AUTOMATIC DATA PROCESSING (ADP) Stock Fundamental Analysis
NASDAQ:ADP • US0530151036
215.12 USD
-2.09 (-0.96%)
Last: Feb 19, 2026, 03:49 PM
Taking everything into account, ADP scores 6 out of 10 in our fundamental rating. ADP was compared to 88 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 has a correct valuation and a medium growth rate. ADP also has an excellent dividend rating. With these ratings, ADP could be worth investigating further for dividend investing!.
1. Profitability
1.1 Basic Checks
- ADP had positive earnings in the past year.
- In the past year ADP had a positive cash flow from operations.
- Each year in the past 5 years ADP has been profitable.
- Each year in the past 5 years ADP had a positive operating cash flow.
1.2 Ratios
- ADP has a better Return On Assets (5.00%) than 60.23% of its industry peers.
- ADP has a Return On Equity of 66.25%. This is amongst the best in the industry. ADP outperforms 95.45% of its industry peers.
- With an excellent Return On Invested Capital value of 34.42%, ADP belongs to the best of the industry, outperforming 97.73% of the companies in the same industry.
- ADP had an Average Return On Invested Capital over the past 3 years of 36.13%. This is significantly above the industry average of 12.55%.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 5% | ||
| ROE | 66.25% | ||
| ROIC | 34.42% |
ROA(3y)7.08%
ROA(5y)6.25%
ROE(3y)81.89%
ROE(5y)76.59%
ROIC(3y)36.13%
ROIC(5y)33.86%
1.3 Margins
- The Profit Margin of ADP (19.96%) is better than 87.50% of its industry peers.
- In the last couple of years the Profit Margin of ADP has grown nicely.
- ADP's Operating Margin of 26.37% is amongst the best of the industry. ADP outperforms 90.91% of its industry peers.
- In the last couple of years the Operating Margin of ADP has grown nicely.
- ADP's Gross Margin of 46.16% is fine compared to the rest of the industry. ADP outperforms 64.77% of its industry peers.
- In the last couple of years the Gross Margin of ADP has grown nicely.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 26.37% | ||
| PM (TTM) | 19.96% | ||
| GM | 46.16% |
OM growth 3Y4.64%
OM growth 5Y4.17%
PM growth 3Y3.54%
PM growth 5Y3.25%
GM growth 3Y2.58%
GM growth 5Y1.81%
2. Health
2.1 Basic Checks
- With a Return on Invested Capital (ROIC) well above the Cost of Capital (WACC), ADP is creating value.
- ADP has less shares outstanding than it did 1 year ago.
- ADP has less shares outstanding than it did 5 years ago.
- Compared to 1 year ago, ADP has a worse debt to assets ratio.
2.2 Solvency
- ADP has an Altman-Z score of 1.60. This is a bad value and indicates that ADP is not financially healthy and even has some risk of bankruptcy.
- With a Altman-Z score value of 1.60, ADP is not doing good in the industry: 62.50% of the companies in the same industry are doing better.
- ADP has a debt to FCF ratio of 0.95. This is a very positive value and a sign of high solvency as it would only need 0.95 years to pay back of all of its debts.
- Looking at the Debt to FCF ratio, with a value of 0.95, ADP belongs to the top of the industry, outperforming 80.68% of the companies in the same industry.
- ADP has a Debt/Equity ratio of 0.62. This is a neutral value indicating ADP is somewhat dependend on debt financing.
- The Debt to Equity ratio of ADP (0.62) is comparable to the rest of the industry.
- Although ADP does not score too well on debt/equity it has very limited outstanding debt, which is well covered by the FCF. We will not put too much weight on the debt/equity number as it may be because of low equity, which could be a consequence of a share buyback program for instance. This needs to be investigated.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.62 | ||
| Debt/FCF | 0.95 | ||
| Altman-Z | 1.6 |
ROIC/WACC4.05
WACC8.5%
2.3 Liquidity
- A Current Ratio of 1.03 indicates that ADP should not have too much problems paying its short term obligations.
- Looking at the Current ratio, with a value of 1.03, ADP is doing worse than 75.00% of the companies in the same industry.
- A Quick Ratio of 1.03 indicates that ADP should not have too much problems paying its short term obligations.
- ADP's Quick ratio of 1.03 is on the low side compared to the rest of the industry. ADP is outperformed by 75.00% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 1.03 | ||
| Quick Ratio | 1.03 |
3. Growth
3.1 Past
- ADP shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 8.08%, which is quite good.
- Measured over the past years, ADP shows a quite strong growth in Earnings Per Share. The EPS has been growing by 11.05% on average per year.
- ADP shows a small growth in Revenue. In the last year, the Revenue has grown by 6.59%.
- The Revenue has been growing slightly by 7.10% on average over the past years.
EPS 1Y (TTM)8.08%
EPS 3Y12.57%
EPS 5Y11.05%
EPS Q2Q%11.49%
Revenue 1Y (TTM)6.59%
Revenue growth 3Y7.61%
Revenue growth 5Y7.1%
Sales Q2Q%6.16%
3.2 Future
- The Earnings Per Share is expected to grow by 7.57% on average over the next years.
