Automatic Data Processing (ADP) AI Stock Analysis

• Market Cap: $102.36B
• Dividend Yield: 2.42%
• Average Volume (3M): 1.92M
• Price to Earnings (P/E): 25.0
• Beta (1Y): 0.51
• Revenue Growth: 7.07%
• EPS Growth: 8.32%
• Country: US
• Employees: 64,000
• Sector: Technology
• Sector Strength: 88
• Industry: Staffing & Employment Services
• EPS (TTM): 2.49
• Shares Outstanding: 404,448,730
• 10 Day Avg. Volume: 2,153,671
• 30 Day Avg. Volume: 1,916,801
• PEG Ratio: 3.19
• Price to Book (P/B): 20.29
• Price to Sales (P/S): 6.11
• P/FCF Ratio: 26.32
• Enterprise Value/Market Cap: 1.18
• Enterprise Value/Revenue: 5.80
• Enterprise Value/Gross Profit: 11.76
• Enterprise Value/Ebitda: 19.03
• 1Y Price Target: $293.58
• Price Target Upside: 16.00% Upside
• Rating Consensus: Hold
• Number of Analyst Covering: 12
• EPS Forecast (FY): 10.93
• Revenue Forecast (FY): $21.75B

• Rating: 70 Outperform
• Price Target: $308.00 ▲(21.70% Upside)

ADP's overall stock score is driven by its strong financial performance and positive earnings call sentiment, which highlight robust profitability and strategic growth initiatives. However, bearish technical indicators and a relatively high valuation suggest caution. The company's dividend yield provides some offsetting value for income-focused investors.

Positive Factors

Revenue Growth

Consistent revenue and EPS growth indicate strong demand for ADP's services, supporting long-term business sustainability and market competitiveness.

Client Satisfaction

High client satisfaction reflects effective service delivery and strengthens client retention, enhancing ADP's competitive position and future revenue stability.

Global Expansion

Global expansion into new markets like Costa Rica diversifies ADP's revenue streams and reduces dependency on any single market, supporting long-term growth.

Negative Factors

Flat Pays Per Control Growth

Flat growth in pays per control suggests potential challenges in client workforce expansion, which could limit ADP's growth in payroll processing revenue.

Retention Rate Decline

A decline in retention rate, even if slight, could indicate emerging competitive pressures or client dissatisfaction, impacting future revenue stability.

Margin Decrease

Decreasing margins in Employer Services may reflect rising costs or pricing pressures, potentially affecting ADP's profitability if not addressed.

Automatic Data Processing Business Overview & Revenue Model

Company Description

Automatic Data Processing (ADP) is a leading global provider of human capital management (HCM) solutions, offering a wide range of services including payroll processing, talent management, benefits administration, and workforce analytics. Established in 1949, ADP serves clients of all sizes across various sectors, helping businesses streamline their HR functions and improve employee experiences. With a strong emphasis on technology, ADP integrates its services with cloud-based platforms, providing clients with innovative tools to manage their workforce efficiently.

How the Company Makes Money

ADP generates revenue primarily through its comprehensive suite of HCM solutions, which are offered on a subscription basis. The company has several key revenue streams, including payroll services, which constitute a significant portion of its earnings, as well as services related to tax filing, human resources, and insurance services. ADP also offers additional services such as time and attendance management, talent acquisition, and employee benefits administration, which further contribute to its revenue. Furthermore, ADP leverages partnerships with various technology companies to enhance its product offerings and expand its market reach. The recurring nature of its subscription model provides a stable revenue stream, while its extensive client base in diverse industries helps mitigate risks associated with economic fluctuations.

Automatic Data Processing Financial Statement Overview

Summary

ADP exhibits strong financial health with robust profitability and efficient operations. The company shows consistent revenue growth and maintains solid margins, although there is a slight decline in free cash flow growth. The balance sheet reflects a manageable level of debt, and the high ROE indicates effective use of equity.

Income Statement

ADP demonstrates solid financial performance with consistent revenue growth and strong profitability margins. The TTM data shows a Gross Profit Margin of 49.33% and a Net Profit Margin of 19.79%, indicating efficient cost management and profitability. The Revenue Growth Rate of 1.67% in the TTM period is modest but stable. EBIT and EBITDA margins are healthy at 27.87% and 30.47%, respectively, reflecting strong operational efficiency.

Balance Sheet

ADP maintains a balanced financial structure with a Debt-to-Equity Ratio of 1.49, which is manageable but indicates a reliance on debt financing. The Return on Equity (ROE) is impressive at 70.42%, showcasing effective use of equity to generate profits. The Equity Ratio stands at 11.73%, suggesting a moderate level of equity financing relative to total assets.

