AUTOMATIC DATA PROCESSING (ADP) Stock Fundamental Analysis
USA - NASDAQ:ADP - US0530151036 - Common Stock
259.22 USD
+2.05 (+0.8%)
259 USD
-0.22 (-0.08%)
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 has a expensive valuation and it also scores bad on growth.
1. Profitability
1.1 Basic Checks
ADP had positive earnings in the past year.
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 (7.61%) than 75.86% of its industry peers.
With an excellent Return On Equity value of 64.90%, ADP belongs to the best of the industry, outperforming 94.25% of the companies in the same industry.
The Return On Invested Capital of ADP (24.00%) is better than 94.25% of its industry peers.
ADP had an Average Return On Invested Capital over the past 3 years of 36.13%. This is significantly above the industry average of 13.25%.
The last Return On Invested Capital (24.00%) for ADP is well below the 3 year average (36.13%), which needs to be investigated, but indicates that ADP had better years and this may not be a problem.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 7.61% | ||
| ROE | 64.9% | ||
| ROIC | 24% |
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
ADP has a Profit Margin of 19.79%. This is amongst the best in the industry. ADP outperforms 90.80% of its industry peers.
In the last couple of years the Profit Margin of ADP has grown nicely.
ADP has a Operating Margin of 26.27%. This is amongst the best in the industry. ADP outperforms 93.10% of its industry peers.
ADP's Operating Margin has improved in the last couple of years.
With a decent Gross Margin value of 47.22%, ADP is doing good in the industry, outperforming 63.22% of the companies in the same industry.
In the last couple of years the Gross Margin of ADP has grown nicely.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 26.27% | ||
| PM (TTM) | 19.79% | ||
| GM | 47.22% |
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. Health
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.
Compared to 5 years ago, ADP has less shares outstanding
ADP has a worse debt/assets ratio than last year.
2.2 Solvency
ADP has an Altman-Z score of 2.73. This is not the best score and indicates that ADP is in the grey zone with still only limited risk for bankruptcy at the moment.
Looking at the Altman-Z score, with a value of 2.73, ADP is in line with its industry, outperforming 49.43% of the companies in the same industry.
The Debt to FCF ratio of ADP is 2.18, which is a good value as it means it would take ADP, 2.18 years of fcf income to pay off all of its debts.
With a decent Debt to FCF ratio value of 2.18, ADP is doing good in the industry, outperforming 67.82% of the companies in the same industry.
A Debt/Equity ratio of 1.44 is on the high side and indicates that ADP has dependencies on debt financing.
With a Debt to Equity ratio value of 1.44, ADP is not doing good in the industry: 78.16% of the companies in the same industry are doing better.
Even though the debt/equity ratio score it not favorable for ADP, it has very limited outstanding debt, so we won't put too much weight on the DE evaluation.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 1.44 | ||
| Debt/FCF | 2.18 | ||
| Altman-Z | 2.73 |
ROIC/WACC2.79
WACC8.6%
2.3 Liquidity
A Current Ratio of 1.05 indicates that ADP should not have too much problems paying its short term obligations.
ADP has a Current ratio of 1.05. This is in the lower half of the industry: ADP underperforms 70.11% of its industry peers.
A Quick Ratio of 1.05 indicates that ADP should not have too much problems paying its short term obligations.
ADP has a Quick ratio of 1.05. This is in the lower half of the industry: ADP underperforms 70.11% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 1.05 | ||
| Quick Ratio | 1.05 |
3. Growth
3.1 Past
The Earnings Per Share has been growing slightly by 7.74% over the past year.
Measured over the past years, ADP shows a quite strong growth in Earnings Per Share. The EPS has been growing by 11.05% on average per year.
ADP shows a small growth in Revenue. In the last year, the Revenue has grown by 7.07%.
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)7.74%
EPS 3Y12.57%
EPS 5Y11.05%
EPS Q2Q%6.87%
Revenue 1Y (TTM)7.07%
Revenue growth 3Y7.61%
Revenue growth 5Y7.1%
Sales Q2Q%7.09%
3.2 Future
The Earnings Per Share is expected to grow by 7.85% on average over the next years.
ADP is expected to show a small growth in Revenue. In the coming years, the Revenue will grow by 5.65% yearly.
EPS Next Y10.23%
EPS Next 2Y9.83%
EPS Next 3Y9.55%
EPS Next 5Y7.85%
Revenue Next Year6.23%
Revenue Next 2Y6%
Revenue Next 3Y5.97%
Revenue Next 5Y5.65%
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.
4. Valuation
4.1 Price/Earnings Ratio
The Price/Earnings ratio is 25.51, which means the current valuation is very expensive for ADP.
ADP's Price/Earnings is on the same level as the industry average.
Compared to an average S&P500 Price/Earnings ratio of 26.03, ADP is valued at the same level.
Based on the Price/Forward Earnings ratio of 21.49, the valuation of ADP can be described as rather expensive.
ADP's Price/Forward Earnings ratio is in line with the industry average.
The average S&P500 Price/Forward Earnings ratio is at 22.27. ADP is around the same levels.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 25.51 | ||
| Fwd PE | 21.49 |
4.2 Price Multiples
Compared to the rest of the industry, the Enterprise Value to EBITDA ratio of ADP is on the same level as its industry peers.
The rest of the industry has a similar Price/Free Cash Flow ratio as ADP.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 24.97 | ||
| EV/EBITDA | 15.58 |
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)2.49
PEG (5Y)2.31
EPS Next 2Y9.83%
EPS Next 3Y9.55%
5. Dividend
5.1 Amount
ADP has a Yearly Dividend Yield of 2.40%.
