Reviewing Automatic Data Processing (NASDAQ:ADP) & Kforce (NASDAQ:KFRC)

Automatic Data Processing (NASDAQ:ADP) and Kforce (NASDAQ:KFRC) are both industrials companies, but which is the superior business? We will contrast the two companies based on the strength of their analyst recommendations, valuation, risk, institutional ownership, dividends, profitability and earnings.

Valuation & Earnings

This table compares Automatic Data Processing and Kforce”s top-line 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	4.89	$4.41 billion	$10.94	24.76
Kforce	$1.34 billion	0.68	$50.41 million	$2.12	24.18

Automatic Data Processing has higher revenue and earnings than Kforce. Kforce 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.

Analyst Ratings

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

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Automatic Data Processing	1	8	3	0	2.17
Kforce	0	3	2	0	2.40

Automatic Data Processing presently has a consensus target price of $273.50, indicating a potential upside of 0.97%. Kforce has a consensus target price of $60.67, indicating a potential upside of 18.32%. Given Kforce’s stronger consensus rating and higher probable upside, analysts plainly believe Kforce is more favorable than Automatic Data Processing.

Profitability

This table compares Automatic Data Processing and Kforce’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%
Kforce	3.59%	30.34%	13.76%

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, Kforce has a beta of 0.9, indicating that its share price is 10% less volatile than the S&P 500.

Insider and Institutional Ownership

80.0% of Automatic Data Processing shares are owned by institutional investors. Comparatively, 92.8% of Kforce shares are owned by institutional investors. 0.2% of Automatic Data Processing shares are owned by insiders. Comparatively, 7.3% of Kforce shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Dividends

Automatic Data Processing pays an annual dividend of $6.80 per share and has a dividend yield of 2.5%. Kforce pays an annual dividend of $1.60 per share and has a dividend yield of 3.1%. Automatic Data Processing pays out 62.2% of its earnings in the form of a dividend. Kforce pays out 75.5% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Automatic Data Processing has raised its dividend for 49 consecutive years.

Summary

Automatic Data Processing beats Kforce on 10 of the 17 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 Kforce

Kforce Inc. provides professional staffing services and solutions in the United States. It operates through two segments, Technology, and Finance and Accounting (FA). The Technology segment provides talent solutions to its clients primarily in the areas of information technology, such as systems/applications architecture and development, data management and analytics, business and artificial intelligence, machine learning, project and program management, and network architecture and security. This segment serves clients in various industries comprising financial and business services, communications, insurance, retail, and technology industries. The FA businesses segment offers talent solutions to its clients in areas, including financial planning and analysis, business intelligence analysis, general accounting, transactional accounting, business and cost analysis, and taxation and treasury. It also provides consultants in lower skilled areas comprising loan servicing and support, customer and call center support, data entry, and other administrative roles. This segment serves clients in various industries, including financial and business services, healthcare, and manufacturing sectors. The company was founded in 1962 and is headquartered in Tampa, Florida.