AUTOMATIC DATA PROCESSING (ADP) Fundamental Analysis & Valuation

NASDAQ:ADP • US0530151036

Current stock price

202.35 USD
-0.52 (-0.26%)
Last:

This ADP fundamental analysis includes valuation metrics, fair value assessment, financial health analysis, profitability trends, growth metrics and dividend sustainability analysis.

9

1. ADP Profitability Analysis

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.
  • ADP had a positive operating cash flow in each of the past 5 years.
ADP Yearly Net Income VS EBIT VS OCF VS FCFADP Yearly Net Income VS EBIT VS OCF VS FCFYearly Net Income VS EBIT VS OCF VS FCF 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 1B 2B 3B 4B 5B

1.2 Ratios

  • ADP has a better Return On Assets (5.00%) than 61.63% of its industry peers.
  • ADP's Return On Equity of 66.25% is amongst the best of the industry. ADP outperforms 95.35% of its industry peers.
  • The Return On Invested Capital of ADP (34.42%) is better than 96.51% of its industry peers.
  • Measured over the past 3 years, the Average Return On Invested Capital for ADP is significantly above the industry average of 12.84%.
Industry RankSector 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%
ADP Yearly ROA, ROE, ROICADP Yearly ROA, ROE, ROICYearly ROA, ROE, ROIC 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 20 40 60 80

1.3 Margins

  • The Profit Margin of ADP (19.96%) is better than 87.21% of its industry peers.
  • In the last couple of years the Profit Margin of ADP has grown nicely.
  • ADP has a Operating Margin of 26.37%. This is amongst the best in the industry. ADP outperforms 89.53% of its industry peers.
  • ADP's Operating Margin has improved in the last couple of years.
  • ADP's Gross Margin of 46.16% is fine compared to the rest of the industry. ADP outperforms 65.12% of its industry peers.
  • In the last couple of years the Gross Margin of ADP has grown nicely.
Industry RankSector 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%
ADP Yearly Profit, Operating, Gross MarginsADP Yearly Profit, Operating, Gross MarginsYearly Profit, Operating, Gross Margins 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 10 20 30 40

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5

2. ADP Health Analysis

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.
  • The number of shares outstanding for ADP has been reduced compared to 5 years ago.
  • The debt/assets ratio for ADP is higher compared to a year ago.
ADP Yearly Shares OutstandingADP Yearly Shares OutstandingYearly Shares Outstanding 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 100M 200M 300M 400M
ADP Yearly Total Debt VS Total AssetsADP Yearly Total Debt VS Total AssetsYearly Total Debt VS Total Assets 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 20B 40B 60B

2.2 Solvency

  • ADP has an Altman-Z score of 1.56. This is a bad value and indicates that ADP is not financially healthy and even has some risk of bankruptcy.
  • The Altman-Z score of ADP (1.56) is worse than 63.95% 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.
  • Looking at the Debt to FCF ratio, with a value of 0.95, ADP is in the better half of the industry, outperforming 75.58% of the companies in the same industry.
  • A Debt/Equity ratio of 0.62 indicates that ADP is somewhat dependend on debt financing.
  • ADP has a Debt to Equity ratio of 0.62. This is in the lower half of the industry: ADP underperforms 62.79% of its industry peers.
  • Although ADP's pure debt/equity ratio does not look good, it has limited outstanding debt compared to the Free Cash Flow. 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 RankSector Rank
Debt/Equity 0.62
Debt/FCF 0.95
Altman-Z 1.56
ROIC/WACC3.97
WACC8.68%
ADP Yearly LT Debt VS Equity VS FCFADP Yearly LT Debt VS Equity VS FCFYearly LT Debt VS Equity VS FCF 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2B 4B 6B

