AUTOMATIC DATA PROCESSING (ADP) Stock Fundamental Analysis
NASDAQ:ADP • US0530151036
214.47 USD
-1.5 (-0.69%)
At close: Feb 20, 2026
214.69 USD
+0.22 (+0.1%)
Pre-Market: 2/23/2026, 4:02:49 AM
We assign a fundamental rating of 6 out of 10 to ADP. ADP was compared to 88 industry peers in the Professional Services industry. While ADP has a great profitability rating, there are some minor concerns on its financial health. ADP has a correct valuation and a medium growth rate. Finally ADP also has an excellent dividend rating. These ratings could make ADP a good candidate for dividend investing.
1. Profitability
1.1 Basic Checks
- In the past year ADP was profitable.
- In the past year ADP had a positive cash flow from operations.
- Each year in the past 5 years ADP has been profitable.
- ADP had a positive operating cash flow in each of the past 5 years.
1.2 Ratios
- Looking at the Return On Assets, with a value of 5.00%, ADP is in the better half of the industry, outperforming 60.23% of the companies in the same industry.
- With an excellent Return On Equity value of 66.25%, ADP belongs to the best of the industry, outperforming 95.45% of the companies in the same industry.
- 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.
- The Average Return On Invested Capital over the past 3 years for ADP 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
- Looking at the Profit Margin, with a value of 19.96%, ADP belongs to the top of the industry, outperforming 87.50% of the companies in the same industry.
- In the last couple of years the Profit Margin of ADP has grown nicely.
- Looking at the Operating Margin, with a value of 26.37%, ADP belongs to the top of the industry, outperforming 90.91% of the companies in the same industry.
- ADP's Operating Margin has improved in the last couple of years.
- Looking at the Gross Margin, with a value of 46.16%, ADP is in the better half of the industry, outperforming 64.77% of the companies in the same industry.
- 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.
- Compared to 1 year ago, ADP has less shares outstanding
- ADP has less shares outstanding than it did 5 years ago.
- The debt/assets ratio for ADP is higher compared to a year ago.
2.2 Solvency
- ADP has an Altman-Z score of 1.59. This is a bad value and indicates that ADP is not financially healthy and even has some risk of bankruptcy.
- ADP has a Altman-Z score of 1.59. This is in the lower half of the industry: ADP underperforms 63.64% of its industry peers.
- The Debt to FCF ratio of ADP is 0.95, which is an excellent value as it means it would take ADP, only 0.95 years of fcf income to pay off all of its debts.
- The Debt to FCF ratio of ADP (0.95) is better than 79.55% of its industry peers.
- A Debt/Equity ratio of 0.62 indicates that ADP is somewhat dependend on debt financing.
- ADP's Debt to Equity ratio of 0.62 is in line compared to the rest of the industry. ADP outperforms 42.05% of its industry peers.
- 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 | 1.59 |
ROIC/WACC4.04
WACC8.52%
2.3 Liquidity
- A Current Ratio of 1.03 indicates that ADP should not have too much problems paying its short term obligations.
- ADP has a worse Current ratio (1.03) than 75.00% of its industry peers.
- A Quick Ratio of 1.03 indicates that ADP should not have too much problems paying its short term obligations.
- The Quick ratio of ADP (1.03) is worse than 75.00% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 1.03 | ||
| Quick Ratio | 1.03 |
3. Growth
3.1 Past
- The Earnings Per Share has grown by an nice 8.08% over the past year.
- ADP shows quite a strong growth in Earnings Per Share. Measured over the last years, the EPS has been growing by 11.05% yearly.
- The Revenue has been growing slightly by 6.59% in the past year.
- 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
- ADP is expected to show a small growth in Earnings Per Share. In the coming years, the EPS will grow by 7.57% yearly.
- ADP is expected to show a small growth in Revenue. In the coming years, the Revenue will grow by 5.64% yearly.
EPS Next Y10.76%
EPS Next 2Y9.92%
EPS Next 3Y9.36%
EPS Next 5Y7.57%
Revenue Next Year6.44%
Revenue Next 2Y6.08%
Revenue Next 3Y6%
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.
- When comparing the Revenue growth rate of the last years to the growth rate of the upcoming years, we see that the growth is decreasing.
4. Valuation
4.1 Price/Earnings Ratio
- Based on the Price/Earnings ratio of 20.56, the valuation of ADP can be described as rather expensive.
- The rest of the industry has a similar Price/Earnings ratio as ADP.
- ADP is valuated rather cheaply when we compare the Price/Earnings ratio to 26.99, which is the current average of the S&P500 Index.
- Based on the Price/Forward Earnings ratio of 17.75, the valuation of ADP can be described as rather expensive.
- ADP's Price/Forward Earnings is on the same level as the industry average.
- ADP's Price/Forward Earnings ratio indicates a valuation a bit cheaper than the S&P500 average which is at 28.02.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 20.56 | ||
| Fwd PE | 17.75 |
4.2 Price Multiples
- The rest of the industry has a similar Enterprise Value to EBITDA ratio as ADP.
- Based on the Price/Free Cash Flow ratio, ADP is valued a bit cheaper than 60.23% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 20.64 | ||
| EV/EBITDA | 14.21 |
4.3 Compensation for Growth
- The high PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates ADP does not grow enough to justify the current Price/Earnings ratio.
- ADP has an outstanding profitability rating, which may justify a higher PE ratio.
PEG (NY)1.91
PEG (5Y)1.86
EPS Next 2Y9.92%
EPS Next 3Y9.36%
5. Dividend
5.1 Amount
- ADP has a Yearly Dividend Yield of 3.15%.
- ADP's Dividend Yield is rather good when compared to the industry average which is at 1.55. ADP pays more dividend than 89.77% of the companies in the same industry.
- Compared to an average S&P500 Dividend Yield of 1.81, ADP pays a better dividend.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 3.15% |
5.2 History
- The dividend of ADP is nicely growing with an annual growth rate of 11.62%!
- ADP has been paying a dividend for at least 10 years, so it has 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
- ADP pays out 59.26% of its income as dividend. 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%
214.47
-1.5 (-0.69%)
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 Change2.04%
Ins Owners0.1%
Ins Owner Change-10.68%
Market Cap86.35B
Revenue(TTM)21.21B
Net Income(TTM)4.24B
Analysts64.55
Price Target286.67 (33.66%)
Short Float %2.21%
Short Ratio3.26
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 3.15% |
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)-4.25%
EPS NQ rev (1m)0.58%
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)0.19%
Revenue NY rev (3m)0.2%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 20.56 | ||
| Fwd PE | 17.75 | ||
| P/S | 4.07 | ||
| P/FCF | 20.64 | ||
| P/OCF | 18.22 | ||
| P/B | 13.51 | ||
| P/tB | 58.49 | ||
| EV/EBITDA | 14.21 |
EPS(TTM)10.43
EY4.86%
EPS(NY)12.08
Fwd EY5.63%
FCF(TTM)10.39
FCFY4.85%
OCF(TTM)11.77
OCFY5.49%
SpS52.69
BVpS15.88
TBVpS3.67
PEG (NY)1.91
PEG (5Y)1.86
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 | 1.59 |
F-Score6
WACC8.52%
ROIC/WACC4.04
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 Year6.44%
Revenue Next 2Y6.08%
Revenue Next 3Y6%
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%.