Automatic Data Processing (NASDAQ:ADP), which competes with Paychex (NASDAQ:PAYX), reported a decline in its payroll revenues from large businesses for 2009 due to the economic environment in the US. We expect ADP’s payroll revenue declines to continue in 2010 for ADP.
Articles for ADP
Payroll Processing 83% of ADP’s Stock
Graph ItNEW!Friday, May 21st, 2010 by Trefis Team
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Near-Term Decline in ADP’s Payroll Revenues From Small Businesses Expected
Graph ItNEW!Thursday, May 13th, 2010 by Trefis Team
ADP (NASDAQ:ADP), a leading payroll processor along with Paychex (NASDAQ:PAYX), serves many large businesses in the US and also caters to a sizeable number of small businesses (fewer than 50 employees). ADP served a total of 425,000 small business clients in 2008 before the economic crisis began. This number decreased by more than 10,000 in 2009, and we expect this declining trend to continue for the next few years.
We estimate that payroll processing constitutes 83% of the $52 Trefis price estimate for ADP’s stock. Small businesses are still struggling to survive in the weak macroeconomic environment, and some are closing down or laying off employees.
The results of a recent survey by National Federation of Independent Business (NFIB) suggest that more jobs will be eliminated by small business owners in the near future. A decline in the number of ADP small business customers along with a decline in the average number of employees at small businesses will negatively impact the payroll processing revenues that ADP earns from these businesses.
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Weak Economic Conditions Continue to Mar Paychex’s Payroll Revenues
Graph ItNEW!Thursday, May 6th, 2010 by Trefis Team
Paychex (NASDAQ: PAYX), which competes with ADP (NASDAQ:ADP), provides payroll processing and other HR services related to insurance, retirement and health benefits. Compared to its competitor ADP, a significant percentage of Paychex’s client base consists of small and medium sized businesses (fewer than 50 employees).
Payroll processing is the most important division for Paychex, constituting 68% of the Trefis price estimate of $28 for Paychex’s stock. Paychex continues to suffer from declining payroll revenues mainly attributable to ongoing weak macroeconomic conditions in the US which is causing a decline in the number of Paychex payroll clients.
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ADP’s Stock Depends on Large National Payroll Accounts
Graph ItNEW!Wednesday, April 14th, 2010 by Trefis Team
ADP (NASDAQ:ADP) and Paychex (NASDAQ:PAYX) are the leading payroll processors in the US. The stocks of both companies are dependent on employment levels and the overall state of the economy. More than 80% of ADP’s stock value comes from its payroll processing business compared to around 70% for the stock of its competitor Paychex.
ADP caters mainly to large businesses (or national accounts) that have huge volumes of payroll processing requirements owing to a substantial employee base. These companies offer greater stability during recessionary times in comparison to smaller companies. These factors make national payroll accounts crucial for ADP’s business.
Below we discuss the importance of payroll processing to ADP’s stock, and the reasons that make national accounts vital for ADP.
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Featured Forecast: 550K+ Paychex Payroll Clients
Graph ItNEW!Friday, February 12th, 2010 by Trefis Team
Paychex (NASDAQ:PAYX) competes primarily with ADP (NASDAQ:ADP) in the payroll processing market and is dependent on the success of the small businesses that make up the majority of its clients. We estimate that the payroll processing business constitutes nearly 70% of the $29 Trefis price estimate for Paychex’s stock.
We estimate that Paychex had about 570,000 clients in 2008 and that this figure has since declined to slightly more than 550,000 due to the recessionary environment which put some of Paychex’s clients out of business.
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How GM and Chrysler impact payroll processor ADP
Graph ItNEW!Wednesday, December 2nd, 2009 by Trefis Team
General Motors announced plans earlier this year that it would close about 40% of its total 6,200 auto dealers by 2010. Similarly Chrysler has closed down about a third of the 3,200 dealerships that it had at the beginning of the year.
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When companies have layoffs, Paychex’s stock suffers
Graph ItNEW!Tuesday, August 4th, 2009 by Trefis Team
Paychex makes money primarily through payroll processing which includes paper and electronic distribution of employee compensation. Businesses save time and resources by outsourcing their payroll processing needs to companies like Paychex and its primary competitor ADP. The payroll processing business constitutes 75% of the $29.96 Trefis price estimate for Paychex.
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ADP : All Articles
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