Stock Analysis Report

Automatic Data Processing

Executive Summary

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


Trading at 34.3% below its fair value

Earnings are forecast to grow 11.35% per year

Earnings grew by 19.8% over the past year

Pays a high and reliable dividend of 1.85%

Risk Analysis

Has a high level of debt

Snowflake Analysis

Solid track record established dividend payer.

Similar Companies

Share Price & News

How has Automatic Data Processing's share price performed over time and what events caused price changes?

Latest Share Price and Events

Stable Share Price: ADP has not had significant price volatility in the past 3 months.

Market Performance

7 Day Return






US Market

1 Year Return






US Market

Return vs Industry: ADP underperformed the US IT industry which returned 39.9% over the past year.

Return vs Market: ADP exceeded the US Market which returned 24.7% over the past year.

Shareholder returns

7 Day1.7%1.1%-0.09%
30 Day4.7%7.5%3.1%
90 Day9.8%14.9%10.4%
1 Year34.7%32.0%41.8%40.3%26.6%23.9%
3 Year85.6%74.3%110.2%101.1%50.9%41.2%
5 Year135.7%110.8%159.8%136.9%78.1%58.5%

Price Volatility Vs. Market

How volatile is Automatic Data Processing's share price compared to the market and industry in the last 5 years?

Simply Wall St News


Is Automatic Data Processing undervalued compared to its fair value and its price relative to the market?


Undervalued compared to fair value

Share Price vs. Fair Value

Below Fair Value: ADP ($171.23) is trading below our estimate of fair value ($260.56)

Significantly Below Fair Value: ADP is trading below fair value by more than 20%.

Price To Earnings Ratio

PE vs Industry: ADP is good value based on its PE Ratio (32.6x) compared to the IT industry average (32.7x).

PE vs Market: ADP is poor value based on its PE Ratio (31.4x) compared to the US market (18.9x).

Price to Earnings Growth Ratio

PEG Ratio: ADP is poor value based on its PEG Ratio (2.8x)

Price to Book Ratio

PB vs Industry: ADP is overvalued based on its PB Ratio (13.8x) compared to the US IT industry average (4.2x).

Next Steps

Future Growth

How is Automatic Data Processing forecast to perform in the next 1 to 3 years based on estimates from 16 analysts?


Forecasted annual earnings growth

Earnings and Revenue Growth Forecasts

Analyst Future Growth Forecasts

Earnings vs Savings Rate: ADP's forecast earnings growth (11.4% per year) is above the savings rate (1.7%).

Earnings vs Market: ADP's earnings (11.4% per year) are forecast to grow slower than the US market (14.3% per year).

High Growth Earnings: ADP's earnings are forecast to grow, but not significantly.

Revenue vs Market: ADP's revenue (6.4% per year) is forecast to grow slower than the US market (7.5% per year).

High Growth Revenue: ADP's revenue (6.4% per year) is forecast to grow slower than 20% per year.

Earnings per Share Growth Forecasts

Future Return on Equity

Future ROE: ADP's Return on Equity is forecast to be high in 3 years time (36.5%)

Next Steps

Past Performance

How has Automatic Data Processing performed over the past 5 years?


Historical annual earnings growth

Earnings and Revenue History

Quality Earnings: ADP has high quality earnings.

Growing Profit Margin: ADP's current net profit margins (16.5%) are higher than last year (14.6%).

Past Earnings Growth Analysis

Earnings Trend: ADP's earnings have grown by 11.5% per year over the past 5 years.

Accelerating Growth: ADP's earnings growth over the past year (19.8%) exceeds its 5-year average (11.5% per year).

Earnings vs Industry: ADP earnings growth over the past year (19.8%) exceeded the IT industry 16.2%.

Return on Equity

High ROE: Whilst ADP's Return on Equity (44.21%) is outstanding, this metric is skewed due to their high level of debt.

Return on Assets

Return on Capital Employed

Next Steps

Financial Health

How is Automatic Data Processing's financial position?

Financial Position Analysis

Short Term Liabilities: ADP's short term assets ($29.5B) exceed its short term liabilities ($29.2B).

Long Term Liabilities: ADP's short term assets ($29.5B) exceed its long term liabilities ($3.2B).

Debt to Equity History and Analysis

Debt Level: ADP's debt to equity ratio (111.4%) is considered high.

Reducing Debt: ADP's debt to equity ratio has increased from 33.1% to 111.4% over the past 5 years.

Debt Coverage: ADP's debt is well covered by operating cash flow (49.8%).

Interest Coverage: ADP's interest