Automatic Data Processing (ADP) Earnings Put Its Valuation Back In Focus

Automatic Data Processing (ADP) reported fourth quarter and full year results on 29 July 2026, giving investors fresh detail on revenue, earnings per share and net income across its human capital management operations.

See our latest analysis for Automatic Data Processing.

Automatic Data Processing’s recent earnings release has coincided with stronger share price momentum, with a 24.39% 90 day share price return and a softer 1 year total shareholder return, which together suggest sentiment has improved in the short term.

If ADP’s move has you thinking more broadly about opportunities, this is a good moment to broaden your search with 18 top founder-led companies

The recent jump in Automatic Data Processing’s share price sits between a modest discount to analyst targets and an implied premium on some fair value models. So where does a reasonable value range actually fall for ADP now?

Most Popular Narrative: 3.5% Overvalued

Automatic Data Processing closed at $266.46, which sits above the most widely followed fair value estimate of about $257.53 that uses a 7.43% discount rate.

Adoption of Next Gen products (such as Lyric HCM and Workforce Now Next Gen) and integration of acquisitions (for example, WorkForce Software) are accelerating demand for advanced, cloud-based, and AI-driven HR solutions, directly locking in higher average revenue per user and supporting earnings growth through margin expansion.

Read the complete narrative.

Want to see what sits behind that fair value for Automatic Data Processing? The narrative leans on steady top line gains, firmer margins and a richer future earnings multiple. The exact mix of revenue growth, profitability and valuation assumptions may surprise you.

Result: Fair Value of $257.53 (OVERVALUED)

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

However, investors also need to weigh softer bookings trends and rising zero margin PEO pass through revenues, which could put pressure on Automatic Data Processing’s growth and profitability narrative.

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

Another View on Automatic Data Processing’s Valuation

While the current fair value narrative suggests Automatic Data Processing is about 3.5% overvalued, the P/E picture is less one sided. ADP trades at 24x earnings compared with a 21.6x industry average and a peer average of 20.8x, yet the fair ratio sits higher at 26.2x. That gap points to richer pricing than peers but also some scope for the market to move closer to the fair ratio over time. The key question is how much valuation risk you are comfortable carrying here.

See what the numbers say about this price — find out in our valuation breakdown.

Next Steps

With sentiment on Automatic Data Processing looking mixed, this is a good moment to review the facts yourself and act promptly while the information is fresh. To understand what the market is optimistic about, start by reviewing the 3 key rewards

Looking for more investment ideas beyond Automatic Data Processing?

If ADP has sharpened your focus, do not stop here. Use fresh ideas from curated stock lists to pressure test your portfolio and spot opportunities you might otherwise miss.

• Strengthen your focus on quality by reviewing companies in the solid balance sheet and fundamentals stocks screener (45 results) that pair resilient finances with clear fundamentals.
• Target potential value opportunities by scanning the 55 high quality undervalued stocks that bring together strong balance sheets and attractive pricing.
• Hunt for future standouts by searching the screener containing 19 high quality undiscovered gems that highlight lesser known stocks with solid underlying metrics.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com