Payroll Processors Weekly Review: ADP, Paychex

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ADP: Automatic Data Processing logo
ADP
Automatic Data Processing

This week in the Human Capital Management industry, Paychex (NASDAQ:PAYX) and Automatic Data Processing (NASDAQ:ADP) released their reports pertaining to the condition of the U.S. job environment. Below we take a look at the announcements and implications for both companies. 

Automatic Data Processing

ADP released its National Employment Report revealing that 212,000 job were added in February, slightly short of market expectations of 220,000. [1] The January job additions were revised upwards from 213,000 to 250,000. Some moderation in job additions was noted in the manufacturing, goods producing, and services sectors. Despite the moderation in overall job additions, the market is upbeat about the current U.S. job environment, given the consistent 200,000 plus job additions.

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ADP’s stock declined 2.3% over the week through Thursday as investors’ cashed in on ADP’s strength. We currently have a price estimate of $76 for ADP. We estimate revenues of $11 billion and EPS of $2.96 for fiscal 2015, in line with consensus estimates.

Click here to see our complete analysis of ADP

Paychex

Paychex released the February numbers for its Paychex IHS Small Business Index reporting that the index grew 0.19% sequentially to 100.84. [2] Despite the index reporting a 0.31% decline year-on-year, the market is optimistic about the strength in small business job additions, since the index has reported sequential growth for the second consecutive time.

Paychex’s stock declined 1.3% over the week through Thursday. We currently have a price estimate of $45 for Paychex. We estimate revenues of $2.7 billion and EPS of $1.83 for fiscal 2015, in line with consensus estimates.

Click here to see our complete analysis of Paychex

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Notes:
  1. ADP’s February 2015 National Employment Report, www.adpemploymentreport.com []
  2. The Paychex | IHS Small Business Jobs Index – February 2015, www.paychex.com []