264.69 USD
+5.35 (+2.06%)
265.06 USD
+0.37 (+0.14%)
We assign a fundamental rating of 6 out of 10 to ADP. ADP was compared to 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 does not seem to be growing, but still is valued expensively.
1. Profitability
1.1 Basic Checks
In the past year ADP was profitable.
ADP had a positive operating cash flow in the past year.
ADP had positive earnings in each of the past 5 years.
In the past 5 years ADP always reported a positive cash flow from operatings.
1.2 Ratios
ADP has a better Return On Assets (7.61%) than 73.56% of its industry peers.
The Return On Equity of ADP (64.90%) is better than 95.40% of its industry peers.
With an excellent Return On Invested Capital value of 24.00%, ADP belongs to the best of the industry, outperforming 93.10% 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 12.13%.
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 better Profit Margin (19.79%) than 87.36% 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 91.95% of its industry peers.
In the last couple of years the Operating Margin of ADP has grown nicely.
ADP has a Gross Margin (47.26%) which is in line with its industry peers.
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 | 47.26% |
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.
The number of shares outstanding for ADP has been reduced compared to 1 year ago.
ADP has less shares outstanding than it did 5 years ago.
Compared to 1 year ago, ADP has a worse debt to assets ratio.
2.2 Solvency
ADP has an Altman-Z score of 2.74. 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.
ADP has a Altman-Z score (2.74) which is in line with its industry peers.
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.
Looking at the Debt to FCF ratio, with a value of 2.18, ADP is in the better half of the industry, outperforming 68.97% of the companies in the same industry.
ADP has a Debt/Equity ratio of 1.44. This is a high value indicating a heavy dependency on external financing.
The Debt to Equity ratio of ADP (1.44) is worse than 75.86% of its industry peers.
Although ADP does not score too well on debt/equity it has very limited outstanding debt, which is well covered by the FCF. 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 Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 1.44 | ||
| Debt/FCF | 2.18 | ||
| Altman-Z | 2.74 |
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 74.71% 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 worse Quick ratio (1.05) than 74.71% 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.
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.
The Revenue has been growing slightly by 7.10% on average over the past years.
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 7.81% on average over the next years.
The Revenue is expected to grow by 5.68% on average over the next years.
EPS Next Y10.23%
EPS Next 2Y9.83%
EPS Next 3Y9.55%
EPS Next 5Y7.81%
Revenue Next Year6.24%
Revenue Next 2Y6.01%
Revenue Next 3Y5.97%
Revenue Next 5Y5.68%
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
ADP is valuated quite expensively with a Price/Earnings ratio of 26.05.
ADP's Price/Earnings ratio is in line with the industry average.
ADP's Price/Earnings ratio indicates a similar valuation than the S&P500 average which is at 26.76.
A Price/Forward Earnings ratio of 21.94 indicates a rather expensive valuation of ADP.
ADP's Price/Forward Earnings ratio is in line with the industry average.
Compared to an average S&P500 Price/Forward Earnings ratio of 23.96, ADP is valued at the same level.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 26.05 | ||
| Fwd PE | 21.94 |
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.
60.92% of the companies in the same industry are more expensive than ADP, based on the Price/Free Cash Flow ratio.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 25.43 | ||
| EV/EBITDA | 15.69 |
4.3 Compensation for Growth
The high PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates ADP does not grow enough to justify the current Price/Earnings ratio.
The excellent profitability rating of ADP may justify a higher PE ratio.
PEG (NY)2.55
PEG (5Y)2.36
EPS Next 2Y9.83%
EPS Next 3Y9.55%
5. Dividend
5.1 Amount
ADP has a Yearly Dividend Yield of 2.62%.
ADP's Dividend Yield is rather good when compared to the industry average which is at 4.12. ADP pays more dividend than 85.06% of the companies in the same industry.
Compared to an average S&P500 Dividend Yield of 2.31, ADP has a dividend comparable with the average S&P500 company.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.62% |
5.2 History
On average, the dividend of ADP grows each year by 11.62%, which is quite nice.
ADP has paid a dividend for at least 10 years, which is 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 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.
The dividend of ADP is growing, but the earnings are growing slower. This means the dividend growth is not sustainable.
DP59.3%
EPS Next 2Y9.83%
EPS Next 3Y9.55%
264.69
+5.35 (+2.06%)
Chartmill FA Rating
GICS SectorIndustrials
GICS IndustryGroupCommercial & Professional Services
GICS IndustryProfessional Services
Earnings (Last)
Earnings (Next)
Inst Owners86.7%
Inst Owner Change-0.45%
Ins Owners0.1%
Ins Owner Change3.18%
Market Cap107.05B
Revenue(TTM)20.90B
Net Income(TTM)4.14B
Analysts65.71
Price Target297.42 (12.37%)
Short Float %1.85%
Short Ratio3.69
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.62% |
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)-5.79%
PT rev (3m)-8.52%
EPS NQ rev (1m)0%
EPS NQ rev (3m)-1.02%
EPS NY rev (1m)0%
EPS NY rev (3m)-0.07%
Revenue NQ rev (1m)0.02%
Revenue NQ rev (3m)-0.39%
Revenue NY rev (1m)0%
Revenue NY rev (3m)0.03%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 26.05 | ||
| Fwd PE | 21.94 | ||
| P/S | 5.12 | ||
| P/FCF | 25.43 | ||
| P/OCF | 22.5 | ||
| P/B | 16.8 | ||
| P/tB | 71.34 | ||
| EV/EBITDA | 15.69 |
EPS(TTM)10.16
EY3.84%
EPS(NY)12.06
Fwd EY4.56%
FCF(TTM)10.41
FCFY3.93%
OCF(TTM)11.76
OCFY4.44%
SpS51.68
BVpS15.76
TBVpS3.71
PEG (NY)2.55
PEG (5Y)2.36
Graham Number60.02
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 | 47.26% | ||
| FCFM | 20.14% |
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 | 78.22% | ||
| Profit Quality | 101.77% | ||
| Current Ratio | 1.05 | ||
| Quick Ratio | 1.05 | ||
| Altman-Z | 2.74 |
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 5Y7.81%
Revenue 1Y (TTM)7.07%
Revenue growth 3Y7.61%
Revenue growth 5Y7.1%
Sales Q2Q%7.09%
Revenue Next Year6.24%
Revenue Next 2Y6.01%
Revenue Next 3Y5.97%
Revenue Next 5Y5.68%
EBIT growth 1Y6.75%
EBIT growth 3Y12.61%
EBIT growth 5Y11.57%
EBIT Next Year18.67%
EBIT Next 3Y11.07%
EBIT Next 5Y10.37%
FCF growth 1Y29.53%
FCF growth 3Y19.94%
FCF growth 5Y12.76%
OCF growth 1Y24.68%
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%.