The Employees Retirement System of Texas has acquired a significant stake in Automatic Data Processing, Inc. (NASDAQ: ADP), purchasing 22,200 shares valued at approximately $6.8 million. This investment was revealed in a report from Holdings Channel.com and reflects a growing interest among institutional investors in the business services provider.
Several other major investors have also adjusted their holdings in Automatic Data Processing during the second quarter. Jacobsen Capital Management increased its position by 3.8%, now owning 907 shares valued at $280,000 after acquiring an additional 33 shares. Similarly, Signature Wealth Management Group boosted its stake by 2.3%, holding 1,450 shares valued at $447,000. Bangor Savings Bank and Ameritas Advisory Services also expanded their holdings modestly, reflecting a broader trend among institutional investors, who currently own 80.03% of ADP’s stock.
Insider Trading Activity
In related news, there has been notable insider trading at Automatic Data Processing. On September 3, 2023, Vice President Joseph Desilva sold 4,614 shares at an average price of $296.57, totaling approximately $1.37 million. Post-sale, he holds 17,536 shares valued at around $5.2 million, marking a 20.83% reduction in his position.
Another vice president, Christopher D’ambrosio, sold 597 shares on September 10, 2023, fetching around $177,249.30. He now owns 10,541 shares, valued at approximately $3.13 million, which is a 5.36% decrease in his holdings. In total, insiders have sold 52,516 shares worth $15.63 million over the last ninety days, while insiders hold 0.20% of the stock.
Recent Financial Performance
Automatic Data Processing’s latest earnings report, released on October 29, 2023, indicates strong financial performance. The company reported earnings per share (EPS) of $2.49, exceeding analysts’ expectations of $2.44 by $0.05. Revenue for the quarter reached $5.18 billion, surpassing estimates of $5.14 billion. This performance marks a 7.1% increase in revenue compared to the same quarter last year, when the company earned $2.33 EPS.
Looking ahead, Automatic Data Processing has set its fiscal year 2026 guidance at EPS between $10.811 and $11.011. Analysts predict that the company will post an EPS of $9.93 for the current fiscal year.
Dividend Increase and Analyst Ratings
In addition to its robust earnings, Automatic Data Processing announced a quarterly dividend of $1.70 per share, to be paid on January 1, 2024. This is an increase from the previous dividend of $1.54, translating to an annualized dividend of $6.80 and a yield of 2.7%. The company’s dividend payout ratio stands at 67.13%.
Analysts have varied opinions on ADP’s stock. Citigroup initiated coverage on October 23, 2023, issuing a “neutral” rating with a price target of $303.00. Weiss Ratings reaffirmed a “buy (B-)” rating, while Wells Fargo & Company lowered its price target from $288.00 to $272.00 and rated the stock as “underweight.” JPMorgan Chase & Co. also cut its price target from $340.00 to $295.00, maintaining an underweight rating. Presently, the consensus rating for ADP is “Hold,” with an average target price of $312.67.
Automatic Data Processing, Inc. provides cloud-based human capital management solutions globally, operating in two segments: Employer Services and Professional Employer Organization (PEO). The company’s strategic platforms and HR outsourcing solutions continue to attract significant investor interest, as evidenced by the recent transactions from large institutional stakeholders.
