One-glance verdict
Within fair range
$339.99 our estimate vs market $277.62
Wall Street consensus: $287.60 (-15.4% lower than our fair-value estimate)
18% below our estimate
Fundamentals snapshot
Automatic Data Processing, Inc.
ADP · NMS · Technology · Software - Application
Current price
$277.62
52-week range
$188.16 - $299.22
Market cap
$110.29B
Balance sheet
Healthy
12.58x Strong cushion
Net debt $1.28B. Interest coverage shows how many times profit covers the interest bill.
What stands out
3 Rewards
2 Risks
3 rewards · 2 risks
- Reward Revenue grew 6.7% last year.
- Reward Returns 72.2% on equity, ahead of 80% of its peers.
- Risk Insider ownership is only 0.2% (peer median: 10.4%).
- Risk Operating margin compressed from 25.0% to 23.5% over 3 years.
What this company does
Automatic Data Processing, Inc.
Automatic Data Processing (ADP) provides essential software and services that help businesses manage their employees, handling everything from payroll to human resources. The company makes most of its money from recurring fees (consistent payments from clients for ongoing services), as it's very difficult for a business to switch its core employee management system once it's set up. This reliance by customers creates a stable and predictable business for ADP.
How the company got here
Automatic Data Processing, Inc., known as ADP, started in 1949 as a small business that processed payroll (the system for paying a company's employees) by hand. A key moment came in 1957 when they began using early computers, which allowed them to handle payroll much faster and more accurately. Over the years, ADP grew by acquiring other companies and expanding its services beyond just payroll to include things like tax filing, benefits administration, and human resources (HR) support. They went public in 1961, meaning their shares became available for anyone to buy on the stock market, which helped fund their growth into a global provider of HR technology and services.
What it actually does
Think of ADP as a company that handles the behind-the-scenes paperwork and tasks related to having employees. For businesses of all sizes, from small startups to huge international corporations, ADP offers services like calculating and issuing paychecks, managing employee benefits like health insurance and retirement plans, and ensuring the business is following all the complex government rules about employment. Essentially, ADP provides software and services that let other companies outsource (hand off) their HR and payroll tasks, so those companies can focus on their own main business.
Employer Services
This is ADP's largest business segment, making up a majority of its revenue. It provides a wide range of cloud-based software and services that help businesses manage their workforce. Companies pay ADP subscription fees to use their platforms for tasks like running payroll, tracking employees' hours, managing benefits, and staying compliant with tax laws. This segment serves a huge range of customers, from small businesses with just a few employees to very large corporations.
Professional Employer Organization (PEO)
This segment, which operates under the brand name ADP TotalSource, offers a more all-inclusive service for small and mid-sized businesses. Through a co-employment model, ADP legally becomes a partner employer, taking on the full responsibility for HR administration, including payroll, benefits, and compliance with workplace laws. This allows smaller companies to offer their employees the kind of high-quality benefits that are usually only available at large corporations. This segment is a smaller but significant part of ADP's overall business.
What management is betting on now
ADP's leadership is focused on using technology, especially artificial intelligence (AI), to make their HR and payroll solutions smarter and more efficient for their clients. They are also concentrating on expanding their services globally to serve multinational corporations. A key part of their strategy is to continue bundling more services around their core payroll offering, encouraging clients to use ADP for a wider range of human capital management needs. By providing unmatched expertise and outsourcing options, they aim to become an indispensable partner for businesses of all sizes.
Price history
How the share price has moved
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Earnings history
Last 8 quarters — what happened
Click any quarter to read the call summary and what the numbers say.
Revenue
$5.47B
Net income
$978.70M
Diluted EPS
2.45
Operating cash flow
$1.43B
Free cash flow
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Sources
Revenue
$5.94B
Net income
$1.36B
Diluted EPS
3.38
Operating cash flow
$2.24B
Free cash flow
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Sources
Revenue
$5.36B
Net income
$1.06B
Diluted EPS
2.62
Operating cash flow
$1.13B
Free cash flow
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Revenue
$5.18B
Net income
$1.01B
Diluted EPS
2.49
Operating cash flow
$642.30M
Free cash flow
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Revenue
$5.13B
Net income
$910.70M
Diluted EPS
2.23
Operating cash flow
$1.44B
Free cash flow
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Revenue
$5.55B
Net income
$1.25B
Diluted EPS
3.06
Operating cash flow
$1.53B
Free cash flow
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Revenue
$5.05B
Net income
$963.20M
Diluted EPS
2.35
Operating cash flow
$1.15B
Free cash flow
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Revenue
$4.83B
Net income
$956.30M
Diluted EPS
2.34
Operating cash flow
$824.40M
Free cash flow
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Is it cheap or expensive?
Fair value $339.99 vs current price $277.62
Wall Street consensus is the average analyst price target: $287.60 (-15.4% lower than our fair-value estimate).
Our most-likely fair value is $339.99 a share — about 22.5% away from today's price of $277.62, so the stock currently looks fairly priced.
Is it drowning in debt?
Healthy
Net debt $1.3B. Interest coverage 12.6x.
Net debt
$1.28B
Interest coverage
12.58x
Automatic Data Processing, Inc.'s profit covers its interest bill about 12.6 times over. which is stronger than most peers shown here.
Healthy
Worse cushion
Baseline
Better cushion
ADP
BASELINE
Automatic Data Processing, Inc.
Total debt $5.51B Interest coverage 12.58x This is the baseline the peer rows are being compared against.
Total debt $4.63B Interest coverage 9.32x -26% vs ADP Carries about 1.4x less debt cushion than ADP.
Total debt $3.77B Interest coverage 8.98x -29% vs ADP Carries about 1.4x less debt cushion than ADP.
Total debt $982.80M Interest coverage 166.82x +1,226% vs ADP Carries about 13.3x more debt cushion than ADP.
Total debt $167.43B Interest coverage 4.88x -61% vs ADP Carries about 2.6x less debt cushion than ADP.
Total debt $8.34B Interest coverage 19.99x +59% vs ADP Carries about 1.6x more debt cushion than ADP.
What you should know
The case for and against ADP
3 Rewards
2 Risks
Rewards
-
Revenue grew 6.7% last year.
-
Returns 72.2% on equity, ahead of 80% of its peers.
-
Free cash flow was positive in 4/10 years.
Risks
-
Insider ownership is only 0.2% (peer median: 10.4%).
-
Operating margin compressed from 25.0% to 23.5% over 3 years.
The numbers
All the key metrics, grouped by purpose
Tap any ? icon to learn what it means.
Valuation
How expensive the stock looks
P/E (TTM)
25.38x
Forward P/E
20.72x
P/B
18.31x
P/S
5.03x
EV/EBITDA
17.40x
PEG ratio
2.58x
Profitability
How much profit each dollar creates
Gross margin
48.7%
Operating margin
23.5%
Net margin
20.1%
ROE
72.2%
ROA
6.2%
Health
Liquidity and balance-sheet strength
Debt / equity
0.91x
Current ratio
1.05x
Quick ratio
0.15x
Total debt
$5.51B
Total cash
$4.23B
Growth
How the business has been compounding
Revenue TTM
$21.95B
Revenue 5Y CAGR
7.4%
EPS TTM
10.94
EPS 5Y CAGR
12.5%
Cash flow
How much cash the business throws off
Operating CF TTM
$5.44B
Free CF TTM
$4.78B
FCF margin
21.8%
Dividend
Shareholder payout
Yield
2.5%
Payout ratio
60.7%
Last ex-div date
2026-09-11