Sector: Industrials | Focus: Human Resource & Employment Services
HQ: Roseland, New Jersey
Financial Risks
ADP faces risks related to market volatility, impacting its ability to access debt markets on favorable terms. Liquidity risk exists, particularly regarding client funds, as the company relies on short-term financing and reverse repurchase agreements. Credit risk is present due to potential borrower defaults on securities held. Legal proceedings, including a class action lawsuit, pose an unknown financial impact. Changes in interest rates and foreign currency exchange rates also present market risks.
Financial Upside
ADP's revenue grew 7% year-over-year, driven by new business, client retention, pricing increases, and increased client funds interest. Earnings before income taxes (EBIT) and adjusted EBIT margins expanded. Shareholder-friendly actions, including dividends and share repurchases, returned $940 million to shareholders. The acquisition of WorkForce Software presents potential for future growth and new solutions.
