A Fresh Look at ADP's (ADP) Valuation as Shares Hold Steady

Automatic Data Processing (ADP) has seen its stock drift lately, finishing the last session at $291.31. While there hasn't been any major news moving the stock, it is a good time to look at how shares are valued today.

See our latest analysis for Automatic Data Processing.

ADP’s share price has stayed steady recently, but zooming out, the story is one of reliable long-term wealth creation. Over the past year, total shareholder return reached 5.4%, with a robust 36% over three years and a standout 114% over five years. Even though recent momentum has cooled, these numbers point to a business that continues to reward patient investors.

If you’re in the mood to broaden your approach, now is a great moment to discover fast growing stocks with high insider ownership

With ADP trading about 9% below analyst price targets and nearly 25% under intrinsic value estimates, the numbers suggest there could be value left to unlock. The question remains: is this a buying window, or is future growth already priced in?

Most Popular Narrative: 8.4% Undervalued

Investors looking at ADP’s last close of $291.31 may notice the most popular narrative sets fair value at $318.17. This suggests a notable gap that could reflect upside. With market sentiment holding steady, all eyes turn to the underlying drivers behind this target.

Adoption of Next Gen products (like Lyric HCM and Workforce Now Next Gen) and integration of acquisitions (e.g., WorkForce Software) are accelerating demand for advanced, cloud-based, and AI-driven HR solutions. This directly locks in higher average revenue per user and supports earnings growth through margin expansion.

Read the complete narrative.

Curious what powers this bullish price? The answer is not just about new technology. The narrative’s fair value rests on bold forecasts for faster product adoption, shifting profit margins, and a future multiple usually reserved for industry leaders. Tempted to see which financial levers drive this view? Dive into the full story to discover the surprise assumptions underpinning these high expectations.

Result: Fair Value of $318.17 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, persistent competitive pressure from SaaS-native rivals and slower than expected new business bookings could quickly challenge this thesis if trends worsen.

Find out about the key risks to this Automatic Data Processing narrative.

Build Your Own Automatic Data Processing Narrative

If you think there’s a different story to tell, or you’d rather dig into the numbers on your own terms, you can build your own in just a few minutes. Do it your way

A great starting point for your Automatic Data Processing research is our analysis highlighting 4 key rewards and 1 important warning sign that could impact your investment decision.

Looking for More Investment Ideas?

Smart investors never stop searching for new winners. Get ahead of the crowd and unlock your next opportunity using these handpicked stock screens from Simply Wall Street:

• Uncover hidden value by targeting these 887 undervalued stocks based on cash flows, which is packed with companies showing strong cash flow potential and trading well below their true worth.
• Capture steady income and reliable returns by exploring these 19 dividend stocks with yields > 3%, featuring high-yield stocks with solid track records.
• Jump into the rapidly expanding world of AI innovation with these 25 AI penny stocks, which could shape the next generation of technological breakthroughs.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com