ADP's Dividend Yield is rather good when compared to the industry average which is at 4.45. ADP pays more dividend than 83.91% of the companies in the same industry.
Compared to an average S&P500 Dividend Yield of 2.38, ADP has a dividend comparable with the average S&P500 company.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.4% |
5.2 History
The dividend of ADP is nicely growing with an annual growth rate of 11.62%!
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 Years26
Div Non Decr Years26
5.3 Sustainability
ADP pays out 59.30% 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.
DP59.3%
EPS Next 2Y9.83%
EPS Next 3Y9.55%
259.22
+2.05 (+0.8%)
Chartmill FA Rating
GICS SectorIndustrials
GICS IndustryGroupCommercial & Professional Services
GICS IndustryProfessional Services
Earnings (Last)
Earnings (Next)
Inst Owners85.24%
Inst Owner Change-0.49%
Ins Owners0.12%
Ins Owner Change1.97%
Market Cap105.01B
Revenue(TTM)20.90B
Net Income(TTM)4.14B
Analysts65.71
Price Target315.71 (21.79%)
Short Float %1.95%
Short Ratio4.52
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.4% |
Yearly Dividend5.9
Dividend Growth(5Y)11.62%
DP59.3%
Div Incr Years26
Div Non Decr Years26
Ex-Date
Surprises & Revisions
EPS beat(2)2
Avg EPS beat(2)0.73%
Min EPS beat(2)0.35%
Max EPS beat(2)1.1%
EPS beat(4)4
Avg EPS beat(4)1.2%
Min EPS beat(4)0.35%
Max EPS beat(4)1.85%
EPS beat(8)8
Avg EPS beat(8)1.6%
EPS beat(12)12
Avg EPS beat(12)1.57%
EPS beat(16)16
Avg EPS beat(16)1.79%
Revenue beat(2)1
Avg Revenue beat(2)0.21%
Min Revenue beat(2)-0.23%
Max Revenue beat(2)0.64%
Revenue beat(4)3
Avg Revenue beat(4)0.27%
Min Revenue beat(4)-0.23%
Max Revenue beat(4)0.64%
Revenue beat(8)4
Avg Revenue beat(8)-0.04%
Revenue beat(12)6
Avg Revenue beat(12)-0.09%
Revenue beat(16)10
Avg Revenue beat(16)0.04%
PT rev (1m)-2.9%
PT rev (3m)-2.1%
EPS NQ rev (1m)0.4%
EPS NQ rev (3m)0.09%
EPS NY rev (1m)-0.01%
EPS NY rev (3m)0.34%
Revenue NQ rev (1m)0%
Revenue NQ rev (3m)0.2%
Revenue NY rev (1m)0%
Revenue NY rev (3m)0.51%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 25.51 | ||
| Fwd PE | 21.49 | ||
| P/S | 5.02 | ||
| P/FCF | 24.97 | ||
| P/OCF | 22.09 | ||
| P/B | 16.47 | ||
| P/tB | 69.98 | ||
| EV/EBITDA | 15.58 |
EPS(TTM)10.16
EY3.92%
EPS(NY)12.06
Fwd EY4.65%
FCF(TTM)10.38
FCFY4%
OCF(TTM)11.73
OCFY4.53%
SpS51.6
BVpS15.73
TBVpS3.7
PEG (NY)2.49
PEG (5Y)2.31
Graham Number59.97
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 7.61% | ||
| ROE | 64.9% | ||
| ROCE | 44.33% | ||
| ROIC | 24% | ||
| ROICexc | 43.76% | ||
| ROICexgc | 88.38% | ||
| OM | 26.27% | ||
| PM (TTM) | 19.79% | ||
| GM | 47.22% | ||
| FCFM | 20.11% |
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 Turnover0.38
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 1.44 | ||
| Debt/FCF | 2.18 | ||
| Debt/EBITDA | 1.51 | ||
| Cap/Depr | 92.82% | ||
| Cap/Sales | 2.62% | ||
| Interest Coverage | 13.19 | ||
| Cash Conversion | 78.14% | ||
| Profit Quality | 101.65% | ||
| Current Ratio | 1.05 | ||
| Quick Ratio | 1.05 | ||
| Altman-Z | 2.73 |
F-Score6
WACC8.6%
ROIC/WACC2.79
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)7.74%
EPS 3Y12.57%
EPS 5Y11.05%
EPS Q2Q%6.87%
EPS Next Y10.23%
EPS Next 2Y9.83%
EPS Next 3Y9.55%
EPS Next 5Y7.85%
Revenue 1Y (TTM)7.07%
Revenue growth 3Y7.61%
Revenue growth 5Y7.1%
Sales Q2Q%7.09%
Revenue Next Year6.23%
Revenue Next 2Y6%
Revenue Next 3Y5.97%
Revenue Next 5Y5.65%
EBIT growth 1Y6.75%
EBIT growth 3Y12.61%
EBIT growth 5Y11.57%
EBIT Next Year19.43%
EBIT Next 3Y11.26%
EBIT Next 5Y10.37%
FCF growth 1Y29.38%
FCF growth 3Y19.94%
FCF growth 5Y12.76%
OCF growth 1Y24.54%
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 of AUTOMATIC DATA PROCESSING (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 financial health for ADP stock?
The financial health rating of AUTOMATIC DATA PROCESSING (ADP) is 5 / 10.
Is the dividend of AUTOMATIC DATA PROCESSING sustainable?
The dividend rating of AUTOMATIC DATA PROCESSING (ADP) is 6 / 10 and the dividend payout ratio is 59.3%.