2.3 Liquidity

  • A Current Ratio of 1.03 indicates that ADP should not have too much problems paying its short term obligations.
  • ADP's Current ratio of 1.03 is on the low side compared to the rest of the industry. ADP is outperformed by 76.74% of its industry peers.
  • ADP has a Quick Ratio of 1.03. This is a normal value and indicates that ADP is financially healthy and should not expect problems in meeting its short term obligations.
  • ADP has a worse Quick ratio (1.03) than 76.74% of its industry peers.
Industry RankSector Rank
Current Ratio 1.03
Quick Ratio 1.03
ADP Yearly Current Assets VS Current LiabilitesADP Yearly Current Assets VS Current LiabilitesYearly Current Assets VS Current Liabilites 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 10B 20B 30B 40B 50B

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WACCDebt/EquityHow to determine the health of a companyAltman-Z scoreShow peers with great health

4

3. ADP Growth Analysis

3.1 Past

  • The Earnings Per Share has grown by an nice 8.08% over the past year.
  • The Earnings Per Share has been growing by 11.05% on average over the past years. This is quite good.
  • Looking at the last year, ADP shows a small growth in Revenue. The Revenue has grown by 6.59% in the last year.
  • ADP shows a small growth in Revenue. Measured over the last years, the Revenue has been growing by 7.10% yearly.
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

  • Based on estimates for the next years, ADP will show a small growth in Earnings Per Share. The EPS will grow by 7.57% on average per year.
  • ADP is expected to show a small growth in Revenue. In the coming years, the Revenue will grow by 5.64% yearly.
EPS Next Y10.77%
EPS Next 2Y9.93%
EPS Next 3Y9.38%
EPS Next 5Y7.57%
Revenue Next Year6.44%
Revenue Next 2Y6.06%
Revenue Next 3Y5.96%
Revenue Next 5Y5.64%

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 decreasing: in the next years the growth will be less than in the last years.
ADP Yearly Revenue VS EstimatesADP Yearly Revenue VS EstimatesYearly Revenue VS Estimates 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 5B 10B 15B 20B 25B
ADP Yearly EPS VS EstimatesADP Yearly EPS VS EstimatesYearly EPS VS Estimates 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 5 10 15

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4

4. ADP Valuation Analysis

4.1 Price/Earnings Ratio

  • ADP is valuated rather expensively with a Price/Earnings ratio of 19.40.
  • Compared to the rest of the industry, the Price/Earnings ratio of ADP is on the same level as its industry peers.
  • ADP is valuated rather cheaply when we compare the Price/Earnings ratio to 27.66, which is the current average of the S&P500 Index.
  • With a Price/Forward Earnings ratio of 16.74, ADP is valued correctly.
  • The rest of the industry has a similar Price/Forward Earnings ratio as ADP.
  • The average S&P500 Price/Forward Earnings ratio is at 38.00. ADP is valued rather cheaply when compared to this.
Industry RankSector Rank
PE 19.4
Fwd PE 16.74
ADP Price Earnings VS Forward Price EarningsADP Price Earnings VS Forward Price Earnings ChartPrice Earnings - Forward Price Earnings PE FPE 10 20 30

4.2 Price Multiples

  • ADP's Enterprise Value to EBITDA ratio is in line with the industry average.
  • ADP's Price/Free Cash Flow is on the same level as the industry average.
Industry RankSector Rank
P/FCF 19.47
EV/EBITDA 13.46
ADP Per share dataADP EPS, Sales, OCF, FCF, BookValue per sharePer Share Data Per Share 10 20 30 40 50

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)1.8
PEG (5Y)1.76
EPS Next 2Y9.93%
EPS Next 3Y9.38%

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Price/EarningsPrice/FCFFCF per shareEV/EBITDAPEG RATIOShow best valued peers

7

5. ADP Dividend Analysis

5.1 Amount

  • ADP has a Yearly Dividend Yield of 3.39%. Purely for dividend investing, there may be better candidates out there.
  • In the last 3 months the price of ADP has falen by -21.33%. A price decline artificially increases the dividend yield. It may be a sign investors do not expect the dividend to last.
  • ADP's Dividend Yield is rather good when compared to the industry average which is at 1.77. ADP pays more dividend than 89.53% of the companies in the same industry.
  • Compared to an average S&P500 Dividend Yield of 1.81, ADP pays a better dividend.
Industry RankSector Rank
Dividend Yield 3.39%

