Automatic Data Processing, Inc.
$227.75
-2.6%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-based platforms, and human resources (HR) outsourcing solutions. Its offerings include payroll, benefits administration, talent management, HR management, workforce management, insurance, retirement, and compliance services, as well as integrated HCM solutions. The PEO Services segment provides HR outsourcing solutions to small and mid-sized businesses through a co-employment model. This segment offers benefits package, protection and compliance, talent engagement, expertise, comprehensive outsourcing, and recruitment process outsourcing services. The company was founded in 1949 and is headquartered in Roseland, New Jersey.
At a Glance
Live SnapshotIntrinsic Alpha Methodology
Thesis Lenses
Signal
High confidenceValuation multiple is mid-range (P/E 22.7).
Valuation inputs: P/E 22.7, earnings yield +4.4%, momentum -2.6%.
If multiples stay elevated while momentum fades, downside repricing risk rises.
Driver
High confidenceReturn profile is strong (ROE +65.9%, ROIC +24.7%).
Profitability stack: net margin +19.8%, ROE +65.9%, ROIC +24.7%.
Quality deterioration often appears in margins before it shows up in headline EPS.
Risk
High confidenceRisk profile is balanced but has notable pressure points to monitor.
Risk factors: liabilities/assets +88.4%, momentum -2.6%, net margin +19.8%.
Higher leverage with weak momentum and thin margins can amplify drawdown severity.
Automatic Data Processing, Inc. Market vs Earnings Trajectory
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Automatic Data Processing, Inc. Fair Value Envelope
Automatic Data Processing, Inc. Profit Bridge
Profitability Analysis
Gross Margin
Exceptional pricing power and cost management. The company retains over half of revenue after direct costs.
Operating Margin
Outstanding operational efficiency. The company generates substantial profit from core operations.
Net Profit Margin
Strong net margins indicate efficient operations and favorable tax/interest management.
Effective Tax Rate
Moderate tax rate typical for most corporations. Represents standard tax burden on profits.
Profitability Insight
Exceptional profitability across all levels: Strong pricing power, efficient operations, and healthy bottom line indicate a high-quality business with sustainable competitive advantages.
Automatic Data Processing, Inc. Cash Conversion Engine
Cash Flow Quality Analysis
FCF Conversion Rate
Excellent cash generation. The company converts earnings to cash at or above 100%, indicating high-quality earnings.
CapEx Intensity
Asset-light business model. Low capital requirements leave more cash available for shareholders and growth investments.
FCF Growth Trend
Strong FCF growth demonstrates improving cash generation and business momentum. Positive signal for sustainability.
Working Capital Impact
Moderate working capital outflow. Typical for growing businesses, but ensure it's supporting revenue growth, not inefficiency.
Cash Flow Quality Insight
Exceptional cash generation: High-quality earnings converting to growing free cash flow. The company demonstrates strong pricing power, efficient operations, and disciplined capital allocation.
Automatic Data Processing, Inc. Funding & Solvency Profile
Financial Health Analysis
Current Ratio
Acceptable liquidity, but monitor closely. Current assets just barely cover current liabilities.
Debt-to-Equity Ratio
High financial leverage. Heavy reliance on debt may indicate increased financial risk and potential solvency concerns.
Working Capital
Positive working capital, but relatively tight. The company should monitor cash flow carefully.
Asset Composition
Asset-light business model with high liquidity. Majority of assets are easily convertible to cash.
Automatic Data Processing, Inc. Street Expectations Map
Wall Street analysts project that ADP stock may experience modest gains over the coming 12 months. The consensus 1-year price target stands at 243.63, with estimates ranging from a low of 190.00 to a high of 281.00.
The consensus 1-year price target stands at 243.63, with estimates ranging from a low of 190.00 to a high of 281.00.
Analyst Consensus Analysis
Upside Potential
Moderate upside. Analysts expect positive returns but with limited margin of safety. Consider entry timing.
Analyst Agreement
Good consensus alignment. Moderate target spread reflects general agreement on value drivers with some variance in assumptions.
Risk-Reward Profile
Balanced risk-reward. Upside and downside potential relatively symmetric. Suitable for moderate risk tolerance with conviction in thesis.
Analyst Conviction
Positive outlook with reasonable agreement. Analysts generally optimistic about prospects with manageable uncertainty.
Market Sentiment Insight
Monitor and evaluate: Current analyst consensus suggests limited conviction or near-term catalysts. Stay informed on company developments and reassess positioning as new information emerges.
Automatic Data Processing, Inc. Insider Positioning
During the last 12 months, insiders have purchased $746K and sold $27.05M worth of ADP shares, resulting in $26.30M of net selling activity.
3 Months
3.6K
745.69K
1.9K
399.36K
+346K
+$346K
3-6 Months
0
0.00
4.1K
1.02M
-1.0M
-$1.02M
6-9 Months
0
0.00
34.8K
10.32M
-10.3M
-$10.32M
9-12 Months
0
0.00
51.3K
15.32M
-15.3M
-$15.32M
Top Buyers
Swan Robert Holmes
Director
$746K
Top Sellers
Rodriguez Carlos A
Director
$12.70M
Mcguire Don
Officer: Corp Vp
$4.03M
Black Maria
Officer: President & Ceo
$2.96M
Bonarti Michael A
Officer: Corporate Vice President
$2.60M
Desilva Joseph
Officer: Executive Vp
$2.39M
Insider Activity Analysis
Net Insider Sentiment
Strong bearish signal with $26.30M net selling. Heavy insider selling may indicate concerns about valuation or near-term prospects.
Buy/Sell Ratio
Very poor ratio. Heavy selling with minimal buying suggests insiders may be concerned about valuation or outlook.
Recent Trend (3 Months)
Positive recent trend with net buying activity. Insiders have been accumulating shares in recent months.
Insider Participation
5 insider sellers vs. 1 buyers. Widespread selling across multiple insiders may signal concerns.
adp Dividend History
Learning Layer
Related Guides
Build conviction on ADP by pairing this stock hub with focused valuation guides.
Research Paths
Snapshot
Start with context, operating signals, and key market metrics.
Value Model
Stress test fair value across bear, base, and bull assumptions.
Statements
Validate revenue quality, margins, and balance sheet durability.
Earnings Call
Read management commentary and compare it with reported outcomes.
Dividends
Check payout sustainability and long-term distribution behavior.
Analyst Expectations
Review consensus spread and where estimate risk is concentrated.