Barclays on U.S. Business & Professional Services: Interest Rate Sensitivity of ADP & PAYX
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Rating Summary:
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Up: 8 | Down: 5 | New: 25
Rating Summary:
5 Buy, 19 Hold, 4 Sell
Rating Trend:
Up
Today's Overall Ratings:
Up: 8 | Down: 5 | New: 25
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Barclays on U.S. Business & Professional Services: Reviewing the Interest Rate Sensitivity of Automatic Data Processing (NYSE: ADP) and Paychex (Nasdaq: PAYX)
Analyst, Gary E. Bisbee, said, "Interest rates matter for the payroll processors because they are able to earn interest on tax withholding from client paychecks for a short period before sending that money to the tax authorities. ADP and PAYX invest this "float" in a combination of high quality short and intermediate term securities."
"We continue to prefer ADP over PAYX for several reasons: 1) in our view, ADP has invested more heavily in product development and technology, which positions it for better growth; 2) ADP's broader offerings across small/mid/large sized customers (vs. only small at PAYX) offers diversification and growth benefits; 3) ADP consistently repurchases its stock vs. no buybacks at PAYX; and 4) despite slightly faster growth, ADP trades at 5%-10% P/E and P/FCF discounts vs. PAYX on CY'13."
Barclays rates ADP at Overweight and PAYX at Equalweight.
Analyst, Gary E. Bisbee, said, "Interest rates matter for the payroll processors because they are able to earn interest on tax withholding from client paychecks for a short period before sending that money to the tax authorities. ADP and PAYX invest this "float" in a combination of high quality short and intermediate term securities."
"We continue to prefer ADP over PAYX for several reasons: 1) in our view, ADP has invested more heavily in product development and technology, which positions it for better growth; 2) ADP's broader offerings across small/mid/large sized customers (vs. only small at PAYX) offers diversification and growth benefits; 3) ADP consistently repurchases its stock vs. no buybacks at PAYX; and 4) despite slightly faster growth, ADP trades at 5%-10% P/E and P/FCF discounts vs. PAYX on CY'13."
Barclays rates ADP at Overweight and PAYX at Equalweight.
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