ADP Stock Pullback: A Buying Opportunity for Income Investors
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 3 days ago
0mins
Should l Buy ADP?
Source: Fool
- Stock Pullback: ADP's stock has declined nearly 70% since its mid-2025 peak, currently priced at $202.49 with a market cap of $81 billion, making it an attractive option for income-focused investors.
- Financial Performance: The company reported a 6% year-over-year revenue increase to $5.4 billion in its fiscal second quarter, exceeding estimates, with earnings per share of $2.62, an 11% improvement from the previous year, indicating a solid financial foundation.
- Outlook: ADP raised its full-year sales and profit guidance, expecting 6% revenue growth and 9% to 10% earnings growth, although the market remains cautious about the short-term outlook.
- Dividend Appeal: With a dividend yield of 3.3% and a history of increasing dividends for 51 consecutive years, ADP demonstrates a strong commitment to shareholders, making it suitable for investors seeking stable income.
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Analyst Views on ADP
Wall Street analysts forecast ADP stock price to rise
12 Analyst Rating
2 Buy
7 Hold
3 Sell
Hold
Current: 198.530
Low
230.00
Averages
276.83
High
332.00
Current: 198.530
Low
230.00
Averages
276.83
High
332.00
About ADP
Automatic Data Processing, Inc. is a provider of cloud-based human capital management (HCM) solutions. Its segments include Employer Services and Professional Employer Organization (PEO). Its Employer Services segment serves clients ranging from single-employee small businesses to large enterprises with tens of thousands of employees around the world, offering a range of technology-based HCM solutions, including its cloud-based platforms, and human resource outsourcing (HRO) (other than PEO) solutions. Its offerings include Payroll Services, Benefits Administration, Talent Management, HR Management, Workforce Management, Compliance Services, Insurance Services and Retirement Services. Its PEO business, called ADP TotalSource, provides clients with guidance, technology, comprehensive employee benefits, risk management, safety, and workers’ compensation program. Its compensation management software supports the compensation planning needs.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
U.S. Stocks Near All-Time Highs as Investors Eye Tech Giants' Earnings
- Strong Market Performance: The S&P 500 and Nasdaq Composite indices reached new all-time highs in April, rising over 8% and 13% respectively, indicating robust market resilience despite ongoing geopolitical tensions and AI disruption concerns, reflecting investor confidence in tech stocks.
- Earnings Pressure on Tech Giants: Next week, five of the 'Magnificent Seven' companies will report earnings, with market expectations for them to demonstrate sufficient revenue growth to justify their high AI expenditures; Alphabet, Amazon, Meta, and Microsoft have all seen stock price increases of over 10% this month, highlighting the market's keen interest in their performance.
- Federal Reserve Meeting Impact: This is expected to be Jerome Powell's last meeting as chair, with the market widely anticipating that the Fed will keep interest rates unchanged, although rising oil prices could complicate future monetary policy, necessitating close attention to how this dynamic may affect the market.
- Cautious Investor Sentiment: As the traditional market adage 'Sell in May' approaches, investors remain wary of potential downside risks, particularly in light of poor software stock performance and rising oil prices, which could further dampen market sentiment.
See More
HR Executives Show Strong Hiring Outlook
- Hiring Confidence Boost: According to the latest survey from the Conference Board, nearly 60% of HR executives plan to increase hiring over the next six months, marking the strongest hiring outlook in three years and indicating growing employer confidence in economic growth.
- Employee Sentiment Recovery: Data from ADP Research shows that worker sentiment improved in April, reversing seven consecutive months of decline, while private employers increased hiring for five straight weeks through early April, signaling positive trends in the job market.
- Significant Job Growth: The US economy added 178,000 jobs in March, with the unemployment rate dropping to 4.3%, reflecting a recovery momentum, although companies still face challenges in retaining existing workers.
- Non-Compensation Benefits to Retain Employees: Despite only 34% of employers expecting an increase in worker retention, firms are not offering raises or bonuses; instead, they are focusing on non-compensation perks like employee recognition, wellness programs, and career progression support to enhance employee loyalty.
See More
ADP Stock Pullback: A Buying Opportunity for Income Investors
- Stock Pullback: ADP's stock has declined nearly 70% since its mid-2025 peak, currently priced at $202.49 with a market cap of $81 billion, making it an attractive option for income-focused investors.
- Financial Performance: The company reported a 6% year-over-year revenue increase to $5.4 billion in its fiscal second quarter, exceeding estimates, with earnings per share of $2.62, an 11% improvement from the previous year, indicating a solid financial foundation.
