Head-To-Head Analysis: Gartner (NYSE:IT) vs. Automatic Data Processing (NASDAQ:ADP)
by Amy Steele · The Cerbat GemGartner (NYSE:IT – Get Free Report) and Automatic Data Processing (NASDAQ:ADP – Get Free Report) are both large-cap industrials companies, but which is the superior investment? We will contrast the two businesses based on the strength of their risk, profitability, institutional ownership, earnings, valuation, dividends and analyst recommendations.
Profitability
This table compares Gartner and Automatic Data Processing’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| Gartner | 11.99% | 525.46% | 13.45% |
| Automatic Data Processing | 20.11% | 71.34% | 6.73% |
Analyst Recommendations
This is a summary of recent ratings and price targets for Gartner and Automatic Data Processing, as provided by MarketBeat.com.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Gartner | 2 | 6 | 2 | 1 | 2.18 |
| Automatic Data Processing | 1 | 8 | 3 | 0 | 2.17 |
Gartner currently has a consensus price target of $187.30, suggesting a potential downside of 4.29%. Automatic Data Processing has a consensus price target of $273.50, suggesting a potential downside of 1.10%. Given Automatic Data Processing’s higher probable upside, analysts clearly believe Automatic Data Processing is more favorable than Gartner.
Insider and Institutional Ownership
91.5% of Gartner shares are owned by institutional investors. Comparatively, 80.0% of Automatic Data Processing shares are owned by institutional investors. 2.6% of Gartner shares are owned by insiders. Comparatively, 0.2% of Automatic Data Processing shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.
Earnings & Valuation
This table compares Gartner and Automatic Data Processing”s gross revenue, earnings per share and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| Gartner | $6.50 billion | 1.90 | $729.23 million | $11.15 | 17.55 |
| Automatic Data Processing | $21.95 billion | 5.01 | $4.41 billion | $10.94 | 25.28 |
Automatic Data Processing has higher revenue and earnings than Gartner. Gartner is trading at a lower price-to-earnings ratio than Automatic Data Processing, indicating that it is currently the more affordable of the two stocks.
Risk and Volatility
Gartner has a beta of 0.96, suggesting that its stock price is 4% less volatile than the S&P 500. Comparatively, Automatic Data Processing has a beta of 0.82, suggesting that its stock price is 18% less volatile than the S&P 500.
Summary
Gartner beats Automatic Data Processing on 8 of the 15 factors compared between the two stocks.
About Gartner
Gartner, Inc. operates as a research and advisory company in the United States, Canada, Europe, the Middle East, Africa, and internationally. It operates through three segments: Research, Conferences, and Consulting. The Research segment delivers its research primarily through a subscription service that include on-demand access to published research content, data and benchmarks, and direct access to a network of research experts. The Conferences segment offers executives and teams in an organization the opportunity to learn, share, and network. The Consulting segment offers market-leading research, custom analysis, and on-the-ground support services. This segment also offers actionable solutions for IT-related priorities, including IT cost optimization, digital transformation, and IT sourcing optimization. Gartner, Inc. was founded in 1979 and is headquartered in Stamford, Connecticut.
About Automatic Data Processing
Automatic Data Processing, Inc. provides cloud-based human capital management solutions worldwide. It operates in two segments, Employer Services and Professional Employer Organization (PEO). The Employer Services segment offers strategic, cloud-based platforms, and human resources (HR) outsourcing solutions. Its offerings include payroll services, benefits administration, talent management, HR management, workforce management, insurance, retirement, and compliance services, as well as integrated HCM solutions. The PEO Services segment provides HR outsourcing solution to businesses through a co-employment model. This segment offers employee benefits, protection and compliance, talent engagement, expertise, comprehensive outsourcing, and recruitment process outsourcing services. Automatic Data Processing, Inc. was founded in 1949 and is headquartered in Roseland, New Jersey.