Automatic Data Processing (ADP)
The Company is a provider of business outsourcing solutions. It offers number of HR, payroll, tax and benefits administration solutions from a single source and also provides integrated computing solutions to automotive and recreational vehicle dealers.
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Way overbought here....numbers don't add up. Short.
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Has outperformed for the past 6 months without real merit. Yes, this is a good company, but it seems overvalued at these levels. I'm also concerned about their rolls dropping due to economic contraction. ADP is larger than its competitors, but don't underestimate their competitors' pitch to prospectives claiming to save money on payroll processing...
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Massive layoffs equals fewer paychecks being issued. Unless their contracts are not based on employee headcount, I worry for ADP. I think it's solid, but i also think it will also solidly underperform until unemployment is under 5.5%
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Until interest rates rise ADP is going to lag the market. Due to its solid balance sheet it has not been beat up as bad as the rest of the world, but it won't gain as quickly as the S&P if/when there's a recovery.
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A key portion of ADP's earnings is tied to interest rates on floating funds, performance will likely remain low until the Fed begins to raise interest rates.
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ADP before 9/11 was a stock that would split about every 5 years.
Times are different now, with their Dealer Services Division making up about 15% of the company and the Automotive business struggling don't look for much movement. If they can unload the DS Division just as they did with the underperforming Brokerage Division about 2 years ago I would change my opinion to outperform but I don't see that happening any time soon. Just my opinion...Good Luck!!
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I have owned this stock for the last 5 years. I bought it in 2003 at $38.45. Even taking into account dividends paid, it has grown only 10% in the last five years. Net of expenses (broker fees), I'm barely at a break even point. I'm very disappointed in its recent performance. I'll wait for the next dividend payout but I think I'm going to sell it soon.
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increased competition in this market
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sensitive to lower interest rates due to lareg float holding of employers tax money
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Despite other companies growing since the tech bubble, this one has minimal annualized growth. May be in position for buyout though.
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i have been tracking this company for some time. it has not budged above $51. its just stuck there. the company is too big. while Paychex is doing better, it has been growing for some time.

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