Roseland, New Jersey-based Automatic Data Processing, Inc. (ADP) provides cloud-based human capital management (HCM) solutions worldwide. With a market cap of $124.1 billion, Automatic Data Processing operates through Employer Services and Professional Employer Organization (PEO) segments.

The HCM solutions giant has outpaced the broader market over the past year. ADP stock prices have surged 30.7% in 2024 and 31.7% over the past 52 weeks, compared to the S&P 500 Index's ($SPX) 24.7% gains in 2024 and 31.1% returns over the past year.

Narrowing the focus, ADP has also outperformed the Technology Select Sector SPDR Fund's (XLK) gains of 21.3% on a YTD basis and 26.9% over the past year.

Shares of Automatic Data Processing gained 1.7% after the release of its impressive Q3 earnings on Oct. 30. The company had a great start to the year, its recent acquisition of WorkForce Software, a leading workforce management solutions provider, and the introduction of ADP Lyric HCM, its flexible, intelligent, and human-centric global HCM platform, position the company to provide its clients with a unique global HR, payroll, time, and service solution. While maintaining its momentum, the company reported a robust 7.1% year-over-year growth in total revenues, reaching $4.8 billion, beating Wall Street's topline expectations.

Moreover, the company also observed notable growth in profitability, its adjusted EBIT margin expanded by 130 basis points to 25.5%, translating into a 12.7% year-over-year surge in adjusted EBIT, totaling $1.2 billion. Moreover, ADP's adjusted EPS grew 12% compared to the year-ago quarter to $2.33, exceeding analysts' consensus estimates by 5.9%.

For the current fiscal year, ending in June 2025, analysts expect ADP to report an 8.2% year-over-year growth in adjusted EPS to $9.93. Moreover, the company has a robust earnings surprise history. It surpassed analysts' consensus estimates in the past four quarters.

ADP stock has a consensus "Hold" rating overall. Among the 20 analysts covering the stock, three advise "Strong Buy," 15 recommend "Hold," and two suggest a "Strong Sell" rating.

On Nov. 4, Mizuho analyst Dan Dolev maintained an "Outperform" rating while raising the price target to $310.

As of writing, ADP is trading above its mean price target of $291. The Street-high price target of $325 represents just a 6.7% premium to current price levels.

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