Automatic Data Processing (NASDAQ: ADP) and TeleTech (NASDAQ:TTEC) are both business services companies, but which is the superior investment? We will compare the two businesses based on the strength of their valuation, institutional ownership, analyst recommendations, profitability, earnings, dividends and risk.
This table compares Automatic Data Processing and TeleTech’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Automatic Data Processing||14.08%||42.34%||4.28%|
This table compares Automatic Data Processing and TeleTech’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||$12.38 billion||4.21||$1.73 billion||$3.93||29.87|
|TeleTech||$1.28 billion||1.48||$33.67 million||$1.05||39.10|
Automatic Data Processing has higher revenue and earnings than TeleTech. Automatic Data Processing is trading at a lower price-to-earnings ratio than TeleTech, indicating that it is currently the more affordable of the two stocks.
Risk & Volatility
Automatic Data Processing has a beta of 0.85, meaning that its share price is 15% less volatile than the S&P 500. Comparatively, TeleTech has a beta of 0.89, meaning that its share price is 11% less volatile than the S&P 500.
Automatic Data Processing pays an annual dividend of $2.52 per share and has a dividend yield of 2.1%. TeleTech pays an annual dividend of $0.50 per share and has a dividend yield of 1.2%. Automatic Data Processing pays out 64.1% of its earnings in the form of a dividend. TeleTech pays out 47.6% 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.
This is a summary of current ratings and price targets for Automatic Data Processing and TeleTech, as reported by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Automatic Data Processing||0||10||5||0||2.33|
Automatic Data Processing currently has a consensus price target of $113.23, indicating a potential downside of 3.55%. TeleTech has a consensus price target of $43.00, indicating a potential upside of 4.75%. Given TeleTech’s higher probable upside, analysts plainly believe TeleTech is more favorable than Automatic Data Processing.
Institutional & Insider Ownership
78.6% of Automatic Data Processing shares are held by institutional investors. Comparatively, 24.8% of TeleTech shares are held by institutional investors. 0.3% of Automatic Data Processing shares are held by company insiders. Comparatively, 70.0% of TeleTech shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.
Automatic Data Processing beats TeleTech on 11 of the 16 factors compared between the two stocks.
About Automatic Data Processing
Automatic Data Processing, Inc. (ADP) is a provider of human capital management (HCM) solutions to employers, offering solutions to businesses of various sizes. The Company also provides business process outsourcing solutions. Its segments include Employer Services and Professional Employer Organization (PEO) Services. The Employer Services segment offers a range of human resources (HR) business process outsourcing and technology-enabled HCM solutions. These offerings include payroll services, benefits administration, talent management, HR management, time and attendance management, insurance services, retirement services, and tax and compliance services. ADP TotalSource, ADP’s PEO business, offers small and mid-sized businesses a HR outsourcing solution through a co-employment model. As a PEO, ADP TotalSource provides HR management services while the client continues to direct the day-to-day job-related duties of the employees.
TeleTech Holdings, Inc. (TeleTech) is a customer service provider that delivers consulting, technology, growth and customer care solutions on a global scale. The Company operates through four segments: Customer Management Services (CMS), Customer Growth Services (CGS), Customer Technology Services (CTS) and Customer Strategy Services (CSS). The CMS segment designs and manages clients’ front-to-back office processes to deliver just-in-time, personalized, multi-channel interactions. The CGS segment offers integrated sales and marketing solutions to help its clients in the business-to-consumer or business-to-business markets. The CTS segment includes operational and system design consulting, customer experience technology product, implementation and integration consulting services, and management of clients cloud and on premise solutions. The CSS segment provides professional services in customer experience strategy, and system and operational process optimization.
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