AUTOMATIC DATA PROCESSING (ADP) Fundamental Analysis & Valuation

NASDAQ:ADP • US0530151036

Current stock price

214.21 USD
+2.27 (+1.07%)
At close:
213.926 USD
-0.28 (-0.13%)
After Hours:

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.
  • ADP had a positive operating cash flow in the past year.
  • Each year in the past 5 years ADP has been profitable.
  • In the past 5 years ADP always reported a positive cash flow from operatings.
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's Return On Assets of 5.00% is fine compared to the rest of the industry. ADP outperforms 62.79% 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.
  • With an excellent Return On Invested Capital value of 34.42%, ADP belongs to the best of the industry, outperforming 97.67% 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 12.34%.
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

  • With an excellent Profit Margin value of 19.96%, ADP belongs to the best of the industry, outperforming 86.05% of the companies in the same industry.
  • ADP's Profit Margin has improved in the last couple of years.
  • The Operating Margin of ADP (26.37%) is better than 89.53% of its industry peers.
  • ADP's Operating Margin has improved in the last couple of years.
  • ADP has a Gross Margin of 46.16%. This is in the better half 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

  • 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.
  • The number of shares outstanding for ADP has been reduced compared to 5 years ago.
  • ADP has a worse debt/assets ratio than last year.
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

  • Based on the Altman-Z score of 1.59, we must say that ADP is in the distress zone and has some risk of bankruptcy.
  • Looking at the Altman-Z score, with a value of 1.59, ADP is doing worse than 63.95% of the companies in the same industry.
  • 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 76.74% of its industry peers.
  • A Debt/Equity ratio of 0.62 indicates that ADP is somewhat dependend on debt financing.
  • ADP has a worse Debt to Equity ratio (0.62) than 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 1.59
ROIC/WACC3.91
WACC8.81%
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

  • ADP has a Current 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'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.
  • With a Quick ratio value of 1.03, ADP is not doing good in the industry: 76.74% of the companies in the same industry are doing better.
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

  • ADP shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 9.26%, which is quite good.
  • 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 7.07% in the last 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)9.26%
EPS 3Y12.57%
EPS 5Y11.05%
EPS Q2Q%10.13%
Revenue 1Y (TTM)7.07%
Revenue growth 3Y7.61%
Revenue growth 5Y7.1%
Sales Q2Q%6.95%

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 6.79% on average per year.
  • ADP is expected to show a small growth in Revenue. In the coming years, the Revenue will grow by 4.46% yearly.
EPS Next Y10.77%
EPS Next 2Y9.93%
EPS Next 3Y9.38%
EPS Next 5Y6.79%
Revenue Next Year6.44%
Revenue Next 2Y6.06%
Revenue Next 3Y5.96%
Revenue Next 5Y4.46%

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.
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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3

4. ADP Valuation Analysis

4.1 Price/Earnings Ratio

  • The Price/Earnings ratio is 19.95, which indicates a rather expensive current valuation of ADP.
  • ADP's Price/Earnings ratio is in line with the industry average.
  • When comparing the Price/Earnings ratio of ADP to the average of the S&P500 Index (26.64), we can say ADP is valued slightly cheaper.
  • Based on the Price/Forward Earnings ratio of 17.72, the valuation of ADP can be described as rather expensive.
  • ADP's Price/Forward Earnings is on the same level as the industry average.
  • Compared to an average S&P500 Price/Forward Earnings ratio of 21.36, ADP is valued at the same level.
Industry RankSector Rank
PE 19.95
Fwd PE 17.72
ADP Price Earnings VS Forward Price EarningsADP Price Earnings VS Forward Price Earnings ChartPrice Earnings - Forward Price Earnings PE FPE 5 10 15 20 25

4.2 Price Multiples

  • ADP's Enterprise Value to EBITDA ratio is in line with the industry average.
  • Compared to the rest of the industry, the Price/Free Cash Flow ratio of ADP is on the same level as its industry peers.
Industry RankSector Rank
P/FCF 20.61
EV/EBITDA 14.2
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 an expensive valuation of the company.
  • ADP has an outstanding profitability rating, which may justify a higher PE ratio.
PEG (NY)1.85
PEG (5Y)1.8
EPS Next 2Y9.93%
EPS Next 3Y9.38%

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7

5. ADP Dividend Analysis

5.1 Amount

  • With a Yearly Dividend Yield of 3.21%, ADP has a reasonable but not impressive dividend return.
  • Compared to an average industry Dividend Yield of 1.34, ADP pays a better dividend. On top of this ADP pays more dividend than 88.37% of the companies listed in the same industry.
  • Compared to an average S&P500 Dividend Yield of 1.80, ADP pays a better dividend.
Industry RankSector Rank
Dividend Yield 3.21%

5.2 History

  • On average, the dividend of ADP grows each year by 11.62%, which is quite nice.
  • 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 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

  • 59.26% 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.
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 (5/1/2026, 8:08:32 PM)

After market: 213.926 -0.28 (-0.13%)

214.21

+2.27 (+1.07%)

Chartmill FA Rating
GICS SectorIndustrials
GICS IndustryGroupCommercial & Professional Services
GICS IndustryProfessional Services
Industry Strength13.04
Industry Growth34.78
Earnings (Last)04-29
Earnings (Next)07-28
Inst Owners86.43%
Inst Owner Change-0.9%
Ins Owners0.1%
Ins Owner Change0.76%
Market Cap86.25B
Revenue(TTM)20.56B
Net Income(TTM)4.24B
Analysts66.09
Price Target265.01 (23.72%)
Short Float %3.49%
Short Ratio3.75
Dividend
Industry RankSector Rank
Dividend Yield 3.21%
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)-5.8%
PT rev (3m)-10.54%
EPS NQ rev (1m)-0.04%
EPS NQ rev (3m)0.54%
EPS NY rev (1m)0%
EPS NY rev (3m)0.49%
Revenue NQ rev (1m)-0.03%
Revenue NQ rev (3m)0.24%
Revenue NY rev (1m)0%
Revenue NY rev (3m)0.19%
Valuation
Industry RankSector Rank
PE 19.95
Fwd PE 17.72
P/S 4.07
P/FCF 20.61
P/OCF 18.2
P/B 13.49
P/tB 58.42
EV/EBITDA 14.2
EPS(TTM)10.74
EY5.01%
EPS(NY)12.09
Fwd EY5.64%
FCF(TTM)10.39
FCFY4.85%
OCF(TTM)11.77
OCFY5.5%
SpS52.69
BVpS15.88
TBVpS3.67
PEG (NY)1.85
PEG (5Y)1.8
Graham Number61.9423 (-71.08%)
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 1.59
F-Score6
WACC8.81%
ROIC/WACC3.91
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)9.26%
EPS 3Y12.57%
EPS 5Y11.05%
EPS Q2Q%10.13%
EPS Next Y10.77%
EPS Next 2Y9.93%
EPS Next 3Y9.38%
EPS Next 5Y6.79%
Revenue 1Y (TTM)7.07%
Revenue growth 3Y7.61%
Revenue growth 5Y7.1%
Sales Q2Q%6.95%
Revenue Next Year6.44%
Revenue Next 2Y6.06%
Revenue Next 3Y5.96%
Revenue Next 5Y4.46%
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 3 / 10 to AUTOMATIC DATA PROCESSING (ADP). This can be considered as Overvalued.


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 19.95 and the Price/Book (PB) ratio is 13.49.


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%.