What Will Drive ADP’s Revenue And EBITDA Growth In 2016?
ADP (NASDAQ:ADP) has reported 7-8% revenue growth over the last few years, fueled by higher demand for HR outsourcing and services in that period. HR outsourcing revenues have increased by over 15% in each of the last three years. Comparatively, payroll processing revenues have witnessed moderate single-digit growth in the last four years. In line with the trend over the previous years, we forecast ADP’s net revenues to grow by 8% in 2016, with growth primarily coming from HR outsourcing and services.
Additionally, ADP’s cash operating expenses are likely to increase at the same rate as revenues, leading to a roughly flat operating margin over the previous year. According to our estimates, ADP’s adjusted EBITDA margin stood at just under 21% in 2015 and is likely to remain at around that level through 2016. It should be noted that the key contributor to the EBITDA growth is the corresponding increase in revenue, while the impact of changes in operating expenses is negligible for ADP.
Have more questions about ADP?
- What’s ADP’s Fundamental Value Based On Expected 2016 Results?
- How Do Paychex And ADP Compare On Core Payroll Processing Business?
- 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?
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