ADP Extends Strategic Alliance With Infor, Boosts HCM Suite

Automatic Data Processing, Inc. ADP recently extended its partnership with Infor — a New York-based provider of industry-specific cloud applications.

The partnership will provide Infor's global human capital management (HCM) customers access to ADP’s payroll products and services with the help of standardized processes like single sign-on (SSO). Initially, the companies had collaborated on Jul 17, 2017.

The expanded alliance offers a multinational payroll model with HCM which is expected to help organizations manage their global workforce more efficiently. Industry-leading cloud application technology — which is designed to support increased governance and regulatory compliance — will be made available to multinational organizations, on a global level and with multiple options. This is expected to reduce operating risks and expenses.

Active on the HCM Business

ADP is continuously increasing its stake in the global HCM market on the back of strategic business moves and its partnership with Infor reflects this. Earlier this month, the company entered into a strategic partnership with Intellitec Solutions to help their mutual clients benefit from an integrated, cloud-based HCM and ERP solution for payroll, HR, time and attendance, tax services, benefits and talent management.

Apart from partnerships, the company continues to pursue acquisitions that strategically fit its overall business mix and enhances its HCM offerings. In this context, some of the noteworthy buyouts of the company are Celergo, WorkMarket, Global Cash Card and The Marcus Buckingham Company.

So far this year, shares of ADP have gained 27.7%, outperforming the 18.9% rally of the industry it belongs to and 9.2% rise of the Zacks S&P 500 Composite Index.

Employer Services Segment Likely to Benefit

We believe the extended partnership will help ADP strengthen its Employer Services segment which offers a comprehensive range of HCM and human resources outsourcing solutions. Performance of the segment was strong in the last reported quarter with revenues improving 7% year over year on a reported basis and 4% on an organic constant currency basis. The segment contributed the largest chunk (around 75%) to ADP’s total revenues in fourth-quarter fiscal 2018.

Zacks Rank & Other Stocks to Consider

Currently, Automatic Data Processing carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Some other top-ranked stocks in the broader Business Services sector include Broadridge Financial Solutions BR, Paychex PAYX and Convergys CVG, each carrying a Zacks Rank of 2. The long-term expected earnings per share growth rate for Broadridge Financial Solutions, Paychex and Convergys is 10%, 8.2% and 7.5%, respectively.

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