AUTOMATIC DATA PROCESSING (ADP) Stock Fundamental Analysis
NASDAQ:ADP - Nasdaq - US0530151036 - Common Stock - Currency: USD
Taking everything into account, ADP scores 6 out of 10 in our fundamental rating. ADP was compared to 82 industry peers in the Professional Services industry. While ADP belongs to the best of the industry regarding profitability, there are some minor concerns on its financial health. While showing a medium growth rate, ADP is valued expensive at the moment.
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
Looking at the Return On Assets, with a value of 7.08%, ADP is in the better half of the industry, outperforming 65.85% of the companies in the same industry.
ADP's Return On Equity of 68.29% is amongst the best of the industry. ADP outperforms 93.90% of its industry peers.
ADP has a better Return On Invested Capital (35.47%) than 98.78% of its industry peers.
ADP had an Average Return On Invested Capital over the past 3 years of 40.21%. This is significantly above the industry average of 13.36%.
The 3 year average ROIC (40.21%) for ADP is well above the current ROIC(35.47%). The reason for the recent decline needs to be investigated.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 7.08% | ||
| ROE | 68.29% | ||
| ROIC | 35.47% |
ROA(3y)6.09%
ROA(5y)5.98%
ROE(3y)90.39%
ROE(5y)71.98%
ROIC(3y)40.21%
ROIC(5y)34.27%
1.3 Margins
Looking at the Profit Margin, with a value of 19.79%, ADP belongs to the top of the industry, outperforming 90.24% of the companies in the same industry.
In the last couple of years the Profit Margin of ADP has grown nicely.
Looking at the Operating Margin, with a value of 26.48%, ADP belongs to the top of the industry, outperforming 90.24% of the companies in the same industry.
In the last couple of years the Operating Margin of ADP has grown nicely.
ADP's Gross Margin of 47.34% is in line compared to the rest of the industry. ADP outperforms 58.54% of its industry peers.
ADP's Gross Margin has been stable in the last couple of years.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 26.48% | ||
| PM (TTM) | 19.79% | ||
| GM | 47.34% |
OM growth 3Y5.45%
OM growth 5Y3.92%
PM growth 3Y4.11%
PM growth 5Y3.76%
GM growth 3Y2.33%
GM growth 5Y1.05%
2. Health
2.1 Basic Checks
ADP has a Return on Invested Capital (ROIC), which is well above the Cost of Capital (WACC), which means it is creating value.
Compared to 1 year ago, ADP has less shares outstanding
Compared to 5 years ago, ADP has less shares outstanding
The debt/assets ratio for ADP has been reduced compared to a year ago.
2.2 Solvency
ADP has an Altman-Z score of 2.80. 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.
With a Altman-Z score value of 2.80, ADP perfoms like the industry average, outperforming 48.78% of the companies in the same industry.
ADP has a debt to FCF ratio of 0.94. This is a very positive value and a sign of high solvency as it would only need 0.94 years to pay back of all of its debts.
Looking at the Debt to FCF ratio, with a value of 0.94, ADP belongs to the top of the industry, outperforming 80.49% of the companies in the same industry.
A Debt/Equity ratio of 0.68 indicates that ADP is somewhat dependend on debt financing.
Looking at the Debt to Equity ratio, with a value of 0.68, ADP is doing worse than 60.98% of the companies in the same industry.
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 | 0.68 | ||
| Debt/FCF | 0.94 | ||
| Altman-Z | 2.8 |
ROIC/WACC3.94
WACC9.01%
2.3 Liquidity
A Current Ratio of 1.02 indicates that ADP should not have too much problems paying its short term obligations.
With a Current ratio value of 1.02, ADP is not doing good in the industry: 73.17% of the companies in the same industry are doing better.
A Quick Ratio of 1.02 indicates that ADP should not have too much problems paying its short term obligations.
Looking at the Quick ratio, with a value of 1.02, ADP is doing worse than 73.17% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 1.02 | ||
| Quick Ratio | 1.02 |
3. Growth
3.1 Past
ADP shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 9.47%, which is quite good.
ADP shows quite a strong growth in Earnings Per Share. Measured over the last years, the EPS has been growing by 10.99% yearly.
Looking at the last year, ADP shows a small growth in Revenue. The Revenue has grown by 6.82% in the last year.
