Assessing Automatic Data Processing (ADP) Valuation After Recent Share Price Weakness

Automatic Data Processing (ADP) has drawn fresh attention after recent share price pressure, with the stock down about 5% over the past month and roughly 17% over the past year on a total return basis.

See our latest analysis for Automatic Data Processing.

At a share price of US$245.97, Automatic Data Processing’s recent 1-day and 7-day share price declines add to a softer 30-day trend, while the 1-year total shareholder return decline of 17.09% contrasts with positive 3-year and 5-year total returns. This suggests that momentum has cooled after a stronger multi year period and that investors are reassessing growth prospects and risk.

If ADP’s recent pullback has you rethinking your watchlist, this could be a useful moment to look beyond payroll and HR and check out fast growing stocks with high insider ownership.

With the shares under pressure, yet trading at an implied discount to some valuation estimates, the key question now is whether ADP is quietly undervalued or if the current price already reflects its future growth potential?

Most Popular Narrative: 36.6% Undervalued

According to one of the most followed narratives on Automatic Data Processing, a fair value of $387.77 versus the last close at $245.97 points to a sizeable gap in how future cash flows are being priced today.

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.

Curious what sits behind that valuation gap? This narrative focuses on factors such as steady growth in HR cloud platforms, resilient margins and a future profit multiple that reflects ADP’s role as critical workforce infrastructure rather than a typical software name.

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 a few things that could challenge this undervalued story, including slower adoption of ADP’s newer platforms or rising competition in HR software.

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

Build Your Own Automatic Data Processing Narrative

If you see the data differently or prefer to piece together your own view, you can build a personalised Automatic Data Processing thesis in minutes 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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