Automatic Data Processing to Report Q3 Earnings: What's in Store?

Automatic Data Processing, Inc. ADP is scheduled to release its third-quarter fiscal 2025 results on April 30, before market open.

ADP has a decent earnings surprise history, surpassing the Zacks Consensus Estimate in the trailing four quarters, with an average surprise of 3.7%.

Automatic Data Processing, Inc. Price, Consensus and EPS Surprise

Automatic Data Processing’s Q3 Expectations

The Zacks Consensus Estimate for the top line is $5.5 billion, suggesting a 4.6% year-over-year increase. The surge in revenues from Employer Services is anticipated to have been the primary contributor to top-line growth.

Our projection for third-quarter fiscal 2025 revenues from Employer Service is $3.8 billion, indicating a 5.4% rise from the year-ago quarter’s actual. Growth in HR outsourcing, compliance, enterprise businesses and small-business offerings are anticipated to have aided this segment’s revenue growth.  

We project Professional Employer Organization (“PEO”) services’ revenues to be $1.7 billion, hinting at 2.4% year-over-year growth. Strong PEO business bookings and faster zero-margin pass-through growth are expected to have driven this segment’s revenues.

Our estimate for Interest on Funds held for clients is $342.4 million, implying a 6.7% rise from the year-ago quarter’s reported figure. Revenues are believed to have improved on the back of increasing average client fund balances.

Our estimate for Average Paid PEO Worksite Employees for the quarter is 753. Changes in Pay per control are anticipated to be 1.8% for the to-be-reported quarter.

The consensus estimate for earnings per share is pegged at $2.96, indicating year-over-year growth of 2.8%. Strong top-line growth is expected to have boosted the bottom line.

What Our Model Says About ADP

Our proven model does not conclusively predict an earnings beat for Automatic Data Processing this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that is not the case here. You can uncover the best stocks before they are reported with our Earnings ESP Filter.

ADP has an Earnings ESP of 0.00% and a Zacks Rank of 3 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Stocks to Consider

Here are a few stocks from the broader Computer And Technology sector, which, according to our model, have the right combination of elements to beat on earnings this season.

Akamai Technologies, Inc. AKAM: The Zacks Consensus Estimate for the company’s first-quarter 2025 revenues is pegged at $1 billion, indicating a year-over-year increase of 2.2%. For earnings, the consensus mark is pegged at $1.58 per share, suggesting a 3.7% decrease from that reported in the year-ago quarter. The company beat the Zacks Consensus Estimate in the past four quarters, with an average surprise of 3.4%.

AKAM currently has an Earnings ESP of +0.07% and a Zacks Rank #3. The company is scheduled to declare its first-quarter 2025 results on May 8. (Find the latest EPS estimates and surprises on Zacks Earnings Calendar.)

DoorDash, Inc. DASH: The Zacks Consensus Estimate for the company’s first-quarter 2025 revenues is pegged at $3.1 billion, indicating year-over-year growth of 10%. For earnings, the consensus mark is pegged at 38 cents per share, implying more than 100% from the year-ago quarter’s actual. The company beat the Zacks Consensus Estimate in two of the past four quarters and missed twice, the average negative surprise being 46.9%.

DASH has an Earnings ESP of +7.68% and a Zacks Rank #3 at present. The company is scheduled to declare its first-quarter 2025 results on May 7.

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This article originally published on Zacks Investment Research (zacks.com).

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