Automatic Data Processing (NASDAQ:ADP) vs. Kforce (NASDAQ:KFRC) Critical Comparison

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

Valuation & Earnings

This table compares Kforce and Automatic Data Processing”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Kforce	$1.34 billion	0.68	$50.41 million	$2.12	24.10
Automatic Data Processing	$21.95 billion	5.22	$4.41 billion	$10.94	26.41

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.

Volatility and Risk

Kforce has a beta of 0.9, meaning that its share price is 10% less volatile than the S&P 500. Comparatively, Automatic Data Processing has a beta of 0.83, meaning that its share price is 17% less volatile than the S&P 500.

Dividends

Kforce pays an annual dividend of $1.60 per share and has a dividend yield of 3.1%. Automatic Data Processing pays an annual dividend of $6.80 per share and has a dividend yield of 2.4%. 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 pays out 62.2% of its earnings in the form of a dividend. Automatic Data Processing has increased its dividend for 49 consecutive years.

Institutional & Insider Ownership

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

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Kforce	3.59%	30.34%	13.76%
Automatic Data Processing	20.11%	71.34%	6.73%

Analyst Recommendations

This is a summary of recent recommendations for Kforce and Automatic Data Processing, as provided by MarketBeat.com.

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

Kforce currently has a consensus price target of $60.67, indicating a potential upside of 18.75%. Automatic Data Processing has a consensus price target of $273.50, indicating a potential downside of 5.33%. Given Kforce’s stronger consensus rating and higher possible upside, equities analysts clearly believe Kforce is more favorable than Automatic Data Processing.

Summary

Automatic Data Processing beats Kforce on 10 of the 17 factors compared between the two stocks.

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.

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.