ADP Automatic Data Processing, Inc. - Fundamental Analysis
At a glance
Key valuation, profitability, growth, and risk metrics.
AI Analysis
Powered by advanced machine learning algorithms
Key Strengths
Key Risks
Performance Snowflake
Multi-dimensional analysis across 5 key categories
While ADP’s multiples are far below hyper-growth tech peers like Snowflake (no P/E) or Cadence (81x), its valuation is unattractive relative to its own growth trajectory and exceeds fair value without margin expansion or acceleration.
- Forward P/E of 23.28 is below sector average of 138.37
- Price/Sales of 4.93 is reasonable for a mature SaaS provider
- P/E of 25x appears high relative to 7.1% revenue growth (PEG implied >3.5)
- Price/Book of 16.08 is extremely elevated, suggesting overvaluation on asset base
ADP’s growth trajectory remains steady but unspectacular, with no evidence of acceleration in revenue or earnings momentum, while price action shows persistent underperformance versus high-beta software peers benefiting from AI and cloud tailwinds.
- Consistent YoY EPS growth of 6.9% and Q/Q growth of 10.2% in most recent quarter
- Stable demand for core payroll and HCM solutions in large enterprise segment
- Revenue growth of 7.1% lags sector average of 20.75%
- No visible inflection in price momentum; 6M return of -19.9% vs peer median gain
ADP has a stellar track record of earnings delivery and margin stability, but share price performance has deteriorated sharply in the past year, suggesting valuation digestion or macro sensitivity despite strong fundamentals.
- 24 out of 25 quarters beat EPS estimates, with only one miss in the last six years
- Profit margins and ROE have remained consistently high, demonstrating operational discipline
- 1Y price return of -14.4% underperforms both 3Y (+6.6%) and 5Y (+58.4%) trends
- Recent quarters show decelerating surprise magnitude despite continued beats
ADP’s balance sheet is leveraged relative to peers, and weak liquidity metrics raise concerns about near-term flexibility, though ongoing operations appear sufficient to service obligations given stable cash flows.
- Operating cash flow supports dividend and debt servicing (implied by stable payout)
- Debt appears manageable given investment-grade profile and stable EBIT
- Debt/Equity of 1.55 is more than double the sector average of 0.74
- Very low quick ratio of 0.27 indicates limited liquid assets to cover short-term liabilities
ADP offers a reliable and well-covered dividend that enhances total return appeal, particularly for income-oriented investors, though lack of growth transparency tempers enthusiasm.
- Dividend yield of 2.69% is attractive in current rate environment
- 60.81% payout ratio is sustainable given stable earnings and cash flow
- No data on 5-year yield average or dividend growth trend limits visibility into policy consistency
- Dividend growth may be constrained by high leverage and capex needs
Stock Price & Analyst Targets
Real-time price movements and analyst price targets
Multi-Horizon Performance vs Peers
Price momentum across 5Y → 1W horizons for ADP and closest competitors.
| Company | 5Y | 3Y | 1Y | 6M | 1M | 1W |
|---|---|---|---|---|---|---|
|
ADP
Automatic Data Processing, Inc.
Primary
|
+58.4% | +6.6% | -14.4% | -19.9% | -10.9% | -0.4% |
|
ADI
Analog Devices, Inc.
Peer
|
+85.9% | +50.0% | +12.6% | +4.3% | -1.4% | +2.8% |
|
SNOW
Snowflake Inc.
Peer
|
+6.3% | +57.2% | +98.8% | +40.4% | +6.7% | -2.2% |
|
CDNS
Cadence Design Systems, Inc.
Peer
|
+174.2% | +86.6% | +3.9% | -2.1% | -2.8% | -3.1% |
|
MRVL
Marvell Technology, Inc.
Peer
|
+103.8% | +95.7% | -4.4% | +35.8% | -2.7% | -4.9% |
Positive values indicate cumulative gains over the specified period. Comparables pulled from the same sector to highlight whether momentum is stock-specific or industry-wide.
Historical Performance Trends
Long-term financial metrics and growth patterns
Revenue & Net Income
Profit & Operating Margins
Return on Equity (ROE)
Quarterly Revenue Growth
Valuation Metrics
Key valuation ratios and pricing indicators
Profitability
Profit margins and return metrics
Growth
Revenue and earnings growth rates
Financial Health
Balance sheet strength and liquidity metrics
Quarterly Earnings History
EPS performance vs analyst estimates
Technology Sector Comparison
Similar Companies
Peer comparison within the same industry
| Company | AI Rating | Market Cap | P/E | ROE | Profit Margin | Price | |
|---|---|---|---|---|---|---|---|
|
ADP
Automatic Data Processing, Inc.
|
NEUTRAL | $102.98B | 25.01 | 70.6% | 19.8% | $253.09 | |
|
ADI
Analog Devices, Inc.
|
BULLISH | $116.85B | 59.92 | 5.7% | 18.8% | $234.89 | |
|
SNOW
Snowflake Inc.
|
NEUTRAL | $87.08B | - | -42.4% | -33.5% | $257.02 | |
|
CDNS
Cadence Design Systems, Inc.
|
BULLISH | $86.01B | 81.38 | 21.7% | 20.4% | $314.93 | |
|
MRVL
Marvell Technology, Inc.
|
NEUTRAL | $75.45B | - | -0.7% | -1.4% | $86.45 |
Recent Insider Trading
Insider buy and sell transactions from the last 6 months
| Date | Insider | Position | Transaction | Shares | Value |
|---|---|---|---|---|---|
| 2025-09-12 | RODRIGUEZ CARLOS ANTONIO | Director | Sale | 4,086 | $1,206,425 |
| 2025-09-10 | RODRIGUEZ CARLOS ANTONIO | Director | Sale | 43,900 | $12,952,553 |
| 2025-09-10 | D'AMBROSIO CHRISTOPHER | Officer | Sale | 597 | $177,249 |
| 2025-09-10 | RODRIGUEZ CARLOS ANTONIO | Director | Option Exercise | 43,900 | $9,081,154 |
| 2025-09-09 | BONARTI MICHAEL A | Officer | Sale | 8,728 | $2,604,697 |
| 2025-09-05 | RODRIGUEZ CARLOS ANTONIO | Director | Sale | 12,056 | $3,582,032 |
| 2025-09-04 | RODRIGUEZ CARLOS ANTONIO | Director | Sale | 23,402 | $7,004,406 |
| 2025-09-03 | MCGUIRE DONALD | Officer | Sale | 13,599 | $4,033,055 |
| 2025-09-03 | BLACK MARIA | Chief Executive Officer | Sale | 23,605 | $7,041,744 |
| 2025-09-03 | DESILVA JOSEPH | Officer | Sale | 4,614 | $1,368,374 |
| 2025-09-03 | FOSKETT DAVID | Officer | Sale | 1,373 | $407,191 |
| 2025-09-02 | DESILVA JOSEPH | Officer | Sale | 1,987 | $599,359 |
| 2025-09-02 | BLACK MARIA | Chief Executive Officer | Sale | 7,721 | $2,315,777 |
| 2025-09-02 | FOSKETT DAVID | Officer | Sale | 1,043 | $314,079 |
| 2025-09-02 | BLACK MARIA | Chief Executive Officer | Option Exercise | 7,721 | $1,597,166 |
Wall Street Analysts
Professional analyst ratings and price targets