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What Does Wall Street See for Automatic Data Processing's Q4?

By Seth Jayson – Updated Apr 10, 2017 at 12:34PM

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Checking expectations

Automatic Data Processing (Nasdaq: ADP) is expected to report Q4 earnings on Aug. 1. Here's what Wall Street wants to see:

The 10-second takeaway
Comparing the upcoming quarter to the prior-year quarter, average analyst estimates predict Automatic Data Processing's revenues will grow 6.7% and EPS will increase 7.5%.

The average estimate for revenue is $2.81 billion. On the bottom line, the average EPS estimate is $0.57.

Revenue details
Last quarter, Automatic Data Processing reported revenue of $3.11 billion. GAAP reported sales were 7.0% higher than the prior-year quarter's $2.91 billion.

Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions. Non-GAAP figures may vary to maintain comparability with estimates.

EPS details
Last quarter, EPS came in at $0.99. GAAP EPS of $0.99 for Q3 were 8.8% higher than the prior-year quarter's $0.91 per share.

Source: S&P Capital IQ. Quarterly periods. Non-GAAP figures may vary to maintain comparability with estimates.

Recent performance
For the preceding quarter, gross margin was 51.3%, 30 basis points worse than the prior-year quarter. Operating margin was 22.9%, 20 basis points worse than the prior-year quarter. Net margin was 15.5%, much about the same as the prior-year quarter.

Looking ahead

The full year's average estimate for revenue is $11.31 billion. The average EPS estimate is $2.92.

Investor sentiment
The stock has a four-star rating (out of five) at Motley Fool CAPS, with 1,095 members out of 1,157 rating the stock outperform, and 62 members rating it underperform. Among 394 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 382 give Automatic Data Processing a green thumbs-up, and 12 give it a red thumbs-down.

Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on Automatic Data Processing is outperform, with an average price target of $63.55.

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Seth Jayson had no position in any company mentioned here at the time of publication. You can view his stock holdings here. He is co-advisor of Motley Fool Hidden Gems, which provides new small-cap ideas every month, backed by a real-money portfolio. The Motley Fool recommends Automatic Data Processing. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Stocks Mentioned

Automatic Data Processing Stock Quote
Automatic Data Processing
$269.90 (0.73%) $1.95

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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