Automatic Data Processing (ADP)
NASDAQ:ADP
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Automatic Data Processing
(NASDAQ:ADP)
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Rating:73Outperform
Price Target:
$222.00
â–²(10.74% Upside)
Action:ReiteratedDate:04/29/26
The score is driven by strong financial quality (healthy margins and strong free-cash-flow conversion) and a constructive earnings update with raised FY2026 guidance and productivity/retention momentum. Offsetting this, technical signals remain weak with the stock below key moving averages and negative MACD, while valuation looks modestly premium despite a supportive dividend yield.
Positive Factors
Cash generation quality
ADP's very strong operating and free cash flow (TTM figures show FCF nearly equals net income) indicates high earnings quality and durable internal funding. This cash strength supports sustained dividends, buybacks, reinvestment in products and strategic M&A without heavy external financing over the medium term.
Negative Factors
Moderating revenue growth
Revenue growth has slowed from earlier faster expansion, with TTM growth below recent annual rates. Slower top-line momentum reduces upside optionality for margins and returns, making long-term EPS expansion more dependent on productivity, cross-sell and client funds income rather than robust organic revenue acceleration.
Read all positive and negative factors
Positive Factors
Negative Factors
Cash generation quality
ADP's very strong operating and free cash flow (TTM figures show FCF nearly equals net income) indicates high earnings quality and durable internal funding. This cash strength supports sustained dividends, buybacks, reinvestment in products and strategic M&A without heavy external financing over the medium term.
Read all positive factors
Automatic Data Processing (ADP) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$86.59B
Dividend Yield2.46%
Average Volume (3M)3.55M
Price to Earnings (P/E)24.4
Beta (1Y)0.53
Revenue Growth6.59%
EPS Growth8.54%
CountryUS
Employees64,000
SectorTechnology
Sector Strength88
IndustryStaffing & Employment Services
Share Statistics
EPS (TTM)3.37
Shares Outstanding402,644,380
10 Day Avg. Volume2,792,243
30 Day Avg. Volume3,549,555
Financial Highlights & Ratios
PEG Ratio3.20
Price to Book (P/B)20.29
Price to Sales (P/S)6.11
P/FCF Ratio26.32
Enterprise Value/Market Cap1.01
Enterprise Value/Revenue4.04
Enterprise Value/Gross Profit8.52
Enterprise Value/Ebitda13.41
Forecast
1Y Price Target
$243.42Price Target Upside21.42% Upside
Rating ConsensusHold
Number of Analyst Covering12
EPS Forecast (FY)10.97
Revenue Forecast (FY)$21.80B
Automatic Data Processing Business Overview & Revenue Model
Company Description
Automatic Data Processing, Inc. provides cloud-based human capital management solutions worldwide. It operates in two segments, Employer Services and Professional Employer Organization (PEO). The Employer Services segment offers strategic, cloud-b...
How the Company Makes Money
ADP primarily makes money by charging employers recurring fees to run HR and payroll processes and to access its HCM software platforms, and by earning interest-related income on client funds it holds temporarily.
1) Employer Services (fees for H...
Automatic Data Processing Key Performance Indicators (KPIs)
Any
Revenue by Segment
Analyzes income from different business units, highlighting which areas drive growth and profitability, and indicating strategic focus and market positioning.
Analyzes income from different business units, highlighting which areas drive growth and profitability, and indicating strategic focus and market positioning.
Data provided by:
The Fly
The FlyAutomatic Data Processing Earnings Call Summary
Earnings Call Date:Apr 29, 2026
(Q3-2026)
| % Change Since: |
Next Earnings Date:Aug 05, 2026
Earnings Call Sentiment Positive
The call conveyed a predominantly positive tone: ADP delivered strong Q3 financial results (7% revenue growth, ~80 bps adjusted EBIT margin expansion, ~10% adjusted EPS growth), raised full‑year revenue and EPS guidance, and highlighted tangible AI‑driven productivity gains and record client retention/satisfaction. Challenges were concentrated in the PEO business where margins fell (~120 bps) due to pass‑through mix, SUI costs, selling expenses and some less favorable reserve movements, and management noted some near‑term FX moderation and booking outcome sensitivity. On balance, the positive operational momentum, upgraded outlook, measurable AI efficiencies, and strong client metrics outweigh the segment‑specific headwinds.Positive Updates
Top-Line Growth and Raised Outlook
Reported consolidated revenue growth of 7% in Q3; company raised full-year consolidated revenue growth guidance to 6%–7% following the quarter.
Negative Updates
PEO Margin Pressure in the Quarter
PEO margins decreased ~120 basis points in Q3, driven by growth in zero‑margin pass‑throughs, higher SUI costs, and elevated selling expenses; PEO margins came in below the team's model for the quarter.
Read all updates
Q3-2026 Updates
Positive
Negative
Top-Line Growth and Raised Outlook
Reported consolidated revenue growth of 7% in Q3; company raised full-year consolidated revenue growth guidance to 6%–7% following the quarter.
