ADP heads into Q4 earnings with 5.9% revenue growth expected

Automatic Data Processing Inc. is scheduled to report fiscal fourth-quarter results on July 29 before the market opens, with analysts projecting revenue of $5.4 billion, up 5.9% from a year earlier.

"The company's Employer Services segment remains the primary growth engine, supported by strong client retention and business bookings," a Zacks Equity Research report said. ADP has surpassed the consensus estimate in each of the past four quarters, delivering an average earnings surprise of 2%.

The consensus estimate for the Employer Services segment stands at $3.7 billion, implying 5.8% year-over-year growth. Professional Employer Organization services revenue is expected at $1.8 billion, a 5.9% gain, driven by robust sales activity and client wins. Interest on funds held for clients is forecast at $340.6 million, up 10.7%, as average client funds have grown.

Earnings per share are expected at $2.59, a 14.6% increase from the prior year. Controlled selling expenses and continued share repurchases, which lower the outstanding share count, are likely to support bottom-line expansion. ADP carries a Zacks Rank of 3 (Hold) with an Earnings ESP of +0.16%, indicating a slight probability of a beat.

The payroll and human resources giant, a component of both the S&P 500 and the Dow Jones Industrial Average, could see notable price movement depending on whether it delivers on the top- and bottom-line estimates. A beat would likely reinforce confidence in ADP's recurring revenue model and client retention trajectory. Investors will watch the July 29 earnings call for updated guidance on segment margins and client funds growth for fiscal 2027.

This article is for informational purposes only and does not constitute investment advice.