Financial Comparison: SS&C Technologies (NASDAQ:SSNC) & Automatic Data Processing (NASDAQ:ADP)

Automatic Data Processing (NASDAQ:ADP) and SS&C Technologies (NASDAQ:SSNC) are both large-cap industrials companies, but which is the superior investment? We will compare the two companies based on the strength of their valuation, institutional ownership, dividends, earnings, profitability, analyst recommendations and risk.

Analyst Ratings

This is a breakdown of recent ratings and target prices for Automatic Data Processing and SS&C Technologies, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Automatic Data Processing	1	8	3	0	2.17
SS&C Technologies	0	2	7	1	2.90

Automatic Data Processing presently has a consensus target price of $273.50, indicating a potential upside of 0.97%. SS&C Technologies has a consensus target price of $92.62, indicating a potential upside of 14.31%. Given SS&C Technologies’ stronger consensus rating and higher possible upside, analysts plainly believe SS&C Technologies is more favorable than Automatic Data Processing.

Valuation and Earnings

This table compares Automatic Data Processing and SS&C Technologies”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Automatic Data Processing	$21.95 billion	4.89	$4.41 billion	$10.94	24.76
SS&C Technologies	$6.27 billion	3.03	$796.90 million	$3.48	23.28

Automatic Data Processing has higher revenue and earnings than SS&C Technologies. SS&C Technologies 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 & Volatility

Automatic Data Processing has a beta of 0.83, suggesting that its share price is 17% less volatile than the S&P 500. Comparatively, SS&C Technologies has a beta of 1.09, suggesting that its share price is 9% more volatile than the S&P 500.

Institutional and Insider Ownership

80.0% of Automatic Data Processing shares are owned by institutional investors. Comparatively, 96.9% of SS&C Technologies shares are owned by institutional investors. 0.2% of Automatic Data Processing shares are owned by insiders. Comparatively, 16.0% of SS&C Technologies shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Dividends

Automatic Data Processing pays an annual dividend of $6.80 per share and has a dividend yield of 2.5%. SS&C Technologies pays an annual dividend of $1.20 per share and has a dividend yield of 1.5%. Automatic Data Processing pays out 62.2% of its earnings in the form of a dividend. SS&C Technologies pays out 34.5% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Automatic Data Processing has raised its dividend for 49 consecutive years and SS&C Technologies has raised its dividend for 9 consecutive years. Automatic Data Processing is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Profitability

This table compares Automatic Data Processing and SS&C Technologies’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Automatic Data Processing	20.11%	71.34%	6.73%
SS&C Technologies	13.16%	21.20%	7.19%

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.

About SS&C Technologies

SS&C Technologies Holdings, Inc. engages in the development and provision of software solutions to the financial services and healthcare industries. It operates through the following geographical segments: United States, Europe, Middle East and Africa, Asia Pacific and Japan, Canada, and the Americas, excluding the United States and Canada. Its products include advent genesis, antares, asset allocators, AWD, axys, BANC mall, BRIX, DST vision, evare, lightning, and moxy. The company was founded by William Charles Stone in March 1986 and is headquartered in Windsor, CT.