AUTOMATIC DATA PROCESSING (ADP)

US0530151036 - Common Stock

249.74  +1.41 (+0.57%)

After market: 249.74 0 (0%)

Fundamental Rating

6

Taking everything into account, ADP scores 6 out of 10 in our fundamental rating. ADP was compared to 81 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.



9

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.
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's Return On Assets of 6.23% is fine compared to the rest of the industry. ADP outperforms 73.75% of its industry peers.
ADP's Return On Equity of 82.36% is amongst the best of the industry. ADP outperforms 96.25% of its industry peers.
ADP's Return On Invested Capital of 40.46% is amongst the best of the industry. ADP outperforms 100.00% 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 11.82%.
The last Return On Invested Capital (40.46%) for ADP is above the 3 year average (34.53%), which is a sign of increasing profitability.
Industry RankSector Rank
ROA 6.23%
ROE 82.36%
ROIC 40.46%
ROA(3y)5.57%
ROA(5y)5.69%
ROE(3y)78.17%
ROE(5y)63.97%
ROIC(3y)34.53%
ROIC(5y)31.13%

1.3 Margins

ADP has a better Profit Margin (19.14%) than 90.00% of its industry peers.
In the last couple of years the Profit Margin of ADP has grown nicely.
ADP has a Operating Margin of 25.30%. This is amongst the best in the industry. ADP outperforms 90.00% of its industry peers.
In the last couple of years the Operating Margin of ADP has grown nicely.
With a Gross Margin value of 45.37%, ADP perfoms like the industry average, outperforming 56.25% of the companies in the same industry.
ADP's Gross Margin has been stable in the last couple of years.
Industry RankSector Rank
OM 25.3%
PM (TTM) 19.14%
GM 45.37%
OM growth 3Y5.13%
OM growth 5Y5.37%
PM growth 3Y3.86%
PM growth 5Y5.93%
GM growth 3Y2.07%
GM growth 5Y1.48%

5

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.
ADP has a worse debt/assets ratio than last year.

2.2 Solvency

An Altman-Z score of 2.33 indicates that ADP is not a great score, but indicates only limited risk for bankruptcy at the moment.
The Altman-Z score of ADP (2.33) is comparable to the rest of the industry.
ADP has a debt to FCF ratio of 0.88. This is a very positive value and a sign of high solvency as it would only need 0.88 years to pay back of all of its debts.
The Debt to FCF ratio of ADP (0.88) is better than 73.75% of its industry peers.
A Debt/Equity ratio of 0.69 indicates that ADP is somewhat dependend on debt financing.
ADP has a Debt to Equity ratio of 0.69. This is in the lower half of the industry: ADP underperforms 68.75% of its industry peers.
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 RankSector Rank
Debt/Equity 0.69
Debt/FCF 0.88
Altman-Z 2.33
ROIC/WACC4.61
WACC8.77%

2.3 Liquidity

ADP has a Current Ratio of 1.01. This is a normal value and indicates that ADP is financially healthy and should not expect problems in meeting its short term obligations.
Looking at the Current ratio, with a value of 1.01, ADP is doing worse than 77.50% of the companies in the same industry.
A Quick Ratio of 1.01 indicates that ADP should not have too much problems paying its short term obligations.
ADP has a worse Quick ratio (1.01) than 76.25% of its industry peers.
Industry RankSector Rank
Current Ratio 1.01
Quick Ratio 1.01

4

3. Growth

3.1 Past

ADP shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 14.48%, which is quite good.
Measured over the past years, ADP shows a quite strong growth in Earnings Per Share. The EPS has been growing by 13.65% on average per year.
The Revenue has been growing slightly by 7.76% in the past year.
ADP shows a small growth in Revenue. Measured over the last years, the Revenue has been growing by 6.29% yearly.
EPS 1Y (TTM)14.48%
EPS 3Y11.61%
EPS 5Y13.65%
EPS growth Q2Q8.67%
Revenue 1Y (TTM)7.76%
Revenue growth 3Y7.28%
Revenue growth 5Y6.29%
Revenue growth Q2Q6.31%

3.2 Future

ADP is expected to show quite a strong growth in Earnings Per Share. In the coming years, the EPS will grow by 9.21% yearly.
The Revenue is expected to grow by 5.64% on average over the next years.
EPS Next Y11.99%
EPS Next 2Y10.78%
EPS Next 3Y10.23%
EPS Next 5Y9.21%
Revenue Next Year6.84%
Revenue Next 2Y6.35%
Revenue Next 3Y6.24%
Revenue Next 5Y5.64%

3.3 Evolution

The EPS growth rate is decreasing: in the next years the growth will be less than in the last years.
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.

