Automatic Data Processing falls after quarterly earnings beat and outlook revision

What happened

ADP fell 2.6% on October 28, 2026, after reporting fiscal first-quarter results that beat estimates and issuing a revised fiscal 2027 outlook. The stock closed at $285.37, trading at 1.6 times its 20-day average and opened 1.2% below the previous close. The S&P 500 rose 0.3% on the day while the technology sector median rose 0.7%, making ADP’s move 3.3 percentage points worse than the sector median.

How big was the move

The one-day decline was 1.7 times a typical daily move for this stock and came amid heavier participation, with trading volume 1.6 times its 20-day average. The session marked a five-day change of fell 3.1%. The stock’s market value stood at $120.52 billion at the close. In the past five years the stock had 39 sessions with a decline of at least 2.6%; twenty trading days later the median result was a gain of 1.0%, and 22 of 39 were higher. ADP’s beta of 0.47 indicates the stock tends to move less than the market.

The technical picture

Technically, the stock traded 1.5% above its 20-day moving average and 3.1% above its 50-day moving average, with the 50-day average above the 200-day average, a sign of an established uptrend. The shares were 18.9% above its 200-day moving average and 7.8% below the 52-week high, and the stock had spent 81 consecutive trading days above the 200-day average. Momentum indicators were neutral: the 14-day Relative Strength Index stood at 53, between 30 and 70. Volatility ran at 25% annualized over 60 days, a level higher than 58% of its own readings over five years. Recent returns showed the stock rose 9.0% over one month and rose 8.1% over three months, while over one year it rose 1.7%, trailing the S&P 500 by 10.9 percentage points.

Fundamentals and valuation

For the four quarters through September 30, 2026, revenue totaled $22.26 billion, up 6.5% from a year earlier, and diluted earnings per share were $11.29, a rise of 11.3% year over year. Gross margin widened to 50.0% from 49.3% a year earlier and operating margin expanded to 24.8% from 19.2% a year earlier. Free-cash-flow margin stood at 22.4% and return on invested capital was 23.9%. The balance sheet showed net debt of 0.3 times EBITDA and share count over one year decreased by 2.3%.

Valuation metrics show the stock traded at 25.3 times trailing earnings and 23.3 times expected earnings, with a free-cash-flow yield of 4.1%. Its price-to-earnings reading was lower than 86% of its own readings over the past five years, where the five-year median is 30.2 times earnings. Those figures reflect a company delivering steady cash generation and margin expansion, while trading below much of its recent historical valuation.

Earnings and analyst expectations

ADP reported quarterly EPS of $2.82 on October 28, 2026, against $2.77 expected, 1.8% above estimates. The result marked 15 consecutive quarters beating estimates and the company’s average surprise over the last four reports was 2.0% above estimates. Management cited continued demand across payroll, human-capital-management and compliance offerings and noted contribution from higher client funds interest income. The company also provided a revised fiscal 2027 outlook.

Typical two-day reactions after recent reports had seen the stock rose 0.5%, but on this occasion the stock fell 2.6% because of the results. The market’s negative response despite the beat suggests investors focused on the details of the outlook or on relative valuation. ADP’s next scheduled earnings report is January 27, 2027.

What to watch

• October 28, 2026: ADP reported fiscal first-quarter results with quarterly EPS of $2.82 versus $2.49 a year ago and beat the Zacks Consensus Estimate of $2.78.
• January 27, 2027: ADP’s next scheduled earnings report.
• Consensus price target $272.11, which is 4.6% below the closing price, based on 36 analysts with a consensus rating of Hold and 22% of ratings at Buy or Strong Buy.
• PromtFinance scores: Value 72 (Positive), Quality 68 (Positive), Momentum 72 (Positive), Stability 97 (Exceptional), Growth 29 (Very weak), Revisions 17 (Very weak).