ADP and Bill.com. Business & Marketing Assignment.

Automatic Data processing (ADP) and Bill.Com Financial Analysis
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Automatic Data processing (ADP) and Bill.Com Financial Analysis
The primary products that ADP trades in is the strategic cloud based products and solutions for client size and geography. These products include HCM solutions, HRO solutions and Global solutions for businesses. These are hardware and software computing components that make cloud computing possible. The ADP’s key businesses segments are the Employer services and the Professional employer organization.
Employer Services. Our Employer Services segment serves clients ranging from single-employee small businesses to large enterprises with tens of thousands of employees around the world, offering a comprehensive range of technology-based HCM solutions, including our strategic, cloud-based platforms, and HRO (other than PEO) solutions. These solutions address critical client needs and include: Payroll Services, Benefits Administration, Talent Management, HR Management, Workforce Management, Compliance Services, Insurance Services and Retirement Services.
Professional Employer Organization. ADP PEO business, called ADP TotalSource, provides clients with comprehensive employment administration outsourcing solutions through a relationship in which employees who work for a client (referred to as “worksite employees”) are co-employed by us and the client.
Describe ADP’s dividends and share repurchases.
In November 2019, ADP announce $5 billion new share repurchases authorization. As seen, heavy use of share repurchases may show the company will be less aggressive with future dividend raises. The ADP says that they will increase the 2020 Earnings per share estimates and raise target price from 198 to 207 dollars.
* How much did ADP pay in dividends in fiscal 2019, in total and per share?
Retained earnings 2019

$17,988 million

Retained earnings 2018

$16,547 million

Change in retained earnings (-)

$1,441 million

Net income 2019

$2,293 million

Change in retained earnings (18,19)

$1,441 million

Dividends paid 2019

$852 million

b) How much stock did ADP repurchase, in dollars, shares, and as a percentage of shares outstanding at the beginning of the year?
ADP repurchase $5 billion in 2019, up to 25 million shares, which is approximately 17% of the shares outstanding at the beginning of the year
25/431.75 * 100 = 17%
c) ADP was founded in 1949. Suppose ADP continues to operate for another 70 years and its discount rate is 3.5%. If ADP pays the same amount in dividends and repurchases to investors as it did in fiscal 2019 every year for the next 70 years, what is the present value of those payments? Compare this present value to the market value of the common stock stated on the title page of the 10-K.
0

2,293

r 3.5%

2,293

1

852


($823.19)

2

852


($795.35)

3

852


($768.46)

4

852


($742.47)

5

852


($717.36)

70



($76.67)


6553

NPV=

($1,553.82)

This provides a negative figure and not sustainable. A value that can be placed to create contant growth of payments will be preferable. A constant growth model will be used
3) Describe Bill.com’s initial public offering.
Bill.com was issuing its first IPO as a startup that had just recently began operations. It priced its IPO at an above-range $22 per share.
a) How much did stock did Bill.com issue in shares and dollars, in total and as compared to the amount of outstanding?
The firm, sold 9.82 million shares in the offering, and is expected to raise $216 million...