AUTOMATIC DATA PROCESSING (ADP)
US0530151036 - Common Stock
Overall ADP gets a fundamental rating of 6 out of 10. We evaluated ADP against 81 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. While showing a medium growth rate, ADP is valued expensive at the moment.
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.
In the past 5 years ADP has always been profitable.
Each year in the past 5 years ADP had a positive operating cash flow.
1.2 Ratios
With a decent Return On Assets value of 7.77%, ADP is doing good in the industry, outperforming 74.03% of the companies in the same industry.
ADP's Return On Equity of 71.96% is amongst the best of the industry. ADP outperforms 96.10% of its industry peers.
Looking at the Return On Invested Capital, with a value of 27.27%, ADP belongs to the top of the industry, outperforming 93.51% of the companies in the same industry.
ADP had an Average Return On Invested Capital over the past 3 years of 40.21%. This is significantly above the industry average of 12.35%.
The last Return On Invested Capital (27.27%) for ADP is well below the 3 year average (40.21%), which needs to be investigated, but indicates that ADP had better years and this may not be a problem.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 7.77% | ||
| ROE | 71.96% | ||
| ROIC | 27.27% |
ROA(3y)6.09%
ROA(5y)5.98%
ROE(3y)90.39%
ROE(5y)71.98%
ROIC(3y)40.21%
ROIC(5y)34.27%
1.3 Margins
ADP has a Profit Margin of 19.71%. This is amongst the best in the industry. ADP outperforms 90.91% of its industry peers.
In the last couple of years the Profit Margin of ADP has grown nicely.
ADP has a better Operating Margin (26.35%) than 89.61% of its industry peers.
In the last couple of years the Operating Margin of ADP has grown nicely.
The Gross Margin of ADP (45.91%) is comparable to the rest of the industry.
In the last couple of years the Gross Margin of ADP has remained more or less at the same level.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 26.35% | ||
| PM (TTM) | 19.71% | ||
| GM | 45.91% |
OM growth 3Y5.45%
OM growth 5Y3.92%
PM growth 3Y4.1%
PM growth 5Y3.75%
GM growth 3Y2.32%
GM growth 5Y1.05%
2. Health
2.1 Basic Checks
The Return on Invested Capital (ROIC) is well above the Cost of Capital (WACC), so ADP is creating value.
ADP has less shares outstanding than it did 1 year ago.
Compared to 5 years ago, ADP has less shares outstanding
ADP has a better debt/assets ratio than last year.
2.2 Solvency
ADP has an Altman-Z score of 3.11. This indicates that ADP is financially healthy and has little risk of bankruptcy at the moment.
The Altman-Z score of ADP (3.11) is comparable to the rest of the industry.
ADP has a debt to FCF ratio of 2.05. This is a good value and a sign of high solvency as ADP would need 2.05 years to pay back of all of its debts.
ADP's Debt to FCF ratio of 2.05 is fine compared to the rest of the industry. ADP outperforms 75.32% of its industry peers.
ADP has a Debt/Equity ratio of 1.38. This is a high value indicating a heavy dependency on external financing.
The Debt to Equity ratio of ADP (1.38) is worse than 80.52% 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 | 1.38 | ||
| Debt/FCF | 2.05 | ||
| Altman-Z | 3.11 |
ROIC/WACC3.01
WACC9.05%
2.3 Liquidity
A Current Ratio of 1.01 indicates that ADP should not have too much problems paying its short term obligations.
Looking at the Current ratio, with a value of 1.01, ADP is doing worse than 75.32% of the companies in the same industry.
ADP has a Quick Ratio of 1.01. This is a normal value and indicates that ADP is financially healthy and should not expect problems in meeting its short term obligations.
ADP's Quick ratio of 1.01 is on the low side compared to the rest of the industry. ADP is outperformed by 75.32% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 1.01 | ||
| Quick Ratio | 1.01 |
3. Growth
3.1 Past
The Earnings Per Share has grown by an nice 11.60% 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 10.99% yearly.
ADP shows a small growth in Revenue. In the last year, the Revenue has grown by 6.63%.
ADP shows a small growth in Revenue. Measured over the last years, the Revenue has been growing by 6.36% yearly.
EPS 1Y (TTM)11.6%
EPS 3Y15.1%
EPS 5Y10.99%
EPS Q2Q%12.02%
Revenue 1Y (TTM)6.63%
Revenue growth 3Y8.57%
Revenue growth 5Y6.36%
Sales Q2Q%7.1%
3.2 Future
ADP is expected to show quite a strong growth in Earnings Per Share. In the coming years, the EPS will grow by 8.11% yearly.
The Revenue is expected to grow by 5.30% on average over the next years.
EPS Next Y9.5%
EPS Next 2Y9.38%
EPS Next 3Y9.07%
EPS Next 5Y8.11%
Revenue Next Year6.34%
Revenue Next 2Y5.98%
Revenue Next 3Y5.76%
Revenue Next 5Y5.3%
3.3 Evolution
The EPS growth rate is decreasing: in the next years the growth will be less than in the last years.
The Revenue growth rate is stable: in the next years the growth will be about the same than in the last years.
4. Valuation
4.1 Price/Earnings Ratio
ADP is valuated quite expensively with a Price/Earnings ratio of 32.30.
Based on the Price/Earnings ratio, ADP is valued a bit more expensive than the industry average as 64.94% of the companies are valued more cheaply.
Compared to an average S&P500 Price/Earnings ratio of 28.96, ADP is valued at the same level.
ADP is valuated quite expensively with a Price/Forward Earnings ratio of 27.73.
Compared to the rest of the industry, the Price/Forward Earnings ratio of ADP indicates a slightly more expensive valuation: ADP is more expensive than 66.23% of the companies listed in the same industry.
