Abstract

Automatic Data Processing Inc will report results on January 28, 2026, Pre-Market; investors are watching whether resilient revenue growth and margin discipline can support double-digit adjusted EPS expansion despite a mixed macro backdrop.

Market Forecast

Consensus expectations point to continued year-over-year growth in the current quarter with total revenue projected at USD 5.34 billion, EBIT at USD 1.36 billion, and adjusted EPS at USD 2.58, implying estimated YoY increases of 7.38%, 9.92%, and 12.35%, respectively. The company’s main businesses—Employer Services and PEO Services—are expected to anchor the quarter, with Employer Services remaining the largest contributor and PEO Services sustaining mid-to-high single-digit growth momentum amid stable client demand. The most promising segment is Employer Services, estimated to generate USD 3.49 billion last quarter; sustained client retention, net new bookings, and pricing support its forward growth trajectory.

Last Quarter Review

Automatic Data Processing Inc delivered solid prior-quarter results with revenue of USD 5.18 billion, a gross profit margin of 47.58%, GAAP net profit attributable to the parent company of USD 1.01 billion, a net profit margin of 19.57%, and adjusted EPS of USD 2.49, representing year-over-year increases of 7.09% in revenue, 6.87% in adjusted EPS, and a quarter-on-quarter net profit gain of 11.23%. A notable highlight was the combination of top-line resilience and efficient cost control, which supported operating performance and beat prior-quarter estimates on both revenue and EPS. In the main businesses, Employer Services contributed USD 3.49 billion and PEO Services contributed USD 1.69 billion, with Employer Services remaining the backbone of revenue growth on stable client counts and value-added solutions.

Current Quarter Outlook

Employer Services

Employer Services is set to remain the core revenue engine this quarter. The segment benefits from durable client retention, gradual expansion in mid-market and enterprise accounts, and disciplined pricing that offsets inflationary cost pressures. Demand for value-added modules such as time and attendance, benefits administration, and global payroll continues to support average revenue per client, helping to sustain margin quality. With total company revenue projected at USD 5.34 billion, Employer Services’ scale and mix are likely to underpin the estimated adjusted EPS of USD 2.58, assuming continued operating efficiency and stable implementation pipelines.

PEO Services

PEO Services, while smaller in absolute revenue, remains strategically important for diversified growth. The business benefits from a consistent base of small-to-medium-sized clients seeking outsourced HR, benefits, and compliance solutions that lower administrative burdens. Though wage inflation and benefit cost dynamics can affect unit economics, the broader value proposition tends to support retention and modest net adds, reinforcing steady revenue growth. If the labor market remains stable and compliance complexity persists, PEO profitability should be supported by scale efficiencies and careful underwriting, contributing positively to consolidated EBIT of USD 1.36 billion.

Factors Most Impacting the Stock This Quarter

Investors will focus on whether revenue growth near USD 5.34 billion aligns with the company’s guidance framework and whether gross margin stability can be maintained around prior-quarter levels. The translation of top-line growth into adjusted EPS of USD 2.58 will hinge on operating leverage, pricing discipline, and cost efficiency across service delivery and implementation. Commentary on client retention, new bookings, and the cadence of module adoption will be particularly important for assessing the sustainability of double-digit adjusted EPS growth, as well as any signals on macro sensitivity across small and mid-sized clients.

Analyst Opinions

The prevailing institutional view is constructive, with a majority of opinions emphasizing consistent execution, stable client retention, and supportive pricing underpinning mid-to-high single-digit revenue growth and double-digit adjusted EPS expansion. Analysts highlight that the forecasted revenue of USD 5.34 billion and adjusted EPS of USD 2.58, alongside an estimated EBIT of USD 1.36 billion, reflect solid operating momentum and effective margin management. Commentary from leading institutions indicates that the primary watchpoints are booking trends and margin durability, but the balance of views expects the quarter to validate ongoing performance discipline and to reinforce a favorable full-year trajectory if guidance confirms sustained growth and operating leverage.