Is AUTOMATIC DATA PROCESSING (NASDAQ:ADP) a Strong Candidate for Quality Investing?

In this article we will dive into AUTOMATIC DATA PROCESSING (NASDAQ:ADP) as a possible candidate for quality investing. Investors should always do their own research, but we noticed AUTOMATIC DATA PROCESSING showing up in our Caviar Cruise quality screen, which makes it worth to investigate a bit more.

Why NASDAQ:ADP may be interesting for quality investors.

• AUTOMATIC DATA PROCESSING has achieved substantial revenue growth over the past 5 years, with a 6.36% increase. This signifies the company's ability to successfully capture market opportunities and generate sustained revenue growth.
• The ROIC excluding cash and goodwill of AUTOMATIC DATA PROCESSING stands at 152.0%, reflecting the company's strong financial management and profitability. This metric underscores its ability to generate favorable returns on the capital invested in its core operations.
• With a Debt/Free Cash Flow Ratio of 0.95, AUTOMATIC DATA PROCESSING exhibits solid financial health and responsible debt management practices. This ratio indicates the company's ability to generate ample free cash flow to meet its debt obligations and pursue growth opportunities.
• AUTOMATIC DATA PROCESSING demonstrates consistent Profit Quality over the past 5 years, with a strong 97.19%. This indicates the company's ability to generate sustainable and reliable profits, showcasing its long-term profitability and financial stability.
• AUTOMATIC DATA PROCESSING has consistently achieved strong EBIT growth over the past 5 years, with a 10.53% increase. This underscores the company's effective management of its operating income and suggests a positive outlook for future profitability.
• AUTOMATIC DATA PROCESSING demonstrates a remarkable trend where its EBIT 5-year growth exceeds its Revenue 5-year growth. This indicates the company's ability to enhance its profitability through improved cost control and operational efficiency.

Fundamental analysis of NASDAQ:ADP

At ChartMill, a crucial aspect of their analysis is the assignment of a Fundamental Rating to each stock. This rating, ranging from 0 to 10, is calculated daily by considering numerous fundamental indicators and properties.

Overall ADP gets a fundamental rating of 6 out of 10. We evaluated ADP against 82 industry peers in the Professional Services industry. While ADP belongs to the best of the industry regarding profitability, 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.

Our latest full fundamental report of ADP contains the most current fundamental analsysis.

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

Disclaimer

Important Note: The content of this article is not intended as trading advice. It is essential to perform your own analysis and exercise caution when making trading decisions. The article presents observations created by automated analysis but does not guarantee any trading or investment outcomes. Always trade responsibly and make independent judgments.