When comparing the Price/Forward Earnings ratio of ADP to the average of the S&P500 Index (23.82), we can say ADP is valued inline with the index average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 32.3 | ||
| Fwd PE | 27.73 |
4.2 Price Multiples
ADP's Enterprise Value to EBITDA ratio is in line with the industry average.
ADP's Price/Free Cash Flow ratio is in line with the industry average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 30.43 | ||
| EV/EBITDA | 20.25 |
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)3.4
PEG (5Y)2.94
EPS Next 2Y9.38%
EPS Next 3Y9.07%
5. Dividend
5.1 Amount
ADP has a Yearly Dividend Yield of 2.04%.
ADP's Dividend Yield is rather good when compared to the industry average which is at 1.81. ADP pays more dividend than 89.61% of the companies in the same industry.
ADP's Dividend Yield is comparable with the S&P500 average which is at 2.23.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.04% |
5.2 History
On average, the dividend of ADP grows each year by 12.44%, which is quite nice.
ADP has paid a dividend for at least 10 years, which is a reliable track record.
ADP has not decreased their dividend for at least 10 years, which is a reliable track record.
Dividend Growth(5Y)12.44%
Div Incr Years25
Div Non Decr Years25
5.3 Sustainability
58.20% of the earnings are spent on dividend by ADP. This is a bit on the high side, but may be sustainable.
The dividend of ADP is growing, but the earnings are growing slower. This means the dividend growth is not sustainable.
DP58.2%
EPS Next 2Y9.38%
EPS Next 3Y9.07%
AUTOMATIC DATA PROCESSING
NASDAQ:ADP (11/21/2024, 8:10:50 PM)
After market: 304.57 0 (0%)304.57
+5.98 (+2%)
Chartmill FA Rating
GICS SectorIndustrials
GICS IndustryGroupCommercial & Professional Services
GICS IndustryProfessional Services
Earnings (Last)
Earnings (Next)
Inst Owners
Inst Owner Change
Ins Owners
Ins Owner Change
Market Cap124.10B
Analysts
Price Target
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.04% |
Dividend Growth(5Y)
DP
Div Incr Years
Div Non Decr Years
Ex-Date
Surprises & Revisions
EPS beat(2)
Avg EPS beat(2)
Min EPS beat(2)
Max EPS beat(2)
EPS beat(4)
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EPS beat(8)
Avg EPS beat(8)
EPS beat(12)
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EPS beat(16)
Avg EPS beat(16)
Revenue beat(2)
Avg Revenue beat(2)
Min Revenue beat(2)
Max Revenue beat(2)
Revenue beat(4)
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Revenue beat(8)
Avg Revenue beat(8)
Revenue beat(12)
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Revenue beat(16)
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PT rev (1m)
PT rev (3m)
EPS NQ rev (1m)
EPS NQ rev (3m)
EPS NY rev (1m)
EPS NY rev (3m)
Revenue NQ rev (1m)
Revenue NQ rev (3m)
Revenue NY rev (1m)
Revenue NY rev (3m)
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 32.3 | ||
| Fwd PE | 27.73 | ||
| P/S | |||
| P/FCF | |||
| P/OCF | |||
| P/B | |||
| P/tB | |||
| EV/EBITDA |
EPS(TTM)
EY
EPS(NY)
Fwd EY
FCF(TTM)
FCFY
OCF(TTM)
OCFY
SpS
BVpS
TBVpS
PEG (NY)3.4
PEG (5Y)2.94
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 7.77% | ||
| ROE | 71.96% | ||
| ROCE | |||
| ROIC | |||
| ROICexc | |||
| ROICexgc | |||
| OM | 26.35% | ||
| PM (TTM) | 19.71% | ||
| GM | 45.91% | ||
| FCFM |
ROA(3y)
ROA(5y)
ROE(3y)
ROE(5y)
ROIC(3y)
ROIC(5y)
ROICexc(3y)
ROICexc(5y)
ROICexgc(3y)
ROICexgc(5y)
ROCE(3y)
ROCE(5y)
ROICexcg growth 3Y
ROICexcg growth 5Y
ROICexc growth 3Y
ROICexc growth 5Y
OM growth 3Y
OM growth 5Y
PM growth 3Y
PM growth 5Y
GM growth 3Y
GM growth 5Y
F-Score
Asset Turnover0.39
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 1.38 | ||
| Debt/FCF | |||
| Debt/EBITDA | |||
| Cap/Depr | |||
| Cap/Sales | |||
| Interest Coverage | |||
| Cash Conversion | |||
| Profit Quality | |||
| Current Ratio | 1.01 | ||
| Quick Ratio | 1.01 | ||
| Altman-Z |
F-Score
WACC
ROIC/WACC
Cap/Depr(3y)
Cap/Depr(5y)
Cap/Sales(3y)
Cap/Sales(5y)
Profit Quality(3y)
Profit Quality(5y)
High Growth Momentum
Growth
EPS 1Y (TTM)11.6%
EPS 3Y15.1%
EPS 5Y
EPS Q2Q%
EPS Next Y9.5%
EPS Next 2Y
EPS Next 3Y
EPS Next 5Y
Revenue 1Y (TTM)6.63%
Revenue growth 3Y8.57%
Revenue growth 5Y
Sales Q2Q%
Revenue Next Year
Revenue Next 2Y
Revenue Next 3Y
Revenue Next 5Y
EBIT growth 1Y
EBIT growth 3Y
EBIT growth 5Y
EBIT Next Year
EBIT Next 3Y
EBIT Next 5Y
FCF growth 1Y
FCF growth 3Y
FCF growth 5Y
OCF growth 1Y
OCF growth 3Y
OCF growth 5Y