- Outlook: ADP raised its full-year sales and profit guidance, expecting 6% revenue growth and 9% to 10% earnings growth, although the market remains cautious about the short-term outlook.
- Dividend Appeal: With a dividend yield of 3.3% and a history of increasing dividends for 51 consecutive years, ADP demonstrates a strong commitment to shareholders, making it suitable for investors seeking stable income.
See More
U.S. Private Sector Employment Continues to Grow
- Employment Growth Trend: For the four weeks ending April 4, 2026, U.S. private employers added an average of 54,750 jobs per week, indicating a positive trend with five consecutive weeks of hiring improvement, reflecting signs of economic recovery.
- Data Source and Adjustments: These figures are derived from the NER Pulse, utilizing ADP's high-frequency data that is seasonally adjusted to ensure accurate estimates of real-time employment trends, although these preliminary numbers may change as new data is incorporated.
- Release Frequency and Transparency: The NER Pulse is published every Tuesday at 8:15 a.m., providing weekly estimates of employment changes along with 12 weeks of historical data, enhancing market transparency and confidence regarding employment conditions.
- ADP's Mission and Impact: ADP Research aims to enhance work productivity through data-driven insights, with over 1.1 million clients relying on its innovative solutions to tackle business challenges globally, further driving economic growth.
See More
ADP Honors 2026 HCM Distinction Award Winners
- Agility at Work Award: Northwood Investors partnered with ADP to unify payroll, benefits, and workforce management, creating a centralized HCM foundation that provides real-time data to support global business growth, enhancing compliance and employee experience.
- Culture at Work Award: Thrive Restaurant Group successfully integrated nine systems into a unified HCM platform while scaling from 2,000 to 8,000 employees, reducing turnover by 57% and saving $3.5 million annually, thereby reinforcing its people-first culture.
- Global Solutions at Work Award: Four Seasons implemented standardized global payroll processes with ADP, enabling rapid onboarding of new properties and enhancing employee experience and market consistency, thus strengthening its people-first culture.
- Innovation at Work Award: LRS unified hiring, onboarding, and payroll management, improving labor planning and compliance, while real-time dashboards and salary benchmarking enhanced cost control, supporting its rapidly growing business needs.
See More
ADP Honors 2026 HCM Distinction Award Winners
- Agility at Work Award: Northwood Investors partnered with ADP to unify payroll, benefits, and workforce management, creating a centralized HCM foundation that provides real-time data across its U.S. and European portfolio, enhancing compliance and employee experience while driving business growth.
- Culture at Work Award: Thrive Restaurant Group scaled from 2,000 to 8,000 employees while integrating nine systems, achieving a 57% reduction in turnover and saving $3.5 million annually, thereby reinforcing its people-first culture.
- Global Solutions at Work Award: Four Seasons implemented standardized global payroll processes with ADP, enabling rapid onboarding of new properties and enhancing employee experience and market consistency, further solidifying its luxury brand image worldwide.
- Innovation at Work Award: LRS unified hiring, onboarding, and payroll management, improving workforce planning efficiency, reducing turnover, and strengthening compliance, ensuring effective HR management during rapid expansion through over 50 acquisitions.
See More
U.S. Stocks Near All-Time Highs as Investors Eye Tech Giants' Earnings
- Strong Market Performance: The S&P 500 and Nasdaq Composite indices reached new all-time highs in April, rising over 8% and 13% respectively, indicating robust market resilience despite ongoing geopolitical tensions and AI disruption concerns, reflecting investor confidence in tech stocks.
- Earnings Pressure on Tech Giants: Next week, five of the 'Magnificent Seven' companies will report earnings, with market expectations for them to demonstrate sufficient revenue growth to justify their high AI expenditures; Alphabet, Amazon, Meta, and Microsoft have all seen stock price increases of over 10% this month, highlighting the market's keen interest in their performance.
- Federal Reserve Meeting Impact: This is expected to be Jerome Powell's last meeting as chair, with the market widely anticipating that the Fed will keep interest rates unchanged, although rising oil prices could complicate future monetary policy, necessitating close attention to how this dynamic may affect the market.
- Cautious Investor Sentiment: As the traditional market adage 'Sell in May' approaches, investors remain wary of potential downside risks, particularly in light of poor software stock performance and rising oil prices, which could further dampen market sentiment.
