A Look At Automatic Data Processing’s Valuation After Solid Q2 2026 Results And NER Pulse Job Gains

Automatic Data Processing (ADP) drew fresh attention after reporting fiscal Q2 2026 results that management described as solid, alongside NER Pulse data showing four straight weeks of strengthening U.S. private job gains.

See our latest analysis for Automatic Data Processing.

The solid Q2 update and ongoing NER Pulse job gains arrived after a 17.0% 30 day share price decline and a 29.7% one year total shareholder return drop, leaving longer term total shareholder return over five years at 36.2% and suggesting recent momentum has been under pressure.

If this payroll and HR story has you thinking about where else growth and resilience might show up, it could be worth scanning our 21 top founder-led companies as a fresh set of ideas.

With the shares down sharply over the past year, trading at a discount to some analyst targets and an indicated intrinsic value, the key question is whether ADP is now undervalued or if the market has already incorporated its future growth.

Most Popular Narrative: 44.7% Undervalued

According to the most followed narrative on ADP, a fair value of $387.77 per share sits well above the recent $214.25 close, framing the current pullback in a very different light.

ADP’s dominance in payroll and HR outsourcing gives it an enviable base: over 1 million clients worldwide, recurring revenue visibility, and industry-leading retention. But its traditional payroll processing services, while consistent, have matured.

Read the complete narrative. Read the complete narrative.

The fair value call leans heavily on assumptions about steady mid single digit revenue growth, firm margins and a premium earnings multiple. The model is based on the idea that ADP continues turning “boring” payroll into high value digital services. It also builds in a specific discount rate and profit profile that are not visible in the headline price chart. If you want to see exactly which assumptions are most influential in the valuation, the full narrative lays them out in detail.

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 assumptions that could break, including heavier than expected AI and infrastructure spending or slower demand for higher margin analytics and HR services.

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

Next Steps

If the mixed sentiment in this article has you weighing both sides, it is worth checking the underlying data yourself and making a call quickly. To see what optimism is already reflected in the story, take a look at the 5 key rewards.

Looking for more investment ideas?

If ADP has sharpened your focus, do not stop here. Broaden your watchlist now so you do not miss other compelling opportunities on your radar.

• Target income-focused ideas by scanning 15 dividend fortresses and see which companies currently combine robust payouts with resilience.
• Hunt for potential value by checking our 53 high quality undervalued stocks, built to surface companies where quality and pricing may not fully align.
• Prioritise capital preservation first and review the 80 resilient stocks with low risk scores to see which businesses score well on our risk framework.

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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