Cash Flow

The cash flow analysis reveals a slight decline in Free Cash Flow Growth at -3.56% in the TTM period, which could be a concern if it continues. However, the Operating Cash Flow to Net Income Ratio is 0.47, and the Free Cash Flow to Net Income Ratio is 0.97, indicating that ADP generates sufficient cash flow relative to its net income, supporting its operational needs and potential investments.

Breakdown	TTM	Dec 2025	Dec 2024	Dec 2023	Dec 2022	Dec 2021
Income Statement
Total Revenue	20.90B	20.56B	19.20B	18.01B	16.50B	15.01B
Gross Profit	10.31B	10.45B	9.59B	8.81B	7.73B	6.97B
EBITDA	6.37B	6.24B	5.80B	5.24B	4.41B	3.93B
Net Income	4.14B	4.08B	3.75B	3.41B	2.95B	2.60B
Balance Sheet
Total Assets	54.32B	53.37B	54.36B	50.97B	63.07B	48.77B
Cash, Cash Equivalents and Short-Term Investments	7.94B	7.85B	3.30B	2.10B	1.48B	2.58B
Total Debt	9.87B	9.07B	3.71B	3.44B	3.49B	3.35B
Total Liabilities	47.95B	47.18B	49.82B	47.46B	59.84B	43.10B
Stockholders Equity	6.37B	6.19B	4.55B	3.51B	3.23B	5.67B
Cash Flow
Free Cash Flow	4.60B	4.77B	3.59B	3.64B	2.55B	2.59B
Operating Cash Flow	4.76B	4.94B	4.16B	4.21B	3.10B	3.09B
Investing Cash Flow	-3.25B	-3.04B	-1.39B	-2.52B	-7.01B	-3.52B
Financing Cash Flow	-317.80M	-6.97B	-1.43B	-15.68B	13.65B	6.44B

Automatic Data Processing Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 253.09
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Positive
• RSI: Positive
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For ADP, the sentiment is Negative. The current price of 253.09 is below the 20-day moving average (MA) of 265.53, below the 50-day MA of 280.21, and below the 200-day MA of 297.13, indicating a bearish trend. The MACD of -8.63 indicates Positive momentum. The RSI at 23.13 is Positive, neither overbought nor oversold. The STOCH value of 35.03 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for ADP.

Automatic Data Processing Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
PAYX	71 Outperform	$40.34B	25.14	41.27%	3.76%	9.08%	-5.00%
ADP	70 Outperform	$102.36B	24.96	70.57%	2.42%	7.07%	8.32%
Sector *	61 Neutral	$37.18B	12.37	-10.20%	1.83%	8.50%	-7.62%
RHI	60 Neutral	$2.70B	17.31	11.27%	8.66%	-7.27%	-43.88%
TNET	60 Neutral	$2.79B	21.19	111.30%	1.93%	0.99%	-47.02%
NSP	47 Neutral	$1.23B	73.84	16.04%	7.35%	3.19%	-86.21%
MAN	46 Neutral	$1.33B	―	-1.00%	8.18%	-2.44%	-156.01%

Automatic Data Processing Corporate Events

ADP Reports Strong Start to Fiscal 2026

Automatic Data Processing (ADP) is a global leader in HR and payroll solutions, providing a wide range of services from simple tools for small businesses to integrated platforms for large enterprises, with a focus on innovation and AI-driven insights.

ADP Reports Strong Q1 Earnings with Record Sales

ADP’s recent earnings call painted a generally positive picture, underscored by robust revenue and EPS growth, record-breaking sales volume, and high levels of client satisfaction. While there were some challenges, such as stagnant pays per control growth and slight declines in retention and segment margins, the overall sentiment was buoyant, with significant achievements taking center stage.

ADP Reports Strong Fiscal 2025 Results and Positive 2026 Outlook

Automatic Data Processing, Inc. (ADP) is a global leader in human resources and payroll solutions, providing innovative services to over 1.1 million clients across more than 140 countries.

ADP’s Earnings Call Highlights Strong 2025 and Optimistic 2026

Automatic Data Processing (ADP) reported a strong fiscal 2025, marked by impressive achievements in revenue growth, retention rates, and product innovation. Despite these successes, the company faced challenges in meeting new business bookings expectations and navigating a moderating macroeconomic environment. Looking ahead, ADP remains optimistic about fiscal 2026, with plans for continued strategic investments and growth initiatives.