Why ADP’s Payroll Processing Business Can Be Key To Its Long Term Growth?

ADP (NASDAQ:ADP) is likely to witness the most revenue growth from its payroll processing business going forward, as compared to client funds interest or HR outsourcing and services. ADP’s primary strength lies in its ability to offer customized solutions to larger clients. As a result, its payroll processing division has grown at a consistent 4% from 2011 through 2016. We forecast payroll processing revenues to grow at about 5% in the next five years.

Moreover, ADP is one of the largest players in the payroll processing space, and as a result it continues to command high pricing compared to peers such as Paychex (NASDAQ:PAYX), which primarily caters to small and medium businesses. We forecast ADP’s revenue generated per client to increase from about $12,800 in 2016 to $14,400 in 2021. Comparatively, Paychex’s revenue generated per payroll processing client could rise from $2,600 in 2016 to $3,500 by 2021.

Have more questions about ADP (NASDAQ:ADP) or Paychex (NASDAQ:PAYX)? See the links below:

• What’s ADP’s Fundamental Value Based On Expected 2016 Results?
• What’s ADP’s Revenue & EBITDA Breakdown By Segment?
• How Has ADP’s Revenue & EBITDA Composition Changed In The Last Five Years?
• Where Will ADP’s Revenue Growth Come From In The Next Five Years?
• ADP Earnings: Top Line Growth From HCM Demand, New Bookings
• What’s Paychex’s Fundamental Value Based On Expected 2016 Results?
• What’s Paychex’s Revenue & Earnings Composition?
• How Has Paychex’s Revenue & EBITDA Composition Changed In The Last Five Years?
• Where Will Paychex’s Revenue Growth Come From In The Next Five Years?

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