ADP Financial Analysis

Analysis Date: 1/30/2025

Business Model

ADP generates revenue primarily through two segments: Employer Services and Professional Employer Organization (PEO) Services

Revenue Sources

• Employer Services (67% of revenue): Offers comprehensive HCM and HR outsourcing solutions
• PEO Services (33% of revenue): Provides employment administration outsourcing solutions

Income Statement Analysis

• Revenue grew 8% driven by strong performance in both segments
• Operating income increased 10.3% with margin expansion of 50 basis points
• Net earnings grew 9.7% reflecting strong operational performance

Capital Allocation

ADP maintains a balanced capital allocation strategy with focus on dividends and strategic investments. The company recently marked its 50th consecutive year of dividend increases.

Management Commentary

Strong Q2 financial and operating performance with 8% revenue growth and 10% adjusted diluted EPS growth

Client satisfaction scores reached all-time highs

Overall Sentiment: Positive with strong execution and strategic progress

Recommendation

Rating: Buy

Reason for Rating: Strong fundamentals with consistent execution and favorable industry positioning

Disclaimer: This analysis is based on company filings and public information. It is for informational purposes only and not financial advice. Past performance does not guarantee future results.

Generated on: 1/30/2025, 4:00:14 AM