Automatic Data Processing, Inc.

NasdaqGS:ADP Stock Report

Market Cap: US$121.3b

Automatic Data Processing Valuation

Is ADP undervalued compared to its fair value, analyst forecasts and its price relative to the market?

Valuation Score

3/6

Valuation Score 3/6

  • Below Fair Value

  • Significantly Below Fair Value

  • Price-To-Earnings vs Peers

  • Price-To-Earnings vs Industry

  • Price-To-Earnings vs Fair Ratio

  • Analyst Forecast

Share Price vs Fair Value

What is the Fair Price of ADP when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.

Below Fair Value: ADP ($297.89) is trading below our estimate of fair value ($352.23)

Significantly Below Fair Value: ADP is trading below fair value, but not by a significant amount.

Key Valuation Metric

Which metric is best to use when looking at relative valuation for ADP?

Key metric: As ADP is profitable we use its Price-To-Earnings Ratio for relative valuation analysis.

The above table shows the Price to Earnings ratio for ADP. This is calculated by dividing ADP's market cap by their current earnings.
What is ADP's PE Ratio?
PE Ratio31.5x
EarningsUS$3.85b
Market CapUS$121.28b

Price to Earnings Ratio vs Peers

How does ADP's PE Ratio compare to its peers?

The above table shows the PE ratio for ADP vs its peers. Here we also display the market cap and forecasted growth for additional consideration.
CompanyForward PEEstimated GrowthMarket Cap
Peer Average32.8x
PAYX Paychex
30x6.3%US$51.5b
PAYC Paycom Software
26x2.4%US$12.3b
PCTY Paylocity Holding
49.1x14.9%US$11.0b
RHI Robert Half
26.2x17.3%US$7.5b
ADP Automatic Data Processing
31.5x6.5%US$121.3b

Price-To-Earnings vs Peers: ADP is good value based on its Price-To-Earnings Ratio (31.5x) compared to the peer average (32.8x).

Price to Earnings Ratio vs Industry

How does ADP's PE Ratio compare vs other companies in the US Professional Services Industry?

10 CompaniesPrice / EarningsEstimated GrowthMarket Cap
CNDT Conduent
1.4x-104.3%US$626.77m
CIH China Index Holdings
3.5xn/aUS$87.15m
ALJJ ALJ Regional Holdings
0.7xn/aUS$70.26m
STCN Steel Connect
2.9xn/aUS$62.85m
ADP 31.5xIndustry Avg. 23.8xNo. of Companies17PE01632486480+
10 CompaniesEstimated GrowthMarket Cap
No more companies

Price-To-Earnings vs Industry: ADP is expensive based on its Price-To-Earnings Ratio (31.5x) compared to the US Professional Services industry average (23.8x).

Price to Earnings Ratio vs Fair Ratio

What is ADP's PE Ratio compared to its Fair PE Ratio? This is the expected PE Ratio taking into account the company's forecast earnings growth, profit margins and other risk factors.

ADP PE Ratio vs Fair Ratio.
Fair Ratio
Current PE Ratio31.5x
Fair PE Ratio35.2x

Price-To-Earnings vs Fair Ratio: ADP is good value based on its Price-To-Earnings Ratio (31.5x) compared to the estimated Fair Price-To-Earnings Ratio (35.2x).

Analyst Price Targets

What is the analyst 12-month forecast and do we have any statistical confidence in the consensus price target?

The above table shows the analyst ADP forecast and predictions for the stock price in 12 month’s time.
DateShare PriceAverage 1Y Price TargetDispersionHighLow1Y Actual priceAnalysts
CurrentUS$297.89
US$297.67
-0.07%
4.4%US$325.00US$280.00n/a15
Nov ’25US$288.18
US$296.92
+3.0%
4.3%US$325.00US$280.00n/a13
Oct ’25US$280.08
US$276.73
-1.2%
4.6%US$310.00US$260.00n/a16
Sep ’25US$275.91
US$274.55
-0.5%
4.5%US$310.00US$260.00n/a16
Aug ’25US$261.30
US$267.63
+2.4%
4.4%US$287.00US$238.00n/a17
Jul ’25US$235.67
US$259.33
+10.0%
4.6%US$282.00US$238.00n/a17
Jun ’25US$244.92
US$259.33
+5.9%
4.6%US$282.00US$238.00n/a17
May ’25US$247.33
US$258.90
+4.7%
4.4%US$280.00US$238.00n/a18
Apr ’25US$245.31
US$257.34
+4.9%
5.2%US$280.00US$235.00n/a18
Mar ’25US$249.69
US$256.51
+2.7%
5.4%US$280.00US$227.00n/a18
Feb ’25US$247.08
US$252.80
+2.3%
5.5%US$280.00US$227.00n/a17
Jan ’25US$232.97
US$246.98
+6.0%
6.8%US$280.00US$217.00n/a18
Dec ’24US$232.94
US$246.98
+6.0%
6.8%US$280.00US$217.00n/a18
Nov ’24US$210.37
US$248.55
+18.2%
6.9%US$280.00US$217.00US$288.1817
Oct ’24US$240.58
US$258.38
+7.4%
6.9%US$285.00US$225.00US$280.0817
Sep ’24US$255.75
US$257.69
+0.8%
6.8%US$285.00US$225.00US$275.9118
Aug ’24US$248.32
US$253.67
+2.2%
6.2%US$285.00US$225.00US$261.3018
Jul ’24US$219.79
US$230.33
+4.8%
8.8%US$275.00US$176.00US$235.6718
Jun ’24US$211.81
US$230.59
+8.9%
8.8%US$275.00US$180.00US$244.9217
May ’24US$221.12
US$231.76
+4.8%
9.1%US$275.00US$180.00US$247.3317
Apr ’24US$222.63
US$243.71
+9.5%
6.5%US$278.00US$213.00US$245.3117
Mar ’24US$219.56
US$245.18
+11.7%
6.6%US$278.00US$213.00US$249.6917
Feb ’24US$226.73
US$245.18
+8.1%
6.6%US$278.00US$213.00US$247.0817
Jan ’24US$238.86
US$250.76
+5.0%
8.1%US$285.00US$213.00US$232.9717
Dec ’23US$267.95
US$248.88
-7.1%
7.4%US$280.00US$213.00US$232.9417
Nov ’23US$243.64
US$247.76
+1.7%
7.0%US$280.00US$213.00US$210.3717

Analyst Forecast: Target price is lower than the current share price.

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