AUTOMATIC DATA PROCESSING (ADP) Fundamental Analysis & Valuation

NASDAQ:ADP • US0530151036

Current stock price

196.53 USD
-2 (-1.01%)
At close:
196.53 USD
0 (0%)
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 has a better Return On Assets (5.00%) than 61.63% of its industry peers.
  • Looking at the Return On Equity, with a value of 66.25%, ADP belongs to the top of the industry, outperforming 95.35% of the companies in the same industry.
  • Looking at the Return On Invested Capital, with a value of 34.42%, ADP belongs to the top of the industry, outperforming 96.51% 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 12.85%.
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

  • ADP's Profit Margin of 19.96% is amongst the best of the industry. ADP outperforms 87.21% of its industry peers.
  • In the last couple of years the Profit Margin of ADP has grown nicely.
  • With an excellent Operating Margin value of 26.37%, ADP belongs to the best of the industry, outperforming 89.53% of the companies in the same industry.
  • In the last couple of years the Operating Margin of ADP has grown nicely.
  • The Gross Margin of ADP (46.16%) is better than 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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ROAROEROICOperating and Profit MarginShow most profitable peers

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.
  • Compared to 1 year ago, ADP has a worse debt to assets ratio.
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 1.54. This is a bad value and indicates that ADP is not financially healthy and even has some risk of bankruptcy.
  • With a Altman-Z score value of 1.54, ADP is not doing good in the industry: 63.95% of the companies in the same industry are doing better.
  • 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.
  • With a decent Debt to FCF ratio value of 0.95, ADP is doing good in the industry, outperforming 75.58% of the companies in the same industry.
  • ADP has a Debt/Equity ratio of 0.62. This is a neutral value indicating ADP is somewhat dependend on debt financing.
  • With a Debt to Equity ratio value of 0.62, ADP is not doing good in the industry: 62.79% of the companies in the same industry are doing better.
  • 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 1.54
ROIC/WACC3.93
WACC8.75%
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 has a Current ratio of 1.03. This is in the lower half of the industry: ADP underperforms 76.74% 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: 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 8.08%, which is quite good.
  • The Earnings Per Share has been growing by 11.05% on average over the past years. This is quite good.
  • The Revenue has been growing slightly by 6.59% in the past 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.
  • 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 3Y9.38%
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

  • With a Price/Earnings ratio of 18.84, ADP is valued on the expensive side.
  • ADP's Price/Earnings ratio is in line with the industry average.
  • ADP is valuated rather cheaply when we compare the Price/Earnings ratio to 27.42, which is the current average of the S&P500 Index.
  • The Price/Forward Earnings ratio is 16.26, which indicates a correct valuation of ADP.
  • The rest of the industry has a similar Price/Forward Earnings ratio as ADP.
  • ADP's Price/Forward Earnings ratio indicates a valuation a bit cheaper than the S&P500 average which is at 22.24.
Industry RankSector Rank
PE 18.84
Fwd PE 16.26
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 is on the same level as the industry average.
  • The rest of the industry has a similar Price/Free Cash Flow ratio as ADP.
Industry RankSector Rank
P/FCF 18.91
EV/EBITDA 13.17
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

  • ADP's PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates a correct valuation of the company.
  • ADP has an outstanding profitability rating, which may justify a higher PE ratio.
PEG (NY)1.75
PEG (5Y)1.7
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

  • With a Yearly Dividend Yield of 3.39%, ADP has a reasonable but not impressive dividend return.
  • The stock price of ADP dropped by -23.79% in the last 3 months. With lower prices the dividend yield is higher, but it may be a sign investors do not trust the long term dividend.
  • Compared to an average industry Dividend Yield of 1.77, ADP pays a better dividend. On top of this ADP pays more dividend than 89.53% of the companies listed 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 been paying a dividend for at least 10 years, so it has a reliable track record.
  • ADP has not decreased their dividend for at least 10 years, which is a reliable track record.
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.
  • 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

More info and screens

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ADP Fundamentals: All Metrics, Ratios and Statistics

AUTOMATIC DATA PROCESSING

NASDAQ:ADP (4/24/2026, 5:33:58 PM)

After market: 196.53 0 (0%)

196.53

-2 (-1.01%)

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 Cap79.13B
Revenue(TTM)21.21B
Net Income(TTM)4.24B
Analysts66.09
Price Target270.26 (37.52%)
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 18.84
Fwd PE 16.26
P/S 3.73
P/FCF 18.91
P/OCF 16.69
P/B 12.38
P/tB 53.6
EV/EBITDA 13.17
EPS(TTM)10.43
EY5.31%
EPS(NY)12.09
Fwd EY6.15%
FCF(TTM)10.39
FCFY5.29%
OCF(TTM)11.77
OCFY5.99%
SpS52.69
BVpS15.88
TBVpS3.67
PEG (NY)1.75
PEG (5Y)1.7
Graham Number61.0418 (-68.94%)
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 1.54
F-Score6
WACC8.75%
ROIC/WACC3.93
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 18.84 and the Price/Book (PB) ratio is 12.38.


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%.