See More
HR Executives Show Strong Hiring Outlook
- Hiring Confidence Boost: According to the latest survey from the Conference Board, nearly 60% of HR executives plan to increase hiring over the next six months, marking the strongest hiring outlook in three years and indicating growing employer confidence in economic growth.
- Employee Sentiment Recovery: Data from ADP Research shows that worker sentiment improved in April, reversing seven consecutive months of decline, while private employers increased hiring for five straight weeks through early April, signaling positive trends in the job market.
- Significant Job Growth: The US economy added 178,000 jobs in March, with the unemployment rate dropping to 4.3%, reflecting a recovery momentum, although companies still face challenges in retaining existing workers.
- Non-Compensation Benefits to Retain Employees: Despite only 34% of employers expecting an increase in worker retention, firms are not offering raises or bonuses; instead, they are focusing on non-compensation perks like employee recognition, wellness programs, and career progression support to enhance employee loyalty.
See More
ADP Stock Pullback: A Buying Opportunity for Income Investors
- Stock Pullback: ADP's stock has declined nearly 70% since its mid-2025 peak, currently priced at $202.49 with a market cap of $81 billion, making it an attractive option for income-focused investors.
- Financial Performance: The company reported a 6% year-over-year revenue increase to $5.4 billion in its fiscal second quarter, exceeding estimates, with earnings per share of $2.62, an 11% improvement from the previous year, indicating a solid financial foundation.
- Outlook: ADP raised its full-year sales and profit guidance, expecting 6% revenue growth and 9% to 10% earnings growth, although the market remains cautious about the short-term outlook.
- Dividend Appeal: With a dividend yield of 3.3% and a history of increasing dividends for 51 consecutive years, ADP demonstrates a strong commitment to shareholders, making it suitable for investors seeking stable income.
See More
U.S. Private Sector Employment Continues to Grow
- Employment Growth Trend: For the four weeks ending April 4, 2026, U.S. private employers added an average of 54,750 jobs per week, indicating a positive trend with five consecutive weeks of hiring improvement, reflecting signs of economic recovery.
- Data Source and Adjustments: These figures are derived from the NER Pulse, utilizing ADP's high-frequency data that is seasonally adjusted to ensure accurate estimates of real-time employment trends, although these preliminary numbers may change as new data is incorporated.
- Release Frequency and Transparency: The NER Pulse is published every Tuesday at 8:15 a.m., providing weekly estimates of employment changes along with 12 weeks of historical data, enhancing market transparency and confidence regarding employment conditions.
- ADP's Mission and Impact: ADP Research aims to enhance work productivity through data-driven insights, with over 1.1 million clients relying on its innovative solutions to tackle business challenges globally, further driving economic growth.
See More
ADP Honors 2026 HCM Distinction Award Winners
- Agility at Work Award: Northwood Investors partnered with ADP to unify payroll, benefits, and workforce management, creating a centralized HCM foundation that provides real-time data to support global business growth, enhancing compliance and employee experience.
- Culture at Work Award: Thrive Restaurant Group successfully integrated nine systems into a unified HCM platform while scaling from 2,000 to 8,000 employees, reducing turnover by 57% and saving $3.5 million annually, thereby reinforcing its people-first culture.
- Global Solutions at Work Award: Four Seasons implemented standardized global payroll processes with ADP, enabling rapid onboarding of new properties and enhancing employee experience and market consistency, thus strengthening its people-first culture.
- Innovation at Work Award: LRS unified hiring, onboarding, and payroll management, improving labor planning and compliance, while real-time dashboards and salary benchmarking enhanced cost control, supporting its rapidly growing business needs.
See More
ADP Honors 2026 HCM Distinction Award Winners
- Agility at Work Award: Northwood Investors partnered with ADP to unify payroll, benefits, and workforce management, creating a centralized HCM foundation that provides real-time data across its U.S. and European portfolio, enhancing compliance and employee experience while driving business growth.
- Culture at Work Award: Thrive Restaurant Group scaled from 2,000 to 8,000 employees while integrating nine systems, achieving a 57% reduction in turnover and saving $3.5 million annually, thereby reinforcing its people-first culture.
- Global Solutions at Work Award: Four Seasons implemented standardized global payroll processes with ADP, enabling rapid onboarding of new properties and enhancing employee experience and market consistency, further solidifying its luxury brand image worldwide.
- Innovation at Work Award: LRS unified hiring, onboarding, and payroll management, improving workforce planning efficiency, reducing turnover, and strengthening compliance, ensuring effective HR management during rapid expansion through over 50 acquisitions.
See More
