Revisiting ADP (ADP) Valuation After Recent Share Price Weakness

Automatic Data Processing (ADP) has quietly lagged the market this year, with the stock down about 11% year to date despite steady revenue and earnings growth. That disconnect is where the investment debate starts.

See our latest analysis for Automatic Data Processing.

At around $257 per share, ADP’s recent 7 day share price return of just over 1% barely dents the roughly 15% three month share price pullback. Even though long term total shareholder returns remain solid, this suggests momentum has cooled rather than broken.

If ADP’s steady compounder profile appeals to you, it could be worth widening the lens and searching for other dependable compounders via fast growing stocks with high insider ownership.

With ADP still growing earnings and trading below analyst targets despite its pullback, investors face a key question: is the recent weakness a mispricing that opens a buying window, or is the market already discounting future gains?

Most Popular Narrative Narrative: 33.7% Undervalued

With Automatic Data Processing closing at $257.18 against a narrative fair value near $387.77, the gap points to a sizable upside if assumptions hold.

The company’s AI strategy focuses on anomaly detection, predictive analytics, and workflow automation, features that help HR practitioners manage talent, compliance, and performance more efficiently. Marshall adds, “The AI and analytics investments at ADP function as a margin protection system because they enable HR practitioners to detect anomalies and gain strategic insights while automating their work.”

Read the complete narrative.

According to yiannisz, the real story here is how modest headline growth, rich margins, and a confident profit multiple combine into one surprisingly aggressive valuation blueprint.

Result: Fair Value of $387.77 (UNDERVALUED)

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

However, slowing macro conditions or execution missteps on costly AI investments could compress margins and prompt investors to reassess that optimistic valuation path.

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

Build Your Own Automatic Data Processing Narrative

If you see the story differently or simply prefer digging into the numbers yourself, you can build a personalised view in just minutes: 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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