Automatic Data Processing Approves $6 Billion Buyback; Q2 Forecast of $5.4 B Revenue, $2.58 EPS
Automatic Data Processing’s board approved a $6.0 billion share buyback, representing up to 5.8% of outstanding stock, alongside a $1.70 quarterly dividend yielding 2.6%. Analysts project fiscal Q2 revenue of $5.4 billion and EPS of $2.58, driven by steady Employer Services and PEO growth.
1. Q2 Earnings Projections
Automatic Data Processing is expected to post second-quarter fiscal 2026 revenues of approximately $5.4 billion, representing a 4.6 percent year-over-year increase from the same period last year. Consensus EPS estimates stand at $2.58 per share, up from $2.49 in Q2 of fiscal 2025. Investors will focus on whether ADP can meet or exceed these projections, given that the company has beaten consensus EPS in five of the past six quarters.
2. Service Segment Momentum
ADP’s core Employer Services unit continues to drive growth, with revenue in that segment rising 6.2 percent year-over-year during Q1. Meanwhile, the Professional Employer Organization business posted 7.8 percent revenue growth, fueled by strong small-business hiring trends. Management has cited net new client additions of 32,000 in Employer Services during the first nine months of fiscal 2026 and 1,100 PEO clients added in the last quarter alone.
3. Capital Allocation and Analyst Sentiment
The board’s recent authorization of a $6 billion share repurchase program underscores management’s confidence in ADP’s cash flow, which generated $2.2 billion in operating free cash flow over the past four quarters. The company also increased its quarterly dividend to $1.70 per share, reflecting a 2.6 percent yield. Among thirteen brokerage firms covering ADP, nine maintain a Hold rating, while two rate it Buy and two rate it Sell; the average twelve-month target stands at $306.42.