A Look At Automatic Data Processing (ADP) Valuation After Softer Payroll Report And Solid Earnings

Interest in Automatic Data Processing (ADP) has picked up after its private payroll report showed softer job creation than economists expected, while the company delivered solid quarterly earnings and introduced new AI-powered ADP Assist agents.

See our latest analysis for Automatic Data Processing.

Despite solid earnings and the launch of ADP Assist, the share price has come under pressure, with a 30 day share price return of 10.39% and a year to date share price return of 7.47%, while the 1 year total shareholder return of 22.59% contrasts with total shareholder returns of 11.64% over three years and 55.62% over five years. This hints that momentum has recently faded after a stronger longer term run.

If this mix of softer near term share price performance and long term compounding has you thinking about where else capital could work, take a look at 22 top founder-led companies as a way to uncover other compelling businesses.

With ADP shares down over the past year despite revenue and net income growth, and the stock trading at a reported 47% intrinsic discount and roughly 20% below analyst targets, the key question is whether this is a reset that creates an opening for new buyers or a sign that the market is already baking in slower future growth.

Most Popular Narrative: 39.7% Undervalued

According to a widely followed narrative on Simply Wall St, Automatic Data Processing's fair value is set at $387.77 per share versus the last close of $233.99, which frames the current weakness as a potential valuation gap rather than a permanent reset.

Automatic Data Processing, Inc. (NASDAQ: ADP) remains one of the most reliable pillars in human capital management, blending predictable cash flows with an expanding suite of digital HR solutions. Yet, as the market increasingly values companies for innovation rather than legacy reliability, ADP finds itself at a crossroads between stability and transformation.

Read the complete narrative.

According to yiannisz, this fair value leans heavily on steady revenue growth, resilient profit margins and a future earnings multiple that treats ADP more like a core tech utility rather than a low growth back office provider. Curious how those pieces fit together and what has to happen to justify that upside gap? The full narrative lays out the playbook behind that $387.77 figure.

Result: Fair Value of $387.77 (UNDERVALUED)

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

However, there are still clear risks, including slower adoption of ADP’s AI tools or heavier than expected technology spending that continues to pressure margins and sentiment.

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

Build Your Own Automatic Data Processing Narrative

If you see the numbers differently, or prefer to verify the data yourself, you can form your own view in minutes by starting with Do it your way.

A good starting point is our analysis highlighting 4 key rewards investors are optimistic about regarding Automatic Data Processing.

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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.

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