- Based on estimates for the next years, ADP will show a small growth in Revenue. The Revenue will grow by 5.64% on average per year.
EPS Next Y10.76%
EPS Next 2Y9.92%
EPS Next 3Y9.36%
EPS Next 5Y7.57%
Revenue Next Year6.43%
Revenue Next 2Y6.08%
Revenue Next 3Y5.99%
Revenue Next 5Y5.64%
3.3 Evolution
- When comparing the EPS growth rate of the last years to the growth rate of the upcoming years, we see that the growth is decreasing.
- The Revenue growth rate is decreasing: in the next years the growth will be less than in the last years.
4. Valuation
4.1 Price/Earnings Ratio
- A Price/Earnings ratio of 20.63 indicates a rather expensive valuation of ADP.
- ADP's Price/Earnings ratio is in line with the industry average.
- ADP is valuated rather cheaply when we compare the Price/Earnings ratio to 27.27, which is the current average of the S&P500 Index.
- A Price/Forward Earnings ratio of 17.80 indicates a rather expensive valuation of ADP.
- ADP's Price/Forward Earnings ratio is in line with the industry average.
- When comparing the Price/Forward Earnings ratio of ADP to the average of the S&P500 Index (28.16), we can say ADP is valued slightly cheaper.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 20.63 | ||
| Fwd PE | 17.8 |
4.2 Price Multiples
- ADP's Enterprise Value to EBITDA is on the same level as the industry average.
- Compared to the rest of the industry, the Price/Free Cash Flow ratio of ADP indicates a somewhat cheap valuation: ADP is cheaper than 60.23% of the companies listed in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 20.7 | ||
| EV/EBITDA | 14.39 |
4.3 Compensation for Growth
- The high PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates an expensive valuation of the company.
- The excellent profitability rating of ADP may justify a higher PE ratio.
PEG (NY)1.92
PEG (5Y)1.87
EPS Next 2Y9.92%
EPS Next 3Y9.36%
5. Dividend
5.1 Amount
- ADP has a Yearly Dividend Yield of 3.24%.
- Compared to an average industry Dividend Yield of 1.59, ADP pays a better dividend. On top of this ADP pays more dividend than 89.77% of the companies listed in the same industry.
- ADP's Dividend Yield is rather good when compared to the S&P500 average which is at 1.85.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 3.24% |
5.2 History
- On average, the dividend of ADP grows each year by 11.62%, which is quite nice.
- ADP has paid a dividend for at least 10 years, which is a reliable track record.
- ADP has not decreased its dividend for at least 10 years, so it has a reliable track record of non decreasing dividend.
Dividend Growth(5Y)11.62%
Div Incr Years26
Div Non Decr Years26
5.3 Sustainability
- 59.26% of the earnings are spent on dividend by ADP. This is a bit on the high side, but may be sustainable.
- ADP's earnings are growing slower than its dividend. This means the dividend growth is not sustainable.
DP59.26%
EPS Next 2Y9.92%
EPS Next 3Y9.36%
NASDAQ:ADP (2/19/2026, 3:49:07 PM)
215.12
-2.09 (-0.96%)
Chartmill FA Rating
GICS SectorIndustrials
GICS IndustryGroupCommercial & Professional Services
GICS IndustryProfessional Services
Earnings (Last)01-28 2026-01-28/bmo
Earnings (Next)04-28 2026-04-28/bmo
Inst Owners86.82%
Inst Owner Change1.53%
Ins Owners0.1%
Ins Owner Change-10.64%
Market Cap86.62B
Revenue(TTM)21.21B
Net Income(TTM)4.24B
Analysts64.55
Price Target286.67 (33.26%)
Short Float %2.21%
Short Ratio3.26
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 3.24% |
Yearly Dividend5.9
Dividend Growth(5Y)11.62%
DP59.26%
Div Incr Years26
Div Non Decr Years26
Ex-Date03-13 2026-03-13 (1.7)
Surprises & Revisions
EPS beat(2)2
Avg EPS beat(2)0.96%