ADP shows a small growth in Revenue. Measured over the last years, the Revenue has been growing by 6.36% yearly.
EPS 1Y (TTM)9.47%
EPS 3Y15.1%
EPS 5Y10.99%
EPS Q2Q%6.25%
Revenue 1Y (TTM)6.82%
Revenue growth 3Y8.57%
Revenue growth 5Y6.36%
Sales Q2Q%5.69%
3.2 Future
The Earnings Per Share is expected to grow by 8.66% on average over the next years. This is quite good.
The Revenue is expected to grow by 6.06% on average over the next years.
EPS Next Y9.33%
EPS Next 2Y9.36%
EPS Next 3Y9.38%
EPS Next 5Y8.66%
Revenue Next Year6.78%
Revenue Next 2Y6.18%
Revenue Next 3Y5.95%
Revenue Next 5Y6.06%
3.3 Evolution
When comparing the EPS growth rate of the last years to the growth rate of the upcoming years, we see that the growth is decreasing.
When comparing the Revenue growth rate of the last years to the growth rate of the upcoming years, we see that the growth is stable.
4. Valuation
4.1 Price/Earnings Ratio
With a Price/Earnings ratio of 31.52, ADP can be considered very expensive at the moment.
Compared to the rest of the industry, the Price/Earnings ratio of ADP indicates a slightly more expensive valuation: ADP is more expensive than 63.41% of the companies listed in the same industry.
ADP's Price/Earnings ratio indicates a valuation a bit more expensive than the S&P500 average which is at 24.83.
The Price/Forward Earnings ratio is 28.22, which means the current valuation is very expensive for ADP.
The rest of the industry has a similar Price/Forward Earnings ratio as ADP.
The average S&P500 Price/Forward Earnings ratio is at 20.94. ADP is valued slightly more expensive when compared to this.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 31.52 | ||
| Fwd PE | 28.22 |
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 Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 29.71 | ||
| EV/EBITDA | 21.31 |
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)3.38
PEG (5Y)2.87
EPS Next 2Y9.36%
EPS Next 3Y9.38%
5. Dividend
5.1 Amount
ADP has a Yearly Dividend Yield of 2.01%.
Compared to an average industry Dividend Yield of 2.07, ADP pays a better dividend. On top of this ADP pays more dividend than 84.15% of the companies listed in the same industry.
Compared to an average S&P500 Dividend Yield of 2.41, ADP has a dividend comparable with the average S&P500 company.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.01% |
5.2 History
On average, the dividend of ADP grows each year by 12.44%, 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)12.44%
Div Incr Years26
Div Non Decr Years26
5.3 Sustainability
58.73% 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.
DP58.73%
EPS Next 2Y9.36%
EPS Next 3Y9.38%
NASDAQ:ADP (5/13/2025, 11:08:25 AM)
309.86
+0.48 (+0.16%)
Chartmill FA Rating
GICS SectorIndustrials
GICS IndustryGroupCommercial & Professional Services
GICS IndustryProfessional Services
Earnings (Last)
Earnings (Next)
Inst Owners84.47%
Inst Owner Change0.26%
Ins Owners0.12%
Ins Owner Change-0.93%
Market Cap126.07B
Analysts67.27
Price Target316.65 (2.19%)
Short Float %1.49%
Short Ratio2.98
