Automatic Data Processing (ADP) AI Stock Analysis

• Market Cap: $125.19B
• Dividend Yield: 2%
• Average Volume (3M): 1.67M
• Price to Earnings (P/E): 31.6
• Beta (1Y): 0.60
• Revenue Growth: 6.82%
• EPS Growth: 9.03%
• Country: US
• Employees: 64,000
• Sector: Industrials
• Sector Strength: 85
• Industry: Staffing & Employment Services
• EPS (TTM): 3.06
• Shares Outstanding: 405,922,760
• 10 Day Avg. Volume: 1,989,169
• 30 Day Avg. Volume: 1,674,801
• PEG Ratio: 16.66
• Price to Book (P/B): 21.28
• Price to Sales (P/S): 0.00
• P/FCF Ratio: 27.50
• Enterprise Value/Market Cap: 1.01
• Enterprise Value/Revenue: 1.60
• Enterprise Value/Gross Profit: 13.23
• Enterprise Value/Ebitda: 5.23
• 1Y Price Target: $320.20
• Price Target Upside: 3.83% Upside
• Rating Consensus: Hold
• Number of Analyst Covering: 10

• Rating: 73 Outperform
• Price Target: $345.00 ▲(11.87%Upside)

ADP's overall stock score reflects its strong financial performance and positive earnings call sentiment, balanced against mixed technical indicators and a relatively high valuation. The company's robust domestic growth and strategic initiatives are significant strengths, but international challenges could impact future performance.

Positive Factors

Financial Performance

Medium-term targets call for +6-7% y/y revenue growth, 50-75bps of adjusted EBIT margin expansion, and +9-11% y/y adjusted EPS growth.

Market Position

ADP's status as the largest provider of HCM technology in the world gives the company a wide advantage in training agentic functions due to the scale of its data asset.

Product Innovation

ADP highlighted its new ADP Assist AI product, which is being embedded across the product portfolio.

Negative Factors

Cybersecurity Risks

The occurrence of any disruptive cyber incidents could harm ADP’s business or damage its brand and reputation, leading to the loss of existing customers.

Economic Environment

Despite being impressed by the company's innovations, the uncertain unemployment and macroeconomic backdrop contributes to the maintenance of a neutral rating.

Market Competition

Intensifying competition could create downward pressure on product pricing and margins.

Automatic Data Processing Business Overview & Revenue Model

Company Description

Automatic Data Processing (ADP) is a leading provider of human resources management software and services. Headquartered in Roseland, New Jersey, ADP operates in sectors such as payroll, human resources, and benefits administration. The company offers a wide range of solutions tailored for businesses of all sizes, including payroll processing, talent management, tax and compliance services, and time and attendance solutions.

How the Company Makes Money

ADP generates revenue primarily through its comprehensive suite of human capital management solutions. The company's key revenue streams include fees from payroll processing, where ADP charges businesses for managing employee payrolls, and subscriptions to its HR management software. ADP also earns money through its benefits administration services, where it provides tools and services for managing employee benefits programs. Additionally, ADP gains revenue from tax and compliance services, assisting businesses in adhering to various regulatory requirements. The company engages in various partnerships to enhance its product offerings, such as collaborations with financial institutions for payroll-related services and integrations with other software providers. These partnerships, along with a broad client base across different industries, contribute significantly to ADP's earnings.

Automatic Data Processing Financial Statement Overview

Summary

ADP displays strong financial health with high profitability and efficient cash flow management. The income statement is robust with a net profit margin of 19.8% and revenue growth of 5.2%. The balance sheet reflects a reasonable debt-to-equity ratio of 0.73, though a low equity ratio of 10.4% suggests reliance on liabilities. Cash flow is strong, with a 25.8% growth in free cash flow.

Income Statement

ADP's income statement shows a robust financial performance with a strong Gross Profit Margin of 47.1% for TTM, indicating efficient cost management. The Net Profit Margin stands at 19.8%, reflecting profitability. Revenue growth is solid at 5.2% from the previous year, showcasing positive business momentum. EBITDA and EBIT margins are strong at 30.6% and 17.4%, respectively, signaling operational efficiency.

Balance Sheet

The balance sheet reveals a manageable Debt-to-Equity Ratio of 0.73, indicating balanced leverage. Return on Equity is impressive at 68.3%, highlighting effective use of shareholders' capital. However, the Equity Ratio is relatively low at 10.4%, suggesting a higher reliance on liabilities.

Cash Flow

ADP's cash flow statement demonstrates strong cash generation capabilities with a Free Cash Flow growth of 25.8% over the previous period. The Operating Cash Flow to Net Income Ratio is 1.2, indicating strong cash earnings. The Free Cash Flow to Net Income Ratio stands at 1.1, reflecting efficient cash conversion.