Min EPS beat(2)0.82%
Max EPS beat(2)1.1%
EPS beat(4)4
Avg EPS beat(4)1.03%
Min EPS beat(4)0.35%
Max EPS beat(4)1.85%
EPS beat(8)8
Avg EPS beat(8)1.64%
EPS beat(12)12
Avg EPS beat(12)1.62%
EPS beat(16)16
Avg EPS beat(16)1.82%
Revenue beat(2)0
Avg Revenue beat(2)-0.41%
Min Revenue beat(2)-0.59%
Max Revenue beat(2)-0.23%
Revenue beat(4)2
Avg Revenue beat(4)-0.02%
Min Revenue beat(4)-0.59%
Max Revenue beat(4)0.64%
Revenue beat(8)4
Avg Revenue beat(8)-0.02%
Revenue beat(12)6
Avg Revenue beat(12)-0.08%
Revenue beat(16)9
Avg Revenue beat(16)-0.02%
PT rev (1m)-3.23%
PT rev (3m)-9.2%
EPS NQ rev (1m)0.71%
EPS NQ rev (3m)0.76%
EPS NY rev (1m)0.48%
EPS NY rev (3m)0.48%
Revenue NQ rev (1m)0.27%
Revenue NQ rev (3m)0.31%
Revenue NY rev (1m)0.18%
Revenue NY rev (3m)0.19%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 20.63 | ||
| Fwd PE | 17.8 | ||
| P/S | 4.08 | ||
| P/FCF | 20.7 | ||
| P/OCF | 18.27 | ||
| P/B | 13.55 | ||
| P/tB | 58.67 | ||
| EV/EBITDA | 14.39 |
EPS(TTM)10.43
EY4.85%
EPS(NY)12.08
Fwd EY5.62%
FCF(TTM)10.39
FCFY4.83%
OCF(TTM)11.77
OCFY5.47%
SpS52.69
BVpS15.88
TBVpS3.67
PEG (NY)1.92
PEG (5Y)1.87
Graham Number61.04
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 5% | ||
| ROE | 66.25% | ||
| ROCE | 44.75% | ||
| ROIC | 34.42% | ||
| ROICexc | 42.91% | ||
| ROICexgc | 84.18% | ||
| OM | 26.37% | ||
| PM (TTM) | 19.96% | ||
| GM | 46.16% | ||
| FCFM | 19.73% |
ROA(3y)7.08%
ROA(5y)6.25%
ROE(3y)81.89%
ROE(5y)76.59%
ROIC(3y)36.13%
ROIC(5y)33.86%
ROICexc(3y)55.75%
ROICexc(5y)48.87%
ROICexgc(3y)137.09%
ROICexgc(5y)114.46%
ROCE(3y)51.2%
ROCE(5y)46.57%
ROICexgc growth 3Y-1.22%
ROICexgc growth 5Y8.54%
ROICexc growth 3Y0.6%
ROICexc growth 5Y6.46%
OM growth 3Y4.64%
OM growth 5Y4.17%
PM growth 3Y3.54%
PM growth 5Y3.25%
GM growth 3Y2.58%
GM growth 5Y1.81%
F-Score6
Asset Turnover0.25
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.62 | ||
| Debt/FCF | 0.95 | ||
| Debt/EBITDA | 0.64 | ||
| Cap/Depr | 94.94% | ||
| Cap/Sales | 2.62% | ||
| Interest Coverage | 12.97 | ||
| Cash Conversion | 76.72% | ||
| Profit Quality | 98.81% | ||
| Current Ratio | 1.03 | ||
| Quick Ratio | 1.03 | ||
| Altman-Z | 1.6 |
F-Score6
WACC8.5%
ROIC/WACC4.05
Cap/Depr(3y)99.42%
Cap/Depr(5y)100.95%
Cap/Sales(3y)2.92%
Cap/Sales(5y)3.1%
Profit Quality(3y)103.34%
Profit Quality(5y)99.19%
High Growth Momentum
Growth
EPS 1Y (TTM)8.08%
EPS 3Y12.57%
EPS 5Y11.05%
EPS Q2Q%11.49%
EPS Next Y10.76%
EPS Next 2Y9.92%
EPS Next 3Y9.36%
EPS Next 5Y7.57%
Revenue 1Y (TTM)6.59%
Revenue growth 3Y7.61%
Revenue growth 5Y7.1%
Sales Q2Q%6.16%
Revenue Next Year6.43%
Revenue Next 2Y6.08%
Revenue Next 3Y5.99%
Revenue Next 5Y5.64%
EBIT growth 1Y6.33%
EBIT growth 3Y12.61%
EBIT growth 5Y11.57%
EBIT Next Year18.65%
EBIT Next 3Y11.07%
EBIT Next 5Y10.37%
FCF growth 1Y23.42%
FCF growth 3Y19.94%
FCF growth 5Y12.76%
OCF growth 1Y20.04%
OCF growth 3Y16.81%
OCF growth 5Y10.3%
AUTOMATIC DATA PROCESSING / ADP FAQ
Can you provide the ChartMill fundamental rating for AUTOMATIC DATA PROCESSING?
ChartMill assigns a fundamental rating of 6 / 10 to ADP.
What is the valuation status for ADP stock?
ChartMill assigns a valuation rating of 4 / 10 to AUTOMATIC DATA PROCESSING (ADP). This can be considered as Fairly Valued.
What is the profitability of ADP stock?
AUTOMATIC DATA PROCESSING (ADP) has a profitability rating of 9 / 10.
Can you provide the expected EPS growth for ADP stock?
The Earnings per Share (EPS) of AUTOMATIC DATA PROCESSING (ADP) is expected to grow by 10.76% in the next year.
Is the dividend of AUTOMATIC DATA PROCESSING sustainable?
The dividend rating of AUTOMATIC DATA PROCESSING (ADP) is 7 / 10 and the dividend payout ratio is 59.26%.