Experian (OTCMKTS:EXPGY) vs. Automatic Data Processing (NASDAQ:ADP) Critical Comparison

Automatic Data Processing (NASDAQ:ADP) and Experian (OTCMKTS:EXPGY) are both large-cap industrials companies, but which is the better business? We will compare the two companies based on the strength of their analyst recommendations, risk, earnings, profitability, dividends, valuation and institutional ownership.

Profitability

This table compares Automatic Data Processing and Experian’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Automatic Data Processing	20.11%	71.34%	6.73%
Experian	N/A	N/A	N/A

Earnings and Valuation

This table compares Automatic Data Processing and Experian”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Automatic Data Processing	$21.95 billion	4.84	$4.08 billion	$10.94	24.29
Experian	$8.45 billion	3.98	$1.50 billion	N/A	N/A

Automatic Data Processing has higher revenue and earnings than Experian.

Volatility and Risk

Automatic Data Processing has a beta of 0.83, indicating that its share price is 17% less volatile than the S&P 500. Comparatively, Experian has a beta of 1.26, indicating that its share price is 26% more volatile than the S&P 500.

Analyst Ratings

This is a breakdown of recent ratings and price targets for Automatic Data Processing and Experian, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Automatic Data Processing	1	9	3	0	2.15
Experian	0	0	1	1	3.50

Automatic Data Processing presently has a consensus price target of $272.43, suggesting a potential upside of 2.53%. Given Automatic Data Processing’s higher possible upside, equities research analysts clearly believe Automatic Data Processing is more favorable than Experian.

Dividends

Automatic Data Processing pays an annual dividend of $6.80 per share and has a dividend yield of 2.6%. Experian pays an annual dividend of $0.91 per share and has a dividend yield of 2.4%. Automatic Data Processing pays out 62.2% of its earnings in the form of a dividend. Automatic Data Processing has increased its dividend for 49 consecutive years. Automatic Data Processing is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Institutional and Insider Ownership

80.0% of Automatic Data Processing shares are owned by institutional investors. Comparatively, 0.3% of Experian shares are owned by institutional investors. 0.2% of Automatic Data Processing shares are owned by company insiders. Comparatively, 0.1% of Experian shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Summary

Automatic Data Processing beats Experian on 12 of the 16 factors compared between the two stocks.

About Automatic Data Processing

Automatic Data Processing, Inc. provides cloud-based human capital management solutions worldwide. It operates in two segments, Employer Services and Professional Employer Organization (PEO). The Employer Services segment offers strategic, cloud-based platforms, and human resources (HR) outsourcing solutions. Its offerings include payroll services, benefits administration, talent management, HR management, workforce management, insurance, retirement, and compliance services, as well as integrated HCM solutions. The PEO Services segment provides HR outsourcing solution to businesses through a co-employment model. This segment offers employee benefits, protection and compliance, talent engagement, expertise, comprehensive outsourcing, and recruitment process outsourcing services. Automatic Data Processing, Inc. was founded in 1949 and is headquartered in Roseland, New Jersey.

About Experian

Experian plc, together with its subsidiaries, operates as a technology company in North America, Latin America, the United Kingdom, Ireland, Europe, the Middle East, Africa, and the Asia Pacific. It operates in two segments, Business-to-Business and Consumer Services. The company collects, sorts, aggregates, and transforms data from various sources to provide a range of data-driven services. It also owns, create, and develops analytics, predictive tools, sophisticated software, and platforms; credit risk, fraud prevention, identity management, customer service and engagement, account processing, and account management services; data analysis, and research and development services. In addition, the company provides credit education, free access to Experian credit reports and scores, and online educational tools. It serves its customers in financial service, direct-to-consumer, health, retail, automotive, software and professional services, telecoms and utility, insurance, media and technology, and other industries, as well as government and public sectors. The company was formerly known as Experian Group Limited and changed its name to Experian plc in July 2008. Experian plc was founded in 1826 and is headquartered in Dublin, Ireland.