2

4. Valuation

4.1 Price/Earnings Ratio

The Price/Earnings ratio is 28.97, which means the current valuation is very expensive for ADP.
Based on the Price/Earnings ratio, ADP is valued a bit more expensive than the industry average as 60.00% of the companies are valued more cheaply.
When comparing the Price/Earnings ratio of ADP to the average of the S&P500 Index (26.48), we can say ADP is valued inline with the index average.
ADP is valuated rather expensively with a Price/Forward Earnings ratio of 24.73.
ADP's Price/Forward Earnings is on the same level as the industry average.
The average S&P500 Price/Forward Earnings ratio is at 22.79. ADP is around the same levels.
Industry RankSector Rank
PE 28.97
Fwd PE 24.73

4.2 Price Multiples

Based on the Enterprise Value to EBITDA ratio, ADP is valued a bit more expensive than 61.25% of the companies in the same industry.
ADP's Price/Free Cash Flow ratio is in line with the industry average.
Industry RankSector Rank
P/FCF 30.26
EV/EBITDA 19.75

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)2.42
PEG (5Y)2.12
EPS Next 2Y10.78%
EPS Next 3Y10.23%

6

5. Dividend

5.1 Amount

ADP has a Yearly Dividend Yield of 2.25%. Purely for dividend investing, there may be better candidates out there.
Compared to an average industry Dividend Yield of 1.96, ADP pays a better dividend. On top of this ADP pays more dividend than 92.50% of the companies listed in the same industry.
ADP's Dividend Yield is comparable with the S&P500 average which is at 2.34.
Industry RankSector Rank
Dividend Yield 2.25%

5.2 History

The dividend of ADP is nicely growing with an annual growth rate of 13.82%!
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)13.82%
Div Incr Years15
Div Non Decr Years15

5.3 Sustainability

58.19% 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.
DP58.19%
EPS Next 2Y10.78%
EPS Next 3Y10.23%

AUTOMATIC DATA PROCESSING

NASDAQ:ADP (3/28/2024, 8:00:00 PM)

After market: 249.74 0 (0%)

249.74

+1.41 (+0.57%)

Chartmill FA Rating
GICS SectorIndustrials
GICS IndustryGroupCommercial & Professional Services
GICS IndustryProfessional Services
Earnings (Last)
Earnings (Next)
Inst Owners
Inst Owner Change
Ins Owners
Ins Owner Change
Market Cap102.59B
Analysts
Price Target
Dividend
Industry RankSector Rank
Dividend Yield 2.25%
Dividend Growth(5Y)
DP
Div Incr Years
Div Non Decr Years
Ex-Date
Surprises & Revisions
EPS beat(2)
Avg EPS beat(2)
Min EPS beat(2)
Max EPS beat(2)
EPS beat(4)
Avg EPS beat(4)
Min EPS beat(4)
Max EPS beat(4)
EPS beat(8)
Avg EPS beat(8)
EPS beat(12)
Avg EPS beat(12)
EPS beat(16)
Avg EPS beat(16)
Revenue beat(2)
Avg Revenue beat(2)
Min Revenue beat(2)
Max Revenue beat(2)
Revenue beat(4)
Avg Revenue beat(4)
Min Revenue beat(4)
Max Revenue beat(4)
Revenue beat(8)
Avg Revenue beat(8)
Revenue beat(12)
Avg Revenue beat(12)
Revenue beat(16)
Avg Revenue beat(16)
PT rev (1m)
PT rev (3m)
EPS NQ rev (1m)
EPS NQ rev (3m)
EPS NY rev (1m)
EPS NY rev (3m)
Revenue NQ rev (1m)
Revenue NQ rev (3m)
Revenue NY rev (1m)
Revenue NY rev (3m)
Valuation
Industry RankSector Rank
PE 28.97
Fwd PE 24.73
P/S
P/FCF
P/OCF
P/B
P/tB
EV/EBITDA
EPS(TTM)
EY
EPS(NY)
Fwd EY
FCF(TTM)
FCFY
OCF(TTM)
OCFY
SpS
BVpS
TBVpS
PEG (NY)2.42
PEG (5Y)2.12
Profitability
Industry RankSector Rank
ROA 6.23%
ROE 82.36%
ROCE
ROIC
ROICexc
ROICexgc
OM 25.3%
PM (TTM) 19.14%
GM 45.37%
FCFM
ROA(3y)
ROA(5y)
ROE(3y)
ROE(5y)
ROIC(3y)
ROIC(5y)
ROICexc(3y)
ROICexc(5y)
ROICexgc(3y)
ROICexgc(5y)
ROCE(3y)
ROCE(5y)
ROICexcg growth 3Y
ROICexcg growth 5Y
ROICexc growth 3Y
ROICexc growth 5Y
OM growth 3Y
OM growth 5Y
PM growth 3Y
PM growth 5Y
GM growth 3Y
GM growth 5Y
F-Score
Asset Turnover0.33
Health
Industry RankSector Rank
Debt/Equity 0.69
Debt/FCF
Debt/EBITDA
Cap/Depr
Cap/Sales
Interest Coverage
Cash Conversion
Profit Quality
Current Ratio 1.01
Quick Ratio 1.01
Altman-Z
F-Score
WACC
ROIC/WACC
Cap/Depr(3y)
Cap/Depr(5y)
Cap/Sales(3y)
Cap/Sales(5y)
Profit Quality(3y)
Profit Quality(5y)
Growth
EPS 1Y (TTM)14.48%
EPS 3Y11.61%
EPS 5Y
EPS growth Q2Q
EPS Next Y11.99%
EPS Next 2Y
EPS Next 3Y
EPS Next 5Y
Revenue 1Y (TTM)7.76%
Revenue growth 3Y7.28%
Revenue growth 5Y
Revenue growth Q2Q
Revenue Next Year
Revenue Next 2Y
Revenue Next 3Y
Revenue Next 5Y
EBIT growth 1Y
EBIT growth 3Y
EBIT growth 5Y
EBIT Next Year
EBIT Next 3Y
EBIT Next 5Y
FCF growth 1Y
FCF growth 3Y
FCF growth 5Y
OCF growth 1Y
OCF growth 3Y
OCF growth 5Y