Head-To-Head Analysis: Gartner (NYSE:IT) vs. Automatic Data Processing (NASDAQ:ADP)

Gartner (NYSE:IT) and Automatic Data Processing (NASDAQ:ADP) are both large-cap industrials companies, but which is the superior investment? We will contrast the two businesses based on the strength of their risk, profitability, institutional ownership, earnings, valuation, dividends and analyst recommendations.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Gartner	11.99%	525.46%	13.45%
Automatic Data Processing	20.11%	71.34%	6.73%

Analyst Recommendations

This is a summary of recent ratings and price targets for Gartner and Automatic Data Processing, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Gartner	2	6	2	1	2.18
Automatic Data Processing	1	8	3	0	2.17

Gartner currently has a consensus price target of $187.30, suggesting a potential downside of 4.29%. Automatic Data Processing has a consensus price target of $273.50, suggesting a potential downside of 1.10%. Given Automatic Data Processing’s higher probable upside, analysts clearly believe Automatic Data Processing is more favorable than Gartner.

Insider and Institutional Ownership

91.5% of Gartner shares are owned by institutional investors. Comparatively, 80.0% of Automatic Data Processing shares are owned by institutional investors. 2.6% of Gartner shares are owned by insiders. Comparatively, 0.2% of Automatic Data Processing shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.

Earnings & Valuation

This table compares Gartner and Automatic Data Processing”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Gartner	$6.50 billion	1.90	$729.23 million	$11.15	17.55
Automatic Data Processing	$21.95 billion	5.01	$4.41 billion	$10.94	25.28

Automatic Data Processing has higher revenue and earnings than Gartner. Gartner is trading at a lower price-to-earnings ratio than Automatic Data Processing, indicating that it is currently the more affordable of the two stocks.

Risk and Volatility

Gartner has a beta of 0.96, suggesting that its stock price is 4% less volatile than the S&P 500. Comparatively, Automatic Data Processing has a beta of 0.82, suggesting that its stock price is 18% less volatile than the S&P 500.

Summary

Gartner beats Automatic Data Processing on 8 of the 15 factors compared between the two stocks.

About Gartner

Gartner, Inc. operates as a research and advisory company in the United States, Canada, Europe, the Middle East, Africa, and internationally. It operates through three segments: Research, Conferences, and Consulting. The Research segment delivers its research primarily through a subscription service that include on-demand access to published research content, data and benchmarks, and direct access to a network of research experts. The Conferences segment offers executives and teams in an organization the opportunity to learn, share, and network. The Consulting segment offers market-leading research, custom analysis, and on-the-ground support services. This segment also offers actionable solutions for IT-related priorities, including IT cost optimization, digital transformation, and IT sourcing optimization. Gartner, Inc. was founded in 1979 and is headquartered in Stamford, Connecticut.

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.