of interest rate hikes by the Federal Reserve, inflation and the threat of a cooling economy.

The firm has also expanded its international business through offering software in individual countries as well as cloud services covering wider regions around the world. The global labor market has seen an uneven recovery after the pandemic, as the war in Ukraine and tightening monetary policy slowed job growth in some areas.

ADP recently raised its dividend by 20% for the 48th year in a row and announced a $5 billion share buyback program in November.

ADP shares have outperformed the market in the past year, rising 8%, compared with an 18% decline in the benchmark S&P 500 information technology index.

Source: TradingView.

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