Analyzing the Quality Characteristics of AUTOMATIC DATA PROCESSING (NASDAQ:ADP).

Quality investors are looking for the best of the best. Companies which are growing steadily and consistently, but are also in excellent financial condition. We will have a look here to see if AUTOMATIC DATA PROCESSING (NASDAQ:ADP) is suited for quality investing. Investors should of course do their own research, but we spotted AUTOMATIC DATA PROCESSING showing up in our Caviar Cruise quality screen, so it may be worth spending some more time on it.

Why NASDAQ:ADP may be interesting for quality investors.

• Over the past 5 years, AUTOMATIC DATA PROCESSING has experienced impressive revenue growth, with 6.36% increase. This demonstrates the company's ability to effectively expand its top line and suggests a positive outlook for future revenue generation.
• AUTOMATIC DATA PROCESSING exhibits a strong ROIC excluding cash and goodwill, indicating efficient capital utilization and profitable operations. The 167.0% reflects the company's ability to generate returns on invested capital and underscores its commitment to delivering value to shareholders.
• AUTOMATIC DATA PROCESSING maintains a healthy Debt/Free Cash Flow Ratio of 0.83, indicating a strong financial position and prudent debt management. This ratio suggests the company has sufficient free cash flow to cover its debt obligations and highlights its ability to generate cash from operations.
• With a robust Profit Quality (5-year) ratio of 97.19%, AUTOMATIC DATA PROCESSING highlights its ability to consistently generate high-quality profits. This metric reflects the company's effective management and operational excellence in delivering reliable earnings over the long term.
• With a robust 5-year EBIT growth of 10.53%, AUTOMATIC DATA PROCESSING showcases its ability to consistently expand its operating profitability. This trend indicates the company's effective cost management and revenue generation strategies.
• With EBIT 5-year growth outpacing its Revenue 5-year growth, AUTOMATIC DATA PROCESSING showcases its effective cost management and enhanced operational performance. This suggests the company's ability to generate higher earnings from its revenue streams.

Fundamental analysis of NASDAQ:ADP

Every day, ChartMill assigns a Fundamental Rating to each stock, providing a score ranging from 0 to 10. This rating is determined by evaluating various fundamental indicators and properties.

ADP gets a fundamental rating of 6 out of 10. The analysis compared the fundamentals against 82 industry peers in the Professional Services industry. While ADP has a great profitability rating, there are some minor concerns on its financial health. ADP is valied quite expensively at the moment, while it does show a decent growth rate.

For an up to date full fundamental analysis you can check the fundamental report of ADP

More quality stocks can be found in our Caviar Cruise screen.

Disclaimer

This article should in no way be interpreted as advice. The article is based on the observed metrics at the time of writing, but you should always make your own analysis and trade or invest at your own responsibility.