AUTOMATIC DATA PROCESSING (ADP) Fundamental Analysis & Valuation
NASDAQ:ADP • US0530151036
223.04 USD
-3.2 (-1.41%)
At close: Mar 9, 2026
223 USD
-0.04 (-0.02%)
After Hours: 3/9/2026, 8:00:01 PM
This ADP fundamental analysis includes valuation metrics, fair value assessment, financial health analysis, profitability trends, growth metrics and dividend sustainability analysis.
Overall ADP gets a fundamental rating of 6 out of 10. We evaluated ADP against 87 industry peers in the Professional Services industry. While ADP has a great profitability rating, there are some minor concerns on its financial health. ADP is quite expensive at the moment. It does show a decent growth rate. Finally ADP also has an excellent dividend rating. These ratings would make ADP suitable for dividend investing!
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.
- 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
- ADP has a better Return On Assets (5.00%) than 60.92% of its industry peers.
- ADP's Return On Equity of 66.25% is amongst the best of the industry. ADP outperforms 95.40% of its industry peers.
- ADP has a Return On Invested Capital of 34.42%. This is amongst the best in the industry. ADP outperforms 97.70% 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 12.78%.
| 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 87.36% of the companies in the same industry.
- ADP's Profit Margin has improved in the last couple of years.
- ADP's Operating Margin of 26.37% is amongst the best of the industry. ADP outperforms 90.80% of its industry peers.
- ADP's Operating Margin has improved in the last couple of years.
- ADP has a better Gross Margin (46.16%) than 64.37% 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. 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.
- The number of shares outstanding for ADP has been reduced compared to 1 year ago.
- ADP has less shares outstanding than it did 5 years ago.
- ADP has a worse debt/assets ratio than last year.
2.2 Solvency
- ADP has an Altman-Z score of 1.62. 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 (1.62) is worse than 62.07% 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.
- ADP has a better Debt to FCF ratio (0.95) than 75.86% of its industry peers.
- ADP has a Debt/Equity ratio of 0.62. This is a neutral value indicating ADP is somewhat dependend on debt financing.
- Looking at the Debt to Equity ratio, with a value of 0.62, ADP is in line with its industry, outperforming 41.38% of the companies in the same industry.
- 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 Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.62 | ||
| Debt/FCF | 0.95 | ||
| Altman-Z | 1.62 |
ROIC/WACC4.01
WACC8.59%
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 75.86% of its industry peers.
- A Quick Ratio of 1.03 indicates that ADP should not have too much problems paying its short term obligations.
- With a Quick ratio value of 1.03, ADP is not doing good in the industry: 75.86% of the companies in the same industry are doing better.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 1.03 | ||
| Quick Ratio | 1.03 |
3. ADP Growth Analysis
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.
- Measured over the past years, ADP shows a small growth in Revenue. The Revenue has been growing by 7.10% on average per year.
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.
- 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 Y10.77%
EPS Next 2Y9.93%
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
- The EPS growth rate is decreasing: in the next years the growth will be less than in the last years.
- 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. ADP Valuation Analysis
4.1 Price/Earnings Ratio
- Based on the Price/Earnings ratio of 21.38, 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 at similar levels of the S&P average when we compare the Price/Earnings ratio to 26.46, which is the current average of the S&P500 Index.
- ADP is valuated rather expensively with a Price/Forward Earnings ratio of 18.46.
- Compared to the rest of the industry, the Price/Forward Earnings ratio of ADP is on the same level as its industry peers.
- ADP's Price/Forward Earnings ratio indicates a valuation a bit cheaper than the S&P500 average which is at 24.65.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 21.38 | ||
| Fwd PE | 18.46 |
4.2 Price Multiples
- ADP's Enterprise Value to EBITDA is on the same level as the industry average.
- ADP's Price/Free Cash Flow ratio is in line with the industry average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 21.46 | ||
| EV/EBITDA | 14.77 |
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)1.99
PEG (5Y)1.93
EPS Next 2Y9.93%
EPS Next 3Y9.36%
5. ADP Dividend Analysis
5.1 Amount
- With a Yearly Dividend Yield of 3.05%, ADP has a reasonable but not impressive dividend return.
- Compared to an average industry Dividend Yield of 1.65, ADP pays a better dividend. On top of this ADP pays more dividend than 86.21% 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 1.82.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 3.05% |
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
- 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 3Y9.36%
ADP Fundamentals: All Metrics, Ratios and Statistics
223.04
-3.2 (-1.41%)
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 Owners86.39%
Inst Owner Change2.1%
Ins Owners0.1%
Ins Owner Change-0.21%
Market Cap89.80B
Revenue(TTM)21.21B
Net Income(TTM)4.24B
Analysts64.55
Price Target282.34 (26.59%)
Short Float %2.48%
Short Ratio3.22
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 3.05% |
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)-1.51%
PT rev (3m)-5.07%
EPS NQ rev (1m)-0.06%
EPS NQ rev (3m)0.76%
EPS NY rev (1m)0.01%
EPS NY rev (3m)0.49%
Revenue NQ rev (1m)-0.02%
Revenue NQ rev (3m)0.29%
Revenue NY rev (1m)0.01%
Revenue NY rev (3m)0.19%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 21.38 | ||
| Fwd PE | 18.46 | ||
| P/S | 4.23 | ||
| P/FCF | 21.46 | ||
| P/OCF | 18.95 | ||
| P/B | 14.05 | ||
| P/tB | 60.83 | ||
| EV/EBITDA | 14.77 |
EPS(TTM)10.43
EY4.68%
EPS(NY)12.08
Fwd EY5.42%
FCF(TTM)10.39
FCFY4.66%
OCF(TTM)11.77
OCFY5.28%
SpS52.69
BVpS15.88
TBVpS3.67
PEG (NY)1.99
PEG (5Y)1.93
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 | 1.62 |
F-Score6
WACC8.59%
ROIC/WACC4.01
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 3Y9.36%
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 Year19.16%
EBIT Next 3Y11.05%
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 3 / 10 to AUTOMATIC DATA PROCESSING (ADP). This can be considered as Overvalued.
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 10.77% 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%.