AUTOMATIC DATA PROCESSING (ADP) Stock Fundamental Analysis
USA - NASDAQ:ADP - US0530151036 - Common Stock
250.315 USD
+0.63 (+0.25%)
Taking everything into account, ADP scores 6 out of 10 in our fundamental rating. ADP was compared to 87 industry peers in the Professional Services industry. ADP has an excellent profitability rating, but 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
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.
1.2 Ratios
The Return On Assets of ADP (7.61%) is better than 73.56% of its industry peers.
The Return On Equity of ADP (64.90%) is better than 93.10% of its industry peers.
The Return On Invested Capital of ADP (24.00%) is better than 91.95% of its industry peers.
The Average Return On Invested Capital over the past 3 years for ADP is significantly above the industry average of 22.56%.
The 3 year average ROIC (36.13%) for ADP is well above the current ROIC(24.00%). The reason for the recent decline needs to be investigated.
| 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
Looking at the Profit Margin, with a value of 19.79%, ADP belongs to the top of the industry, outperforming 88.51% of the companies in the same industry.
ADP's Profit Margin has improved in the last couple of years.
ADP's Operating Margin of 26.27% is amongst the best of the industry. ADP outperforms 93.10% 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
The Return on Invested Capital (ROIC) is well above the Cost of Capital (WACC), so ADP is creating value.
Compared to 1 year ago, ADP has less shares outstanding
ADP has less shares outstanding than it did 5 years ago.
The debt/assets ratio for ADP is higher compared to a year ago.
2.2 Solvency
ADP has an Altman-Z score of 2.69. 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 2.69, ADP perfoms like the industry average, outperforming 51.72% of the companies in the same industry.
ADP has a debt to FCF ratio of 2.18. This is a good value and a sign of high solvency as ADP would need 2.18 years to pay back of all of its debts.
ADP has a Debt to FCF ratio of 2.18. This is in the better half of the industry: ADP outperforms 65.52% of its industry peers.
A Debt/Equity ratio of 1.44 is on the high side and indicates that ADP has dependencies on debt financing.
Looking at the Debt to Equity ratio, with a value of 1.44, ADP is doing worse than 79.31% of the companies in the same industry.
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 | 2.69 |
ROIC/WACC2.79
WACC8.59%
2.3 Liquidity
ADP has a Current Ratio of 1.05. 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 1.05. This is in the lower half of the industry: ADP underperforms 73.56% of its industry peers.
ADP has a Quick Ratio of 1.05. This is a normal value and indicates that ADP is financially healthy and should not expect problems in meeting its short term obligations.
The Quick ratio of ADP (1.05) is worse than 73.56% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 1.05 | ||
| Quick Ratio | 1.05 |
3. Growth
3.1 Past
ADP shows a small growth in Earnings Per Share. In the last year, the EPS has grown by 7.74%.
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.
The Revenue has been growing slightly by 7.07% in the past year.
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 7.81% 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 Year6.23%
Revenue Next 2Y6%
Revenue Next 3Y5.97%
Revenue Next 5Y5.68%
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 decreasing.
4. Valuation
4.1 Price/Earnings Ratio
ADP is valuated rather expensively with a Price/Earnings ratio of 24.64.
ADP's Price/Earnings is on the same level as the industry average.
ADP is valuated at similar levels of the S&P average when we compare the Price/Earnings ratio to 25.46, which is the current average of the S&P500 Index.
The Price/Forward Earnings ratio is 20.75, which indicates a rather expensive current valuation of ADP.
The rest of the industry has a similar Price/Forward Earnings ratio as ADP.
When comparing the Price/Forward Earnings ratio of ADP to the average of the S&P500 Index (35.39), we can say ADP is valued slightly cheaper.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 24.64 | ||
| Fwd PE | 20.75 |
4.2 Price Multiples
60.92% of the companies in the same industry are more expensive than ADP, based on the Enterprise Value to EBITDA ratio.
ADP's Price/Free Cash Flow ratio is in line with the industry average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 24.09 | ||
| EV/EBITDA | 15.08 |
4.3 Compensation for Growth
The high PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates an expensive valuation of the company.
ADP has an outstanding profitability rating, which may justify a higher PE ratio.
PEG (NY)2.41
PEG (5Y)2.23
EPS Next 2Y9.83%
EPS Next 3Y9.55%
5. Dividend
5.1 Amount
ADP has a Yearly Dividend Yield of 2.67%.
Compared to an average industry Dividend Yield of 4.28, ADP pays a better dividend. On top of this ADP pays more dividend than 86.21% of the companies listed in the same industry.
ADP's Dividend Yield is comparable with the S&P500 average which is at 2.44.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.67% |
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 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
59.30% of the earnings are spent on dividend by ADP. 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%
NASDAQ:ADP (11/19/2025, 2:58:27 PM)
250.315
+0.63 (+0.25%)
Chartmill FA Rating
GICS SectorIndustrials
GICS IndustryGroupCommercial & Professional Services
GICS IndustryProfessional Services
Earnings (Last)
Earnings (Next)
Inst Owners85.24%
Inst Owner Change-0.6%
Ins Owners0.12%
Ins Owner Change5.55%
Market Cap101.40B
Revenue(TTM)20.90B
Net Income(TTM)4.14B
Analysts65.71
Price Target315.71 (26.13%)
Short Float %1.84%
Short Ratio3.72
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.67% |
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)-2.2%
PT rev (3m)-3.25%
EPS NQ rev (1m)-1.02%
EPS NQ rev (3m)-1.56%
EPS NY rev (1m)-0.07%
EPS NY rev (3m)0.29%
Revenue NQ rev (1m)-0.41%
Revenue NQ rev (3m)-0.43%
Revenue NY rev (1m)0.03%
Revenue NY rev (3m)0.54%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 24.64 | ||
| Fwd PE | 20.75 | ||
| P/S | 4.85 | ||
| P/FCF | 24.09 | ||
| P/OCF | 21.31 | ||
| P/B | 15.91 | ||
| P/tB | 67.57 | ||
| EV/EBITDA | 15.08 |
EPS(TTM)10.16
EY4.06%
EPS(NY)12.06
Fwd EY4.82%
FCF(TTM)10.39
FCFY4.15%
OCF(TTM)11.74
OCFY4.69%
SpS51.6
BVpS15.73
TBVpS3.7
PEG (NY)2.41
PEG (5Y)2.23
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 | 47.26% | ||
| 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 | 2.69 |
F-Score6
WACC8.59%
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 Year6.23%
Revenue Next 2Y6%
Revenue Next 3Y5.97%
Revenue Next 5Y5.68%
EBIT growth 1Y6.75%
EBIT growth 3Y12.61%
EBIT growth 5Y11.57%
EBIT Next Year19.43%
EBIT Next 3Y11.28%
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%.