Stock Analysis

Is Now An Opportune Moment To Examine Automatic Data Processing, Inc. (NASDAQ:ADP)?

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NasdaqGS:ADP
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Let's talk about the popular Automatic Data Processing, Inc. (NASDAQ:ADP). The company's shares received a lot of attention from a substantial price movement on the NASDAQGS over the last few months, increasing to US$248 at one point, and dropping to the lows of US$196. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether Automatic Data Processing's current trading price of US$200 reflective of the actual value of the large-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Automatic Data Processing’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

Check out our latest analysis for Automatic Data Processing

What's the opportunity in Automatic Data Processing?

Good news, investors! Automatic Data Processing is still a bargain right now. My valuation model shows that the intrinsic value for the stock is $269.57, but it is currently trading at US$200 on the share market, meaning that there is still an opportunity to buy now. Another thing to keep in mind is that Automatic Data Processing’s share price may be quite stable relative to the rest of the market, as indicated by its low beta. This means that if you believe the current share price should move towards its intrinsic value over time, a low beta could suggest it is not likely to reach that level anytime soon, and once it’s there, it may be hard to fall back down into an attractive buying range again.

Can we expect growth from Automatic Data Processing?

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NasdaqGS:ADP Earnings and Revenue Growth February 18th 2022

Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company's future expectations. With profit expected to grow by 29% over the next couple of years, the future seems bright for Automatic Data Processing. It looks like higher cash flow is on the cards for the stock, which should feed into a higher share valuation.

What this means for you:

Are you a shareholder? Since ADP is currently undervalued, it may be a great time to increase your holdings in the stock. With a positive outlook on the horizon, it seems like this growth has not yet been fully factored into the share price. However, there are also other factors such as capital structure to consider, which could explain the current undervaluation.

Are you a potential investor? If you’ve been keeping an eye on ADP for a while, now might be the time to make a leap. Its buoyant future outlook isn’t fully reflected in the current share price yet, which means it’s not too late to buy ADP. But before you make any investment decisions, consider other factors such as the strength of its balance sheet, in order to make a well-informed investment decision.

Diving deeper into the forecasts for Automatic Data Processing mentioned earlier will help you understand how analysts view the stock going forward. So feel free to check out our free graph representing analyst forecasts.

If you are no longer interested in Automatic Data Processing, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

What are the risks and opportunities for Automatic Data Processing?

Automatic Data Processing, Inc. provides cloud-based human capital management solutions worldwide.

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Rewards

  • Earnings are forecast to grow 8.1% per year

  • Earnings grew by 14.7% over the past year

Risks

  • Has a high level of debt

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Automatic Data Processing

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