AUTOMATIC DATA PROCESSING (ADP) Stock Fundamental Analysis
USA - NASDAQ:ADP - US0530151036 - Common Stock
280.94 USD
-0.61 (-0.22%)
280.94 USD
0 (0%)
Taking everything into account, ADP scores 6 out of 10 in our fundamental rating. ADP was compared to 86 industry peers in the Professional Services industry. ADP scores excellent on profitability, but 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.
Each year in the past 5 years ADP had a positive operating cash flow.
1.2 Ratios
ADP's Return On Assets of 7.64% is fine compared to the rest of the industry. ADP outperforms 76.74% of its industry peers.
Looking at the Return On Equity, with a value of 65.93%, ADP belongs to the top of the industry, outperforming 94.19% of the companies in the same industry.
ADP has a Return On Invested Capital of 24.78%. This is amongst the best in the industry. ADP outperforms 94.19% of its industry peers.
Measured over the past 3 years, the Average Return On Invested Capital for ADP is significantly above the industry average of 13.28%.
The last Return On Invested Capital (24.78%) 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 | 7.64% | ||
| ROE | 65.93% | ||
| ROIC | 24.78% |
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 19.84%, ADP belongs to the top of the industry, outperforming 90.70% of the companies in the same industry.
ADP's Profit Margin has improved in the last couple of years.
ADP has a Operating Margin of 26.42%. This is amongst the best in the industry. ADP outperforms 93.02% of its industry peers.
In the last couple of years the Operating Margin of ADP has grown nicely.
ADP has a Gross Margin of 47.37%. This is in the better half of the industry: ADP outperforms 62.79% of its industry peers.
In the last couple of years the Gross Margin of ADP has grown nicely.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 26.42% | ||
| PM (TTM) | 19.84% | ||
| GM | 47.37% |
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
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
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
An Altman-Z score of 2.87 indicates that ADP is not a great score, but indicates only limited risk for bankruptcy at the moment.
ADP has a Altman-Z score (2.87) which is in line with its industry peers.
The Debt to FCF ratio of ADP is 1.99, which is an excellent value as it means it would take ADP, only 1.99 years of fcf income to pay off all of its debts.
ADP has a Debt to FCF ratio of 1.99. This is in the better half of the industry: ADP outperforms 67.44% of its industry peers.
A Debt/Equity ratio of 1.41 is on the high side and indicates that ADP has dependencies on debt financing.
With a Debt to Equity ratio value of 1.41, ADP is not doing good in the industry: 79.07% 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 | 1.41 | ||
| Debt/FCF | 1.99 | ||
| Altman-Z | 2.87 |
ROIC/WACC2.91
WACC8.51%
2.3 Liquidity
A Current Ratio of 1.05 indicates that ADP should not have too much problems paying its short term obligations.
With a Current ratio value of 1.05, ADP is not doing good in the industry: 70.93% of the companies in the same industry are doing better.
A Quick Ratio of 1.05 indicates that ADP should not have too much problems paying its short term obligations.
The Quick ratio of ADP (1.05) is worse than 70.93% 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 grown by an nice 8.93% over the past year.
The Earnings Per Share has been growing by 11.05% on average over the past years. This is quite good.
ADP shows a small growth in Revenue. In the last year, the Revenue has grown by 7.07%.
ADP shows a small growth in Revenue. Measured over the last years, the Revenue has been growing by 7.10% yearly.
EPS 1Y (TTM)8.93%
EPS 3Y12.57%
EPS 5Y11.05%
EPS Q2Q%8.13%
Revenue 1Y (TTM)7.07%
Revenue growth 3Y7.61%
Revenue growth 5Y7.1%
Sales Q2Q%7.51%
3.2 Future
Based on estimates for the next years, ADP will show a small growth in Earnings Per Share. The EPS will grow by 7.85% on average per year.
ADP is expected to show a small growth in Revenue. In the coming years, the Revenue will grow by 5.65% yearly.
EPS Next Y10.29%
EPS Next 2Y9.86%
EPS Next 3Y9.66%
EPS Next 5Y7.85%
Revenue Next Year6.2%
Revenue Next 2Y5.96%
Revenue Next 3Y5.92%
Revenue Next 5Y5.65%
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.
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
Based on the Price/Earnings ratio of 28.09, the valuation of ADP can be described as expensive.
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 26.89, which is the current average of the S&P500 Index.
ADP is valuated quite expensively with a Price/Forward Earnings ratio of 25.47.
ADP's Price/Forward Earnings is on the same level as the industry average.
Compared to an average S&P500 Price/Forward Earnings ratio of 22.99, ADP is valued at the same level.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 28.09 | ||
| Fwd PE | 25.47 |
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.
ADP's Price/Free Cash Flow is on the same level as the industry average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 25.91 | ||
| EV/EBITDA | 17.53 |
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)2.73
PEG (5Y)2.54
EPS Next 2Y9.86%
EPS Next 3Y9.66%
5. Dividend
5.1 Amount
ADP has a Yearly Dividend Yield of 2.19%. Purely for dividend investing, there may be better candidates out there.
