Automatic Data Processing (NASDAQ:ADP) & Kelly Services (NASDAQ:KELYA) Head-To-Head Review

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

Institutional and Insider Ownership

80.0% of Automatic Data Processing shares are owned by institutional investors. Comparatively, 76.3% of Kelly Services shares are owned by institutional investors. 0.2% of Automatic Data Processing shares are owned by insiders. Comparatively, 5.4% of Kelly Services shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.

Volatility and Risk

Automatic Data Processing has a beta of 0.82, meaning that its stock price is 18% less volatile than the S&P 500. Comparatively, Kelly Services has a beta of 0.87, meaning that its stock price is 13% less volatile than the S&P 500.

Analyst Ratings

This is a summary of recent ratings for Automatic Data Processing and Kelly Services, 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
Kelly Services	1	1	1	0	2.00

Automatic Data Processing presently has a consensus price target of $273.50, suggesting a potential upside of 5.98%. Kelly Services has a consensus price target of $20.00, suggesting a potential upside of 23.38%. Given Kelly Services’ higher possible upside, analysts clearly believe Kelly Services is more favorable than Automatic Data Processing.

Dividends

Automatic Data Processing pays an annual dividend of $6.80 per share and has a dividend yield of 2.6%. Kelly Services pays an annual dividend of $0.30 per share and has a dividend yield of 1.9%. Automatic Data Processing pays out 62.2% of its earnings in the form of a dividend. Kelly Services pays out -3.8% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. 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.

Earnings and Valuation

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Automatic Data Processing	$21.95 billion	4.66	$4.41 billion	$10.94	23.59
Kelly Services	$4.25 billion	0.13	-$254.10 million	($7.81)	-2.08

Automatic Data Processing has higher revenue and earnings than Kelly Services. Kelly Services 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.

Profitability

This table compares Automatic Data Processing and Kelly Services’ 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%
Kelly Services	-6.73%	2.69%	1.19%

Summary

Automatic Data Processing beats Kelly Services on 13 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 Kelly Services

Kelly Services, Inc., together with its subsidiaries, provides workforce solutions to various industries. The company operates through five segments: Professional & Industrial; Science, Engineering & Technology; Education; Outsourcing & Consulting; and International. The Professional & Industrial segment delivers staffing, outcome-based, and permanent placement services providing administrative, accounting, and finance; light industrial; contact center staffing; and other workforce solutions. The Science, Engineering & Technology segment offers staffing, outcome-based, and permanent placement services in the areas of science and clinical research, engineering, technology, and telecommunications specialties. The Education segment provides staffing, permanent placement, and executive search services to pre-K-12 school districts and education organizations. The Outsourcing & Consulting segment offers managed service provider, recruitment process outsourcing, payroll process outsourcing, and executive coaching programs to customers on a global basis that includes its RocketPower brand. The International segment provides staffing, recruitment process outsourcing, and permanent placement services. The company serves customers in the United States, Canada, Mexico, Puerto Rico, France, Switzerland, Portugal, Russia, Italy, rest of Europe, and the Asia-Pacific region. Kelly Services, Inc. was founded in 1946 and is headquartered in Troy, Michigan.