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 Years27
Div Non Decr Years27
ADP Yearly Dividends per shareADP Yearly Dividends per shareYearly Dividends per share 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2 4 6

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 2Y9.93%
EPS Next 3Y9.38%
ADP Yearly Income VS Free CF VS DividendADP Yearly Income VS Free CF VS DividendYearly Income VS Free CF VS Dividend 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 1B 2B 3B 4B
ADP Dividend Payout.ADP Dividend Payout, showing the Payout Ratio.ADP Dividend Payout.PayoutRetained Earnings

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ADP Fundamentals: All Metrics, Ratios and Statistics

AUTOMATIC DATA PROCESSING

NASDAQ:ADP (4/22/2026, 10:02:03 AM)

202.35

-0.52 (-0.26%)

Chartmill FA Rating
GICS SectorIndustrials
GICS IndustryGroupCommercial & Professional Services
GICS IndustryProfessional Services
Earnings (Last)01-28
Earnings (Next)04-29
Inst Owners86.43%
Inst Owner Change0%
Ins Owners0.1%
Ins Owner Change0.76%
Market Cap81.47B
Revenue(TTM)21.21B
Net Income(TTM)4.24B
Analysts66.09
Price Target270.26 (33.56%)
Short Float %3.49%
Short Ratio3.54
Dividend
Industry RankSector Rank
Dividend Yield 3.39%
Yearly Dividend5.9
Dividend Growth(5Y)11.62%
DP59.26%
Div Incr Years27
Div Non Decr Years27
Ex-Date06-12
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)-4.28%
PT rev (3m)-8.77%
EPS NQ rev (1m)-0.03%
EPS NQ rev (3m)0.69%
EPS NY rev (1m)0%
EPS NY rev (3m)0.49%
Revenue NQ rev (1m)0%
Revenue NQ rev (3m)0.27%
Revenue NY rev (1m)0%
Revenue NY rev (3m)0.19%
Valuation
Industry RankSector Rank
PE 19.4
Fwd PE 16.74
P/S 3.84
P/FCF 19.47
P/OCF 17.19
P/B 12.74
P/tB 55.19
EV/EBITDA 13.46
EPS(TTM)10.43
EY5.15%
EPS(NY)12.09
Fwd EY5.97%
FCF(TTM)10.39
FCFY5.14%
OCF(TTM)11.77
OCFY5.82%
SpS52.69
BVpS15.88
TBVpS3.67
PEG (NY)1.8
PEG (5Y)1.76
Graham Number61.0418 (-69.83%)
Profitability
Industry RankSector 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 RankSector 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 1.56
F-Score6
WACC8.68%
ROIC/WACC3.97
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 Y10.77%
EPS Next 2Y9.93%
EPS Next 3Y9.38%
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 2Y6.06%
Revenue Next 3Y5.96%
Revenue Next 5Y5.64%
EBIT growth 1Y6.33%
EBIT growth 3Y12.61%
EBIT growth 5Y11.57%
EBIT Next Year19.16%
EBIT Next 3Y11.09%
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 Fundamental Analysis 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.


How profitable is AUTOMATIC DATA PROCESSING (ADP) stock?

AUTOMATIC DATA PROCESSING (ADP) has a profitability rating of 9 / 10.


What are the PE and PB ratios of AUTOMATIC DATA PROCESSING (ADP) stock?

The Price/Earnings (PE) ratio for AUTOMATIC DATA PROCESSING (ADP) is 19.4 and the Price/Book (PB) ratio is 12.74.


How sustainable is the dividend of AUTOMATIC DATA PROCESSING (ADP) stock?

The dividend rating of AUTOMATIC DATA PROCESSING (ADP) is 7 / 10 and the dividend payout ratio is 59.26%.