ADP

Automatic Data Processing Inc

Finance/Real Estate, Event Driven/Special Sit


Presented:08/07/2017
Price:$112.17
Cap:$50.15B
Current Price:$290.04
Cap:$118.29B

Presented

Date08/07/2017
Price$112.17
Market Cap$50.15B
Ent Value$45.03B
P/E Ratio29.18x
Book Value$8.94
Div Yield1.78%
Shares O/S447.10M
Ave Daily Vol3,945,958
Short Int1.32%

Current

Price$290.04
Market Cap$118.29B
Automatic Data Processing, Inc. provides business outsourcing solutions. It operates through the following segments: Employer Services and Professional Employer Organization Services. The Employer Services segment offers business outsourcing and human capital management solutions, including payroll, benefits administration, talent management, human resources management, time and attendance management, insurance, retirement and compliance & payment. The Professional Employer Organization Services segment provides employment administration outsourcing solutions through a co-employment relationship, including payroll, payroll tax filing, HR guidance, 401(k) plan administration, benefits administration, compliance services, health and worker's compensation coverage and other supplemental benefits for employees. The company was founded by Henry Taub in 1949 and is headquartered in Roseland, NJ.

Publicly traded companies mentioned herein: Automatic Data Processing Inc (ADP), CDK Global Inc (CDK), Paychex Inc (PAYX)

Highlights

The presenter is long shares of Automatic Data Processing (ADP), stating that ADP operates on a legacy corporate structure with significant room for cost takeout, leading to higher margins. He views the Bill Ackman/Pershing Square involvement as a good catalyst to realize some of these cost structure improvements and get margins closer to peers. Should ADP improve margins by ~13%, 2018 EPS would come in at ~$5.50, meaningfully higher than the Street’s $4.00 forecast.

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Idea Discussion

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