Automatic Data Processing (ADP)’s Shares Tank After CDK Global, Inc. (CDK) Spinoff

The shares of Automatic Data Processing (NASDAQ:ADP) closed at $71.42 one day after the spinoff of CDK Global. The company lost 13.71% of its share value in the last two days after the spinoff.

Earlier, ADP completed the spinoff of CDK Global to create a separate entity that would offer technology and marketing services to auto dealers. The company will trade on NASDAQ under the ticker symbol CDK Global, Inc. (NASDAQ:CDK). Under the spinoff deal, stockholders of ADP received one share of CDK Global against every three shares of ADP common stock, as per the record date of September 24, 2014.

Automatic Data Processing (ADP)

Carlos Rodriguez, CEO and president of Automatic Data Processing (NASDAQ:ADP), said,

“With the completion of the spin-off, ADP’s ongoing operations will be squarely focused on our global HCM strategy, where our solutions already enjoy a leading position. This, combined with our scale and focus on innovation, will enable us to devote our full attention to developing solutions for our client’s most challenging HCM needs. By creating value for our customers, we anticipate continuing ADP’s tradition of creating value for our shareholders.”

Prior to the spinoff, Automatic Data Processing (NASDAQ:ADP) reported promising financial results for fiscal 2014 with revenue growth of 8% to $12.2 billion for the financial year. The company reported diluted earnings per share of $3.11 for the fiscal with 11% increase from the previous year at $2.79. At the same time, fourth quarter 2014 accounted for 10% growth in quarterly revenue of the company at $3.1 billion with diluted earnings per share of $0.60 for the quarter.

The company provided an updated fiscal guidance after the spinoff and ADP expects its earnings to grow by 12% to 14% during fiscal 2015.

This article has been written by Prakash Pandey.

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