Jensen’s Quality Growth Investment Committee recently added Automatic Data Processing (ADP) to the firm’s Quality Growth portfolios.
ADP is a leading Human Capital Management (HCM) software and cloud services company that serves a wide range of businesses from small to multinational. The company provides its services via two business segments, Employer Services and Professional Employer Organization (PEO). Employer Services offers a comprehensive suite of human resource services such as payroll, benefits administration, talent acquisition and management to name a few. ADP’s PEO business segment provides small and mid-sized businesses a HR outsourcing solution through a co-employment model, which is the largest in the U.S.
We expect revenue growth will be driven by cloud adoption, expanding services, incorporating new technologies such as artificial intelligence (AI), and taking market share. The company recently completed a significant restructuring that consolidated much of its physical office footprint into regional sales and support centers, which improved margins. The company also revamped its sales force to better serve cloud-based clients.
We believe the company is well-positioned to deliver stable, profitable growth into the future. In summary, ADP possesses many of the characteristics we look for in a high-quality business, and we are pleased to add the company to the firm’s Quality Growth portfolios at current valuation levels.
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