ADP (ADP): Evaluating Valuation After Decision to Halt Jobs Data Share with the Fed

Automatic Data Processing (ADP) recently stopped sharing its private weekly jobs data with the Federal Reserve, removing a key tool the central bank has used to track employment trends more closely since 2018. The shift comes at a moment when the government shutdown means official labor statistics are already limited. This makes it more difficult for policymakers to gauge the current job market.

See our latest analysis for Automatic Data Processing.

While ADP's move to pull private employment data has added a layer of unpredictability for markets, its own performance has reflected a bit of that uncertainty as well. After a stellar multi-year run, delivering a 97% total shareholder return over five years and 23% over three, the past twelve months have been less rewarding, with a modest 1-year total return of -0.4%. Momentum has faded recently as the share price sits at $280.94, and investors are watching closely to see how external volatility and labor market shifts feed into ADP’s next chapter.

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With the stock now trading at a noticeable discount to analysts’ price targets, investors are left wondering if ADP is undervalued given its consistent earnings growth, or if the market has already accounted for all future gains.

Most Popular Narrative: 10.6% Undervalued

With Automatic Data Processing closing at $280.94 and the most widely followed narrative placing fair value near $314, the stage is set for a deeper dive into the assumptions behind this bullish outlook. Before drawing any conclusions, consider what’s underpinning this valuation perspective and why analysts are confident about ADP’s trajectory.

Ongoing investments in AI-driven automation (e.g., ADP Assist and proprietary agent development) are improving operational efficiency and reducing service costs. As these deployments mature, they are expected to deliver sustained net margin and earnings improvement over time.

Read the complete narrative.

What will really decide ADP’s future price? It all comes down to surprising margin improvements, bold global expansion, and one very ambitious profit target. The underlying numbers driving this fair value statement might defy your expectations. Take a closer look and see if you agree with what has analysts this optimistic.

Result: Fair Value of $314 (UNDERVALUED)

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

However, slowing U.S. payroll growth and increased competition could put pressure on ADP’s future revenue momentum and overall margin gains.

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

Build Your Own Automatic Data Processing Narrative

Keep in mind, you might see things differently or want to dig deeper into the data yourself. Anyone can craft a narrative in just a few minutes. Why not give it a try and 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.

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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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