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.01% |
Yearly Dividend5.32
Dividend Growth(5Y)12.44%
DP58.73%
Div Incr Years26
Div Non Decr Years26
Ex-Date
Surprises & Revisions
EPS beat(2)2
Avg EPS beat(2)1.78%
Min EPS beat(2)1.48%
Max EPS beat(2)2.07%
EPS beat(4)4
Avg EPS beat(4)2.17%
Min EPS beat(4)0.58%
Max EPS beat(4)4.53%
EPS beat(8)8
Avg EPS beat(8)1.94%
EPS beat(12)12
Avg EPS beat(12)1.83%
EPS beat(16)16
Avg EPS beat(16)2.59%
Revenue beat(2)2
Avg Revenue beat(2)0.35%
Min Revenue beat(2)0.13%
Max Revenue beat(2)0.57%
Revenue beat(4)3
Avg Revenue beat(4)0.12%
Min Revenue beat(4)-0.45%
Max Revenue beat(4)0.57%
Revenue beat(8)4
Avg Revenue beat(8)-0.1%
Revenue beat(12)7
Avg Revenue beat(12)-0.03%
Revenue beat(16)11
Avg Revenue beat(16)0.12%
PT rev (1m)-0.11%
PT rev (3m)4.06%
EPS NQ rev (1m)-2.27%
EPS NQ rev (3m)-2.3%
EPS NY rev (1m)-0.02%
EPS NY rev (3m)-0.19%
Revenue NQ rev (1m)-0.2%
Revenue NQ rev (3m)-0.2%
Revenue NY rev (1m)0.19%
Revenue NY rev (3m)0.19%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 31.52 | ||
| Fwd PE | 28.22 | ||
| P/S | 6.24 | ||
| P/FCF | 29.71 | ||
| P/OCF | 26.26 | ||
| P/B | 21.53 | ||
| P/tB | 132.6 | ||
| EV/EBITDA | 21.31 |
EPS(TTM)9.83
EY3.17%
EPS(NY)10.98
Fwd EY3.54%
FCF(TTM)10.43
FCFY3.37%
OCF(TTM)11.8
OCFY3.81%
SpS49.65
BVpS14.39
TBVpS2.34
PEG (NY)3.38
PEG (5Y)2.87
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 7.08% | ||
| ROE | 68.29% | ||
| ROCE | 50.44% | ||
| ROIC | 35.47% | ||
| ROICexc | 46.12% | ||
| ROICexgc | 102.41% | ||
| OM | 26.48% | ||
| PM (TTM) | 19.79% | ||
| GM | 47.34% | ||
| FCFM | 21% |
ROA(3y)6.09%
ROA(5y)5.98%
ROE(3y)90.39%
ROE(5y)71.98%
ROIC(3y)40.21%
ROIC(5y)34.27%
ROICexc(3y)55.5%
ROICexc(5y)46.4%
ROICexgc(3y)138.4%
ROICexgc(5y)107.71%
ROCE(3y)52.26%
ROCE(5y)44.53%
ROICexcg growth 3Y43.74%
ROICexcg growth 5Y22.92%
ROICexc growth 3Y26.6%
ROICexc growth 5Y15.01%
OM growth 3Y5.45%
OM growth 5Y3.92%
PM growth 3Y4.11%
PM growth 5Y3.76%
GM growth 3Y2.33%
GM growth 5Y1.05%
F-Score8
Asset Turnover0.36
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.68 | ||
| Debt/FCF | 0.94 | ||
| Debt/EBITDA | 0.67 | ||
| Cap/Depr | 97.47% | ||
| Cap/Sales | 2.76% | ||
| Interest Coverage | 12.36 | ||
| Cash Conversion | 81.08% | ||
| Profit Quality | 106.13% | ||
| Current Ratio | 1.02 | ||
| Quick Ratio | 1.02 | ||
| Altman-Z | 2.8 |
F-Score8
WACC9.01%
ROIC/WACC3.94
Cap/Depr(3y)103.92%
Cap/Depr(5y)107.85%
Cap/Sales(3y)3.15%
Cap/Sales(5y)3.41%
Profit Quality(3y)96.23%
Profit Quality(5y)97.19%
High Growth Momentum
Growth
EPS 1Y (TTM)9.47%
EPS 3Y15.1%
EPS 5Y10.99%
EPS Q2Q%6.25%
EPS Next Y9.33%
EPS Next 2Y9.36%
EPS Next 3Y9.38%
EPS Next 5Y8.66%
Revenue 1Y (TTM)6.82%
Revenue growth 3Y8.57%
Revenue growth 5Y6.36%
Sales Q2Q%5.69%
Revenue Next Year6.78%
Revenue Next 2Y6.18%
Revenue Next 3Y5.95%
Revenue Next 5Y6.06%
EBIT growth 1Y9.59%
EBIT growth 3Y14.49%
EBIT growth 5Y10.53%
EBIT Next Year19.9%
EBIT Next 3Y11.17%
EBIT Next 5Y9.85%
FCF growth 1Y26.29%
FCF growth 3Y11.58%
FCF growth 5Y11.12%
OCF growth 1Y22.02%
OCF growth 3Y10.36%
OCF growth 5Y9.11%