ADP – Market expectations are for Uniform ROA to reach new peaks, but management may be concerned about bookings declines, marketing costs, and macro headwinds

• Automatic Data Processing, Inc. (ADP:USA) currently trades at a recent high relative to UAFRS-based (Uniform) earnings, with a 30.2x Uniform P/E. At these levels, the market is pricing in bullish expectations for the firm, but management may be concerned about bookings declines, digital marketing costs, and potential macroeconomic headwinds
  
  
• Specifically, management may lack confidence in their ability to maintain their product investments, manage their digital marketing costs, and mitigate declines in Employer Services segment bookings, particularly in Southern California. Additionally, they may have concerns about the sustainability of the company’s underlying growth trends, the potential for further pandemic-related headwinds, and the accuracy of their bookings forecast based on macroeconomic indicators. Furthermore, they may lack confidence in their ability to retain clients by providing free additional services and expand to new addressable markets with the Celergo acquisition