ADP's Dividend Yield is rather good when compared to the industry average which is at 3.92. ADP pays more dividend than 84.88% 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 | 2.19% |
5.2 History
The dividend of ADP is nicely growing with an annual growth rate of 11.62%!
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 58.80% 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.
DP58.8%
EPS Next 2Y9.86%
EPS Next 3Y9.66%
280.94
-0.61 (-0.22%)
Chartmill FA Rating
GICS SectorIndustrials
GICS IndustryGroupCommercial & Professional Services
GICS IndustryProfessional Services
Earnings (Last)
Earnings (Next)
Inst Owners85.24%
Inst Owner Change0.09%
Ins Owners0.12%
Ins Owner Change1.97%
Market Cap113.81B
Revenue(TTM)20.56B
Net Income(TTM)4.08B
Analysts67
Price Target322.81 (14.9%)
Short Float %2.13%
Short Ratio4.95
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.19% |
Yearly Dividend5.9
Dividend Growth(5Y)11.62%
DP58.8%
Div Incr Years26
Div Non Decr Years26
Ex-Date
Surprises & Revisions
EPS beat(2)2
Avg EPS beat(2)1.1%
Min EPS beat(2)0.35%
Max EPS beat(2)1.85%
EPS beat(4)4
Avg EPS beat(4)2.06%
Min EPS beat(4)0.35%
Max EPS beat(4)4.53%
EPS beat(8)8
Avg EPS beat(8)1.67%
EPS beat(12)12
Avg EPS beat(12)1.7%
EPS beat(16)16
Avg EPS beat(16)2.33%
Revenue beat(2)2
Avg Revenue beat(2)0.38%
Min Revenue beat(2)0.11%
Max Revenue beat(2)0.64%
Revenue beat(4)4
Avg Revenue beat(4)0.38%
Min Revenue beat(4)0.11%
Max Revenue beat(4)0.64%
Revenue beat(8)4
Avg Revenue beat(8)-0.16%
Revenue beat(12)7
Avg Revenue beat(12)-0.04%
Revenue beat(16)11
Avg Revenue beat(16)0.12%
PT rev (1m)-0.71%
PT rev (3m)0.1%
EPS NQ rev (1m)-0.06%
EPS NQ rev (3m)-3.47%
EPS NY rev (1m)-0.01%
EPS NY rev (3m)0.34%
Revenue NQ rev (1m)-0.02%
Revenue NQ rev (3m)0.64%
Revenue NY rev (1m)0%
Revenue NY rev (3m)0.51%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 28.09 | ||
| Fwd PE | 25.47 | ||
| P/S | 5.54 | ||
| P/FCF | 25.91 | ||
| P/OCF | 23.04 | ||
| P/B | 18.39 | ||
| P/tB | 86.78 | ||
| EV/EBITDA | 17.53 |
EPS(TTM)10
EY3.56%
EPS(NY)11.03
Fwd EY3.93%
FCF(TTM)10.84
FCFY3.86%
OCF(TTM)12.19
OCFY4.34%
SpS50.76
BVpS15.28
TBVpS3.24
PEG (NY)2.73
PEG (5Y)2.54
Graham Number58.63
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 7.64% | ||
| ROE | 65.93% | ||
| ROCE | 44.92% | ||
| ROIC | 24.78% | ||
| ROICexc | 46.35% | ||
| ROICexgc | 100.97% | ||
| OM | 26.42% | ||
| PM (TTM) | 19.84% | ||
| GM | 47.37% | ||
| FCFM | 21.36% |
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-Score8
Asset Turnover0.39
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 1.41 | ||
| Debt/FCF | 1.99 | ||
| Debt/EBITDA | 1.45 | ||
| Cap/Depr | 93.92% | ||
| Cap/Sales | 2.66% | ||
| Interest Coverage | 12.73 | ||
| Cash Conversion | 82.14% | ||
| Profit Quality | 107.67% | ||
| Current Ratio | 1.05 | ||
| Quick Ratio | 1.05 | ||
| Altman-Z | 2.87 |
F-Score8
WACC8.51%
ROIC/WACC2.91
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)8.93%
EPS 3Y12.57%
EPS 5Y11.05%
EPS Q2Q%8.13%
EPS Next Y10.29%
EPS Next 2Y9.86%
EPS Next 3Y9.66%
EPS Next 5Y7.85%
Revenue 1Y (TTM)7.07%
Revenue growth 3Y7.61%
Revenue growth 5Y7.1%
Sales Q2Q%7.51%
Revenue Next Year6.2%
Revenue Next 2Y5.96%
Revenue Next 3Y5.92%
Revenue Next 5Y5.65%
EBIT growth 1Y8.87%
EBIT growth 3Y12.61%
EBIT growth 5Y11.57%
EBIT Next Year19.43%
EBIT Next 3Y11.26%
EBIT Next 5Y10.37%
FCF growth 1Y22.22%
FCF growth 3Y19.94%
FCF growth 5Y12.76%
OCF growth 1Y18.81%
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 58.8%.