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Is AUTOMATIC DATA PROCESSING (NASDAQ:ADP) a Strong Candidate for Quality Investing?

By Mill Chart

Last update: Oct 11, 2023

Quality investors are looking for the best of the best. Companies which are growing steadily and consistently, but are also in excellent financial condition. We will have a look here to see if AUTOMATIC DATA PROCESSING (NASDAQ:ADP) is suited for quality investing. Investors should of course do their own research, but we spotted AUTOMATIC DATA PROCESSING showing up in our Caviar Cruise quality screen, so it may be worth spending some more time on it.

Some of the quality metrics of NASDAQ:ADP highlighted

  • AUTOMATIC DATA PROCESSING has achieved substantial revenue growth over the past 5 years, with a 6.3% increase. This signifies the company's ability to successfully capture market opportunities and generate sustained revenue growth.
  • The ROIC excluding cash and goodwill of AUTOMATIC DATA PROCESSING stands at 144.0%, reflecting the company's strong financial management and profitability. This metric underscores its ability to generate favorable returns on the capital invested in its core operations.
  • The Debt/Free Cash Flow Ratio of AUTOMATIC DATA PROCESSING stands at 0.82, reflecting the company's prudent capital structure and cash flow dynamics. This ratio highlights the company's ability to generate robust free cash flow relative to its debt obligations.
  • With a robust Profit Quality (5-year) ratio of 96.54%, AUTOMATIC DATA PROCESSING highlights its ability to consistently generate high-quality profits. This metric reflects the company's effective management and operational excellence in delivering reliable earnings over the long term.
  • AUTOMATIC DATA PROCESSING has consistently achieved strong EBIT growth over the past 5 years, with a 12.01% increase. This underscores the company's effective management of its operating income and suggests a positive outlook for future profitability.
  • AUTOMATIC DATA PROCESSING has achieved superior EBIT 5-year growth compared to its Revenue 5-year growth. This demonstrates the company's ability to maximize its profitability through effective cost management and operational strategies.

A complete fundamental analysis of NASDAQ:ADP

ChartMill employs a sophisticated system to assign a Fundamental Rating to every stock in its analysis. This rating, which ranges from 0 to 10, is determined by carefully assessing multiple fundamental indicators and properties.

Overall ADP gets a fundamental rating of 6 out of 10. We evaluated ADP against 77 industry peers in the Professional Services industry. ADP has an excellent profitability rating, but there are some minor concerns on its financial health. ADP is valied quite expensively at the moment, while it does show a decent growth rate.

Check the latest full fundamental report of ADP for a complete fundamental analysis.

Our Caviar Cruise screen will find you more ideas suited for quality investing.

Keep in mind

This article should in no way be interpreted as advice in any way. The article is based on the observed metrics at the time of writing, but you should always make your own analysis and trade or invest at your own responsibility.

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AUTOMATIC DATA PROCESSING

NASDAQ:ADP (2/23/2024, 11:54:08 AM)

255.375

+0.62 (+0.24%)

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