A Look At Automatic Data Processing’s Valuation After Q2 Earnings Beat And US$6b Buyback Announcement

Automatic Data Processing (ADP) is back in focus after fiscal Q2 2026 results beat analyst revenue and adjusted EPS forecasts. However, the stock reaction has been shaped by insider selling and a new US$6b buyback announcement.

See our latest analysis for Automatic Data Processing.

Despite the Q2 beat and new US$6b buyback, recent sentiment shifts and insider selling have coincided with a 30 day share price return decline of 17.95% and a 1 year total shareholder return decline of 29.64%, signaling pressure rather than momentum for now.

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With ADP trading at a discount to analyst targets and peer comparisons suggesting it may be undervalued, the question now is whether recent weakness is a temporary reset or if the market is already accounting for future growth.

Most Popular Narrative: 45.3% Undervalued

According to the most followed narrative on Automatic Data Processing, the fair value sits at $387.77 per share versus the last close of $212.11, framing a wide valuation gap that hinges on how durable its payroll and HR infrastructure really is.

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.

Want to see how this fairness estimate is built? The narrative leans heavily on steady revenue progress, firm margins, and a future profit multiple more typical of faster growing tech platforms. Curious which specific growth and profitability assumptions justify that gap to $387.77, and how they stack against current forecasts and recent results? The full narrative lays out the math behind that conviction.

Result: Fair Value of $387.77 (UNDERVALUED)

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

However, this hinges on ADP containing margin pressure from AI and tech spend and avoiding stronger share losses to lower cost or more specialised payroll rivals.

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

Build Your Own Automatic Data Processing Narrative

If you are not fully on board with this story or simply prefer to test the assumptions yourself, you can build a personalized view in just a few minutes, starting with Do it your way.

A good starting point is our analysis highlighting 5 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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