ADP is about to release earnings. Ponder the Bear Case Scenario as you contemplate a long or short.
Interest rates are low. Funds captured in float are not yielding much. It will be a while before rates climb high enough so that the float yields nicely. Then when rates go up clients will optimize against the float.
Some 15% according to some estimates of ADP’s revenues comes from the volatile auto dealer business. Cyclical big-ticket issues will not enhance growth.
PEO services while the fastest growing also have the skinniest margin. So fast growth will have little lasting impact. ADP needs to come up with new schtick.
George Gutowski writes from a caveat emptor perspective.