Comparing Automatic Data Processing (NASDAQ:ADP) and Gartner (NYSE:IT)

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

Insider and Institutional Ownership

80.0% of Automatic Data Processing shares are held by institutional investors. Comparatively, 91.5% of Gartner shares are held by institutional investors. 0.2% of Automatic Data Processing shares are held by company insiders. Comparatively, 2.6% of Gartner shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock is poised for long-term growth.

Volatility and Risk

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

Earnings & Valuation

This table compares Automatic Data Processing and Gartner”s top-line 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	4.88	$4.41 billion	$10.94	24.65
Gartner	$6.50 billion	1.74	$729.23 million	$11.15	16.04

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.

Profitability

This table compares Automatic Data Processing and Gartner’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%
Gartner	11.99%	525.46%	13.45%

Analyst Ratings

This is a breakdown of current recommendations for Automatic Data Processing and Gartner, as reported by MarketBeat.

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

Automatic Data Processing currently has a consensus price target of $273.50, suggesting a potential upside of 1.43%. Gartner has a consensus price target of $187.30, suggesting a potential upside of 4.71%. Given Gartner’s stronger consensus rating and higher possible upside, analysts clearly believe Gartner is more favorable than Automatic Data Processing.

Summary

Gartner beats Automatic Data Processing on 9 of the 15 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 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.