Read all positive updates
Company Guidance
ADP raised its fiscal 2026 outlook after a strong Q3 (revenue +7%, adjusted EBIT margin expansion +80 bps, adjusted EPS +10%) and now expects consolidated revenue growth of 6–7% for the year; Employer Services revenue is expected to grow 6–7% (ES pays-per-control ~1%), with ES retention now forecast to be flat to down 20 bps (guidance improved 10 bps). The company increased its average client funds balances growth forecast to about 6% (Q3 balances +9%), expects an average yield of ~3.4%, and raised client funds interest revenue by $25M to $1.34–1.35B (and the midpoint of extended investment strategy impact by $25M to $1.30–1.31B). PEO revenue grew 7% in Q3 (PEO ex zero-margin pass-throughs +5%) and ADP now expects PEO revenue ex pass-throughs to grow 4–5% with average worksite employee growth of ~2%. ADP also updated full-year targets to 70–80 bps of adjusted EBIT margin expansion, 10–11% adjusted EPS growth, an effective tax rate around 23%, and plans to continue share repurchases at or above current elevated levels.Automatic Data Processing Financial Statement Overview
Summary
Income Statement
86
Very Positive
Balance Sheet
71
Positive
Cash Flow
88
Very Positive
| Breakdown | TTM | Jun 2025 | Jun 2024 | Jun 2023 | Jun 2022 | Jun 2021 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 21.60B | 20.56B | 19.20B | 18.01B | 16.50B | 15.01B |
| Gross Profit | 10.26B | 10.45B | 9.59B | 8.81B | 7.73B | 6.97B |
| EBITDA | 6.51B | 6.24B | 5.80B | 5.24B | 4.41B | 3.93B |
| Net Income | 4.35B | 4.08B | 3.75B | 3.41B | 2.95B | 2.60B |
Balance Sheet | ||||||
| Total Assets | 64.48B | 53.37B | 54.36B | 50.97B | 63.07B | 48.77B |
| Cash, Cash Equivalents and Short-Term Investments | 3.23B | 7.85B | 3.30B | 2.10B | 1.48B | 2.58B |
| Total Debt | 3.98B | 9.07B | 3.71B | 3.44B | 3.49B | 3.35B |
| Total Liabilities | 58.13B | 47.18B | 49.82B | 47.46B | 59.84B | 43.10B |
| Stockholders Equity | 6.35B | 6.19B | 4.55B | 3.51B | 3.23B | 5.67B |
Cash Flow | ||||||
| Free Cash Flow | 5.15B | 4.77B | 3.59B | 3.64B | 2.55B | 2.59B |
| Operating Cash Flow | 5.45B | 4.94B | 4.16B | 4.21B | 3.10B | 3.09B |
| Investing Cash Flow | -3.33B | -3.04B | -1.39B | -2.52B | -7.01B | -3.52B |
| Financing Cash Flow | 2.24B | -6.97B | -1.43B | -15.68B | 13.65B | 6.44B |
Automatic Data Processing Technical Analysis
Negative
200.47
Price Trends
209.26
Negative
231.93
Negative
258.45
Negative
Market Momentum
-4.19
Negative
45.40
Neutral
60.40
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 200.47 is below the 20-day moving average (MA) of 201.34, below the 50-day MA of 209.26, and below the 200-day MA of 258.45, indicating a bearish trend. The MACD of -4.19 indicates Negative momentum. The RSI at 45.40 is Neutral, neither overbought nor oversold. The STOCH value of 60.40 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for ADP.
Automatic Data Processing Risk Analysis
Automatic Data Processing disclosed 1 risk factors in its most recent earnings report. Automatic Data Processing reported the most risks in the "Legal & Regulatory" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Automatic Data Processing Peers Comparison
UnderperformOutperform
Sector (61)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
75 Outperform | $33.70B | 15.02 | 40.94% | 3.70% | 16.44% | -5.79% | |
73 Outperform | $86.59B | 24.45 | 68.69% | 2.46% | 6.59% | 8.54% | |
63 Neutral | $2.78B | 45.87 | 9.98% | 8.65% | -6.08% | -35.51% | |
61 Neutral | $37.18B | 12.37 | -10.20% | 1.83% | 8.50% | -7.62% | |
57 Neutral | $1.98B | 18.31 | 185.63% | 1.81% | -0.24% | -6.75% | |
53 Neutral | $1.43B | 137.58 | -0.81% | 4.96% | 4.77% | -115.03% | |
50 Neutral | $1.42B | -210.19 | -7.69% | 6.37% | 3.51% | -107.81% |
* Technology Sector Average
ADP
Automatic Data Processing
211.94
-84.18
-28.43%
NSP
Insperity
35.57
-27.09
-43.23%
MAN
ManpowerGroup
30.27
-12.13
-28.61%
PAYX
Paychex
92.63
-52.08
-35.99%
RHI
Robert Half
26.61
-15.49
-36.79%
TNET
TriNet Group
45.78
-33.04
-41.92%
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.