Automatic Data Processing, Inc. ADP has reported impressive second-quarter fiscal 2026 results, wherein earnings and revenues outpaced the Zacks Consensus Estimate.
ADP’s earnings per share of $2.62 beat the consensus estimate by 1.6% and increased 11.5% from the year-ago quarter. Total revenues of $5.4 billion missed the consensus estimate by a slight margin but grew 6.2% on a year-over-year basis.
The ADP stock has declined 12.8% in the past year compared with the industry’s 4.1% dip and the 19.1% rise of the Zacks S&P 500 Composite.
Automatic Data Processing, Inc. Price, Consensus and EPS Surprise
Automatic Data Processing, Inc. price-consensus-eps-surprise-chart | Automatic Data Processing, Inc. Quote
ADP’s Segmental Results
Employer Services’ revenues of $3.6 billion increased 6% on a reported basis and 5% on an organic constant-currency basis, surpassing the Zacks Consensus estimate of $3.3 billion. Pays per control increased 1% with the year-ago quarter.
PEO Services’ revenues gained 6% from the year-ago quarter to $1.8 billion and beat the consensus mark of $1.7 billion. Average worksite employees paid by PEO Services were 758,000, rising 2% from the year-ago quarter.
Interest on funds held for clients grew 13% from the year-ago quarter to $309 million and missed the consensus estimate of $310.2 million. ADP’s average client funds balance rose 6% to $37.6 billion. The average interest yield on client funds expanded 20 basis points (bps) to 3.3%.
Automatic Data Processing’s Margins
Adjusted EBIT increased 10% on a year-over-year basis to $1.4 billion. The adjusted EBIT margin gained 80 bps to 26%.
The margin of Employer Services decreased 50 bps, while PEO Services dipped 70 bps from the year-ago quarter.
Balance Sheet & Cash Flow of ADP
Automatic Data Processing exited second-quarter fiscal 2026 with cash and cash equivalents of $2.4 billion compared with $2.5 billion at the end of the preceding quarter. The long-term debt of $4 billion remained flat with the preceding quarter.
The company generated $1.1 billion in cash from operating activities in the quarter.
Automatic Data Processing’s FY26 Outlook
For fiscal 2026, ADP expects year-over-year revenue growth of 6% compared with the preceding quarter’s projection of 5-6%. The adjusted EPS growth guidance is kept at 9-10% compared with the 8-10% provided in the first quarter of fiscal 2026. The adjusted effective tax rate is estimated to be 23%. The guidance for the adjusted EBIT margin is 50-70 bps.
Automatic Data Processing’s Employer Services’ revenue growth expectations are at 6% compared with the 5-6% provided in the preceding quarter. For PEO Services, revenue growth is kept at 5-7%.
ADP carries a Zacks Rank #3 (Hold) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Earnings Snapshot
Accenture plc ACN reported impressive first-quarter fiscal 2026 results.
ACN’s earnings were $3.94 per share, beating the Zacks Consensus Estimate by 5.6%. The metric increased 9.8% from the year-ago quarter. Total revenues of $18.7 billion beat the consensus estimate by 1% and rose 6% on a year-over-year basis.
Paychex, Inc. PAYX posted impressive second-quarter fiscal 2026 results.
PAYX’s fiscal second-quarter earnings of $1.26 per share beat the Zacks Consensus Estimate by 1.6% and increased 10.5% from the year-ago quarter. Total revenues of $1.6 billion surpassed the consensus estimate by a slight margin and rallied 18.3% from the year-ago quarter.
Quantum Computing Stocks Set To Soar
Artificial intelligence has already reshaped the investment landscape, and its convergence with quantum computing could lead to the most significant wealth-building opportunities of our time.
Today, you have a chance to position your portfolio at the forefront of this technological revolution. In our urgent special report, Beyond AI: The Quantum Leap in Computing Power, you'll discover the little-known stocks we believe will win the quantum computing race and deliver massive gains to early investors.
Access the Report Free Now >>Accenture PLC (ACN) : Free Stock Analysis Report
Paychex, Inc. (PAYX) : Free Stock Analysis Report
Automatic Data Processing, Inc. (ADP) : Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
