Automatic Data Processing Inc
Exchange: NASDAQSector: IndustrialsIndustry: Staffing & Employment Services
Automatic Data Processing, Inc. (ADP) is a provider of business outsourcing solutions. ADP offers a wide range of human resource, payroll, tax and benefits administration solutions from a single source. ADP is also a provider of integrated computing solutions to auto, truck, motorcycle, marine, recreational vehicle, and heavy equipment dealers throughout the world. The Company's operating segments include: Employer Services, professional employer organization (PEO) Services, and Dealer Services. In October 2011, the Company acquired WALLACE - The Training Tax Credit Company. In January 2012, the Company acquired Indian payroll business of Randstad Holding NV. In April 2012, it acquired the human resource solutions subsidiary of SHPS, Inc. In June 2013, Automatic Data Processing, Inc. announced that it has acquired Payroll S.A.
Did you know?
Trading 34% below its estimated fair value of $273.50.
Current Price
$204.01
+1.36%GoodMoat Value
$273.50
34.1% undervaluedProfile
Valuation (TTM)
Market Cap$82.51B
P/E19.48
EV$86.72B
P/B13.33
Shares Out404.45M
P/Sales3.89
Revenue$21.21B
EV/EBITDA12.91
Automatic Data Processing Inc (ADP) Stock Analysis
GoodMoat Analysis
ADP is a high-quality, moat-protected business in payroll and HR services, demonstrating exceptional profitability with a 68.4% ROE. However, its current valuation appears full, trading at a P/E of 19.3x against modest 6.2% revenue growth, and the GoodMoat target suggests a significant margin of safety may be lacking.
Read full analysis
Automatic Data Processing Inc (ADP) is a leading provider of human capital management solutions, primarily payroll processing, tax filing, and HR services. The company's durable moat is built on high switching costs, as its mission-critical, compliance-heavy services are deeply embedded in client operations, and significant scale advantages in processing a massive volume of payroll transactions. Applying the GoodMoat framework, ADP likely scores highly on Switching Costs, Scale Privilege, and Pricing Power, meeting the 'Moat Score ≥ 5' threshold to proceed to valuation analysis. Its quality indicators are strong, with a high ROE of 68.4%, a robust operating margin of 26.3%, and consistent free cash flow generation evidenced by a 5.4% FCF yield. The decision framework hinges on valuation. While the business passes the Moat & Quality Gate, the valuation assessment is less compelling. The current P/E of 19.3x, combined with a modest revenue growth rate of 6.2% YoY, suggests the stock is not cheap relative to its growth profile. The provided GoodMoat target price of $273.50 implies a potential upside, which would classify the current price as favourable. However, an investor must reconcile this target with the observable growth and multiples to assess if a sufficient margin of safety exists. For a value investor, ADP represents a classic 'quality at a reasonable price' candidate that warrants deeper investigation into its intrinsic value calculation and the sustainability of its exceptional returns on capital. Analysis based on data as of 2024-05-15.
Market Cap$82.51B
Current Price$204.01
P/E Ratio19.48
Forward P/E—
PEG Ratio1.70
EPS$9.98
Book Value$15.30
P/B Ratio13.33
ADP Financial Charts
FCF vs CAPEX
FCFCAPEX
Forward estimates use 12.9% FCF growth (CAGR)
Cash vs Debt
Net Debt: 5.8B
Revenue
14.1B
FY19
14.6B
FY20
15.0B
FY21
16.5B
FY22
18.0B
FY23
19.2B
FY24
20.6B
FY25
Net Income
2.3B
FY19
2.5B
FY20
2.6B
FY21
2.9B
FY22
3.4B
FY23
3.8B
FY24
4.1B
FY25
ADP 52-Week Range
$201.25
$318.83
50-Day MA: $219.06200-Day MA: $263.61
Did you know?
Earnings per share grew at a 12.9% CAGR.
Automatic Data Processing Inc (ADP) Financial Summary
Automatic Data Processing Inc (ADP) is a Industrials company in the Staffing & Employment Services industry, listed on NASDAQ. The stock currently trades at $204.01 with a market capitalization of $82.51B.
Key valuation metrics include a P/E ratio of 19.48, price-to-book ratio of 13.33, and EPS of $9.98. The company reports a profit margin of 20.0% and return on equity of 68.4%.
ADP Key Financial Metrics
| Metric | Value |
|---|---|
| Market Cap | $82.51B |
| P/E Ratio | 19.48 |
| EPS | $9.98 |
| P/B Ratio | 13.33 |
| P/S Ratio | 3.89 |
| EV/EBITDA | 12.91 |
| Dividend Yield | 2.91% |
| Profit Margin | 20.0% |
| Return on Equity | 68.4% |
| Debt/Equity | 1.47 |
ADP Revenue & Earnings History
| Year | Revenue | Net Income |
|---|---|---|
| FY19 | $14.11B | $2.29B |
| FY20 | $14.59B | $2.47B |
| FY21 | $15.01B | $2.60B |
| FY22 | $16.50B | $2.95B |
| FY23 | $18.01B | $3.41B |
| FY24 | $19.20B | $3.75B |
| FY25 | $20.56B | $4.08B |
Automatic Data Processing Inc (ADP) Valuation
Based on GoodMoat's DCF model, Automatic Data Processing Inc has a fair value estimate of $273.50. At the current price of $204.01, the stock appears 25.4% undervalued relative to our intrinsic value estimate.
ADP Quality Indicators
Automatic Data Processing Inc maintains a profit margin of 20.0% and an operating margin of 26.3%. Return on equity stands at 68.4%. The current ratio is 1.05. Debt-to-equity ratio is 1.47.
About Automatic Data Processing Inc
Automatic Data Processing, Inc. (ADP) is a provider of business outsourcing solutions. ADP offers a wide range of human resource, payroll, tax and benefits administration solutions from a single source. ADP is also a provider of integrated computing solutions to auto, truck, motorcycle, marine, recreational vehicle, and heavy equipment dealers throughout the world. The Company's operating segments include: Employer Services, professional employer organization (PEO) Services, and Dealer Services. In October 2011, the Company acquired WALLACE - The Training Tax Credit Company. In January 2012, the Company acquired Indian payroll business of Randstad Holding NV. In April 2012, it acquired the human resource solutions subsidiary of SHPS, Inc. In June 2013, Automatic Data Processing, Inc. announced that it has acquired Payroll S.A.
ADP Free Cash Flow
Automatic Data Processing Inc generated $4.40B in trailing twelve-month free cash flow, representing an FCF yield of 5.34%. This strong FCF yield suggests the company generates substantial cash relative to its market value.
ADP Shares Outstanding
Automatic Data Processing Inc has 0.40 billion shares outstanding at a share price of $204.01, giving it a market capitalization of $82.51B.
ADP Recent Insider Trades
Recent insider transactions at Automatic Data Processing Inc include:
| Insider | Type | Shares | Value |
|---|---|---|---|
| D'Ambrosio Christopher (Corp. VP) | SELL | 543 | $113188.35 |
| D'Ambrosio Christopher (Corp. VP) | SELL | 543 | $115349.49 |
| Michaud Brian L. (Executive VP) | SELL | 1,000 | $234180.00 |