After spending much of the past year at a respectable four-star rank, ADP (Nasdaq: ADP) has impressed enough top-performing members of our 170,000-strong Motley Fool CAPS community to take it to the top level of five stars. A total of 971members have given their opinion on the business solutions firm, with many of them offering analysis and commentary explaining the recent optimism.
Similar to peers Administaff (NYSE: ASF) and Paychex (Nasdaq: PAYX), ADP has been working hard to maintain business in a challenging employment environment. But the company has seen signs of stabilization trends and recently entered its new fiscal year with some solid sales momentum. It saw strong new business sales in its employer services and professional employer organization (PEO) services segments with each segment posting sales growth in its fiscal fourth quarter. Despite the weakness in the labor market, many CAPS members believe ADP's strong balance sheet and solid position in its industry have it on a path of long-term growth.
ADP's dealer services segment has been picking up market share in key international markets like China and the Middle East, as well. While automaker customers such as Ford (NYSE: F) and Toyota (NYSE: TM) posted declining U.S. August sales numbers compared to the government-subsidized sales numbers of last year, China and other emerging markets are seeing big growth. ADP is positioning itself to benefit here with recently inked deals with Chrysler China and a major South African dealer group.
ADP has been active refocusing internally as well. It's been investing resources in its various businesses. It recently completed acquisitions of Workscape and Cobalt, and inked an agreement to buy one of its dealer services distributors, PACC, in the Middle East. Cobalt and PACC are expected to boost its dealer services presence and Workscape will help it compete for larger benefit solutions deals.
And while investors won't find a dividend payout from other companies in the software and services sector such as Cognizant (Nasdaq: CTSH) and Citrix Systems (Nasdaq: CTXS), CAPS members are big fans of ADP's strong dividend history, which includes increasing its payout for 35 consecutive years.
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