Breakdown	TTM	Jun 2024	Jun 2023	Jun 2022	Jun 2021	Jun 2020
Income Statement
Total Revenue	20.20B	19.20B	18.01B	16.50B	15.01B	14.59B
Gross Profit	9.51B	8.73B	8.06B	7.04B	6.37B	6.14B
EBITDA	6.18B	5.80B	5.24B	4.41B	3.93B	3.77B
Net Income	4.00B	3.75B	3.41B	2.95B	2.60B	2.47B
Balance Sheet
Total Assets	56.45B	54.36B	50.97B	63.07B	48.77B	39.17B
Cash, Cash Equivalents and Short-Term Investments	2.68B	2.91B	2.10B	1.47B	2.58B	1.91B
Total Debt	4.27B	3.71B	3.34B	3.49B	3.33B	2.35B
Total Liabilities	50.59B	49.82B	47.46B	59.84B	43.10B	33.41B
Stockholders Equity	5.86B	4.55B	3.51B	3.23B	5.67B	5.75B
Cash Flow
Free Cash Flow	4.52B	3.59B	3.64B	2.55B	2.59B	2.41B
Operating Cash Flow	4.80B	4.16B	4.21B	3.10B	3.09B	3.03B
Investing Cash Flow	-3.68B	-1.39B	-2.52B	-7.01B	-3.52B	3.16B
Financing Cash Flow	-13.03B	-1.43B	-15.68B	13.65B	6.44B	-5.89B

Automatic Data Processing Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 308.40
• 50DMA: Negative
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Neutral
• 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 308.4 is above the 20-day moving average (MA) of 307.93, below the 50-day MA of 310.55, and above the 200-day MA of 297.62, indicating a neutral trend. The MACD of -1.53 indicates Negative momentum. The RSI at 46.64 is Neutral, neither overbought nor oversold. The STOCH value of 74.91 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
KFY	78 Outperform	$3.81B	15.95	13.49%	2.62%	-1.23%	44.06%
ADP	73 Outperform	$125.19B	31.57	76.29%	2.00%	6.82%	9.03%
PAYX	71 Outperform	$52.47B	31.81	41.80%	2.94%	5.56%	-1.91%
TNET	63 Neutral	$3.47B	21.39	162.14%	1.53%	1.50%	-44.95%
RHI	61 Neutral	$4.21B	20.55	14.49%	5.73%	-7.81%	-40.22%
Sector *	58 Neutral	HK$13.89B	4.25	-3.01%	7.32%	3.67%	-54.16%
NSP	57 Neutral	$2.27B	36.45	48.65%	3.98%	1.90%	-60.33%

Automatic Data Processing Corporate Events

Automatic Data Processing Secures $7.05 Billion Credit Agreements

On June 27, 2025, Automatic Data Processing, Inc. entered into new credit agreements totaling $7.05 billion, replacing previous facilities. These agreements, which include a $4.55 billion 364-Day Facility and a $2.5 billion Five-Year Facility, are designed to enhance the company’s financial flexibility and support general corporate purposes. The new facilities, led by major financial institutions, offer revolving credit options and include terms similar to the previous agreements, with customary covenants and events of default. The agreements reflect ADP’s strategic financial management and its ongoing relationships with key lenders, potentially impacting its operational capabilities and market positioning.

The most recent analyst rating on (ADP) stock is a Sell with a $285.00 price target. To see the full list of analyst forecasts on Automatic Data Processing stock, see the ADP Stock Forecast page.

Automatic Data Processing to Host 2025 Investor Day

Automatic Data Processing, Inc. announced it will host its 2025 Investor Day on June 12, 2025, in New York, with a presentation starting at 9:00 am ET. The event will be webcast live on the company’s website, offering stakeholders insights into the company’s strategic direction and operational focus, potentially impacting its market positioning and investor relations.

The most recent analyst rating on (ADP) stock is a Sell with a $285.00 price target. To see the full list of analyst forecasts on Automatic Data Processing stock, see the ADP Stock Forecast page.

Automatic Data Processing Issues $1 Billion in Senior Notes

On May 5, 2025, Automatic Data Processing, Inc. entered into an Underwriting Agreement with major financial institutions to issue and sell $1 billion in senior notes due 2032, with a 4.750% interest rate. The issuance, registered with the SEC, reflects the company’s strategic financial maneuver to potentially strengthen its capital structure and support its operational growth.

ADP Appoints Peter J. Hadley as New CFO

On April 28, 2025, Automatic Data Processing, Inc. announced the appointment of Peter J. Hadley as Chief Financial Officer, effective July 1, 2025. Mr. Hadley, who has been with the company in various leadership roles since 2006, will succeed Don McGuire. This leadership change is expected to impact the company’s financial strategies and operations, as Mr. Hadley brings extensive experience from his previous roles within the company. His compensation package includes a base salary, bonuses, and participation in long-term incentive programs, reflecting the company’s commitment to aligning executive compensation with performance and shareholder interests.