Automatic Data Processing (ADP) AI Stock Analysis

• Market Cap: $105.82B
• Dividend Yield: 2.35%
• Average Volume (3M): 2.25M
• Price to Earnings (P/E): 25.8
• Beta (1Y): 0.50
• 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: 2,286,247
• 30 Day Avg. Volume: 2,245,317
• 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: 1.15
• Enterprise Value/Revenue: 5.80
• Enterprise Value/Gross Profit: 11.76
• Enterprise Value/Ebitda: 19.03
• 1Y Price Target: $291.50
• Price Target Upside: 11.42% 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 ▲(17.72% 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, Inc. (ADP) is a global leader in human capital management (HCM) solutions, providing a wide range of payroll, talent management, tax, and benefits administration services. Founded in 1949, ADP serves clients across various sectors, including small businesses, mid-market firms, and large enterprises. Its core products include payroll processing software, HCM platforms, and a suite of analytics and compliance tools designed to streamline workforce management and improve operational efficiency.

How the Company Makes Money

ADP primarily generates revenue through its service-based model, which includes recurring fees for its payroll and HCM services. The company earns money from subscription fees for its cloud-based software solutions, as well as fees for processing payroll and related services. Key revenue streams include payroll services, which account for a significant portion of revenue, and human capital management services, including talent acquisition and management, benefits administration, and compliance solutions. Additionally, ADP benefits from partnerships with various financial institutions and technology providers, enhancing its service offerings and expanding its customer base. The company's ability to retain clients through long-term contracts and the growing demand for integrated HCM solutions in the market also contribute significantly to its earnings.

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: 261.63
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Negative
• RSI: Neutral
• STOCH: Negative

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 261.63 is above the 20-day moving average (MA) of 254.46, below the 50-day MA of 269.72, and below the 200-day MA of 293.73, indicating a neutral trend. The MACD of -2.47 indicates Negative momentum. The RSI at 53.26 is Neutral, neither overbought nor oversold. The STOCH value of 89.63 is Negative, 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	73 Outperform	$40.33B	25.14	41.27%	3.77%	9.08%	-5.00%
ADP	70 Outperform	$105.82B	25.80	70.57%	2.35%	7.07%	8.32%
TNET	62 Neutral	$2.79B	21.19	111.30%	1.89%	0.99%	-47.02%
Sector *	61 Neutral	$37.18B	12.37	-10.20%	1.83%	8.50%	-7.62%
RHI	60 Neutral	$2.71B	17.40	11.27%	8.81%	-7.27%	-43.88%
NSP	50 Neutral	$1.32B	79.45	16.04%	6.83%	3.19%	-86.21%
MAN	49 Neutral	$1.29B	―	-1.00%	5.16%	-2.44%	-156.01%

Automatic Data Processing Corporate Events

Automatic Data Processing Holds Annual Stockholders Meeting

On November 12, 2025, Automatic Data Processing, Inc. held its Annual Meeting of Stockholders, where shareholders voted on several key proposals. The election of directors saw all nominees successfully appointed to the board, while the advisory vote on executive compensation and the ratification of Deloitte & Touche LLP as the independent registered public accounting firm for the fiscal year starting July 1, 2025, were both approved. These decisions reflect shareholder support for the company’s leadership and financial oversight, potentially impacting its governance and operational strategies.