Automatic Data Processing, Inc.

Valuation Analysis

About the Company

Automatic Data Processing, Inc. provides cloud-based human capital management (HCM) solutions worldwide. It operates in two segments, Employer Services and Professional Employer Organization (PEO). The Employer Services segment offers strategic, cloud-based platforms, and human resources (HR) outsourcing solutions. This segment's offerings include RUN Powered by ADP, a software platform for small business payroll, HR, and compliance; ADP Workforce Now, a HCM solution used across mid-sized and large businesses to manage employees; and ADP Lyric HCM, a solution for HR management, payroll, workforce management, talent, and data analytics. The PEO Services segment provides HR and employment administration outsourcing solutions under ADP TotalSource name to businesses through a co-employment mo

Automatic Data Processing, Inc. Stock at a Glance

Automatic Data Processing, Inc. (ADP) is currently trading at $226.21 with a market capitalization of $90.4B. The trailing P/E ratio stands at 21.1x, with a forward P/E of 18.55x. The 52-week range spans from $188.16 to $315.98; the current price is 28.4% below the yearly high. Year-over-year revenue growth stands at +7.0%. The net profit margin stands at 20.12%.

💰 Dividend

Automatic Data Processing, Inc. pays an annual dividend of $6.80 per share, representing a yield of 3.01%. The payout ratio stands at 60.45%.

📊 Analyst Rating

15 analysts rate Automatic Data Processing, Inc. (ADP) on consensus: Hold. The average price target is $246.80, implying +9.1% from the current price. Analyst price targets range from $190.00 to $305.00.

Automatic Data Processing, Inc.: The Investment Case in Detail

Automatic Data Processing, Inc. (ADP) operates in the Technology — specifically Software - Application — and is headquartered in United States. Below is a structured read of the investment case built directly from the latest fundamentals, valuation multiples, analyst positioning and smart-money flows. Each section translates raw numbers into the investment logic they imply, so you can decide whether the risk/reward fits your portfolio.

The Bull Case

The combination of a 48.5% gross margin and 30.18% operating margin shows the business converts revenue into profit efficiently — a hallmark of competitive moat. Return on equity of 71.21% places management among the most capital-efficient operators in the public market — every euro of shareholder capital is working hard. Free cash flow is positive and net margins stand at 20.12%, meaning reported earnings translate into real cash that can fund buybacks, dividends or strategic acquisitions.

What to Watch Next

• The forward P/E of 18.55x is meaningfully below the trailing 21.1x — analysts expect earnings to step up; the next earnings release is the test.
• The dividend yield near 3.01% combined with a payout ratio of 60.45% leaves room for further hikes — a track record of consecutive raises is a strong income signal.

Investment Thesis: Strengths & Weaknesses

Technical Snapshot

The price is in a transition zone relative to the moving averages — no clear signal.

Risk Profile

The data points to relatively defensive market behavior.

Trading Data

💵 Dividend Info

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