Kelly Services (NASDAQ:KELYA – Get Free Report) and Automatic Data Processing (NASDAQ:ADP – Get Free Report) are both industrials companies, but which is the better business? We will contrast the two businesses based on the strength of their dividends, analyst recommendations, risk, valuation, profitability, institutional ownership and earnings.
Dividends
Kelly Services pays an annual dividend of $0.30 per share and has a dividend yield of 1.8%. Automatic Data Processing pays an annual dividend of $6.80 per share and has a dividend yield of 2.6%. Kelly Services pays out -3.8% of its earnings in the form of a dividend. Automatic Data Processing pays out 62.2% 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 increased its dividend for 49 consecutive years. Automatic Data Processing is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Earnings and Valuation
This table compares Kelly Services and Automatic Data Processing”s revenue, earnings per share (EPS) and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| Kelly Services | $4.06 billion | 0.14 | -$254.10 million | ($7.81) | -2.09 |
| Automatic Data Processing | $21.95 billion | 4.75 | $4.41 billion | $10.94 | 23.99 |
Automatic Data Processing has higher revenue and earnings than Kelly Services. Kelly Services 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.
Insider & Institutional Ownership
76.3% of Kelly Services shares are held by institutional investors. Comparatively, 80.0% of Automatic Data Processing shares are held by institutional investors. 5.4% of Kelly Services shares are held by company insiders. Comparatively, 0.2% of Automatic Data Processing shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.
Analyst Recommendations
This is a breakdown of current ratings for Kelly Services and Automatic Data Processing, as reported by MarketBeat.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Kelly Services | 1 | 1 | 1 | 0 | 2.00 |
| Automatic Data Processing | 1 | 8 | 3 | 0 | 2.17 |
Kelly Services presently has a consensus target price of $20.00, indicating a potential upside of 22.77%. Automatic Data Processing has a consensus target price of $273.50, indicating a potential upside of 4.23%. Given Kelly Services’ higher probable upside, equities analysts plainly believe Kelly Services is more favorable than Automatic Data Processing.
Profitability
This table compares Kelly Services and Automatic Data Processing’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| Kelly Services | -6.73% | 2.69% | 1.19% |
| Automatic Data Processing | 20.11% | 71.34% | 6.73% |
Volatility and Risk
Kelly Services has a beta of 0.87, indicating that its stock price is 13% less volatile than the S&P 500. Comparatively, Automatic Data Processing has a beta of 0.82, indicating that its stock price is 18% less volatile than the S&P 500.
Summary
Automatic Data Processing beats Kelly Services on 13 of the 17 factors compared between the two stocks.
About Kelly Services
Kelly Services, Inc., together with its subsidiaries, provides workforce solutions to various industries. The company operates through five segments: Professional & Industrial; Science, Engineering & Technology; Education; Outsourcing & Consulting; and International. The Professional & Industrial segment delivers staffing, outcome-based, and permanent placement services providing administrative, accounting, and finance; light industrial; contact center staffing; and other workforce solutions. The Science, Engineering & Technology segment offers staffing, outcome-based, and permanent placement services in the areas of science and clinical research, engineering, technology, and telecommunications specialties. The Education segment provides staffing, permanent placement, and executive search services to pre-K-12 school districts and education organizations. The Outsourcing & Consulting segment offers managed service provider, recruitment process outsourcing, payroll process outsourcing, and executive coaching programs to customers on a global basis that includes its RocketPower brand. The International segment provides staffing, recruitment process outsourcing, and permanent placement services. The company serves customers in the United States, Canada, Mexico, Puerto Rico, France, Switzerland, Portugal, Russia, Italy, rest of Europe, and the Asia-Pacific region. Kelly Services, Inc. was founded in 1946 and is headquartered in Troy, Michigan.
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.
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