The backtest shows that ADP's stock generally performs positively following earnings beats, with a 63.64% win rate at 3 days and peaking at a 72.73% win rate at 10 days. The returns are modest, with the highest average return of 1.97% over 10 days. However, by 30 days the win rate drops to 45.45%, indicating possible short-term strength but less consistency longer term.

These results suggest that market reaction to ADP's earnings beats is favorable but primarily transient.

Investors may benefit from short-term positions in ADP following earnings surprises, but should be cautious about holding beyond two weeks.

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The backtest reveals that the Professional Services Industry generally experiences a negative impact following earnings beats, with a maximum average return of just 0.97% occurring 14 days post-event. This unusually weak reaction suggests that earnings beats do not reliably translate into positive price movements within this sector.

The limited return magnitude indicates a muted or skeptical market response to good earnings news in this industry over the examined period.

Investors should be cautious about expecting strong upside from earnings beats in Professional Services and may need to explore alternative signals for this sector.

The backtest reveals that ADP's earnings beat positively impacted the Capital Markets industry with sustained gains over 35 days, while Healthcare Services experienced a prolonged decline over 30 days. This divergence reflects the market's interpretation of stronger economic conditions boosting business confidence and investment activity, benefiting financial sectors but reducing defensive demand in healthcare. Investors might consider overweighting Capital Markets to capitalize on expansion phases following employment strength signals, while adopting caution or underweighting Healthcare Services, which tends to underperform during improving economic cycles.

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Backtest ADP Earning Beats

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