What happened
Shares of Automatic Data Processing (ADP -0.74%) rose 13.2% in October, according to data from S&P Global Market Intelligence. The stock climbed thanks to momentum for the broader human resources software industry and better-than-expected quarterly results at the end of the month.
The Labor Department published jobs and economic data early last month, and the report showed that 660,000 non-farm jobs had been added in September. This figure came in below the Dow Jones economist target for 800,000 non-farm job additions in the month, but the data still generally indicated that the economy was continuing to recover from coronavirus-related challenges.
So what
ADP published first quarter results on Oct. 28, delivering sales and earnings for the period that came in ahead of the market's expectations. The company posted non-GAAP (adjusted) earnings per share of $1.41 on revenue of $3.47 billion. The average analyst estimate had called for per-share earnings of $0.98 on revenue of $3.27 billion.
Now what
ADP stock has continued to climb in November's trading, although its gains have lagged those of the S&P 500 index. The software company's share price is up roughly 3% in the month so far.
ADP expects that sales for the current fiscal year will come in somewhere between 1% lower and 1% higher than last year, and its adjusted EBIT margin is projected to decline between 100 and 150 basis points. Adjusted earnings per share are expected to be between 3% and 7% lower on an annual basis.
ADP has a market capitalization of roughly $71.3 billion and trades at approximately 30 times this year's expected earnings. The stock also has a dividend yield of 2.2%, and the company has increased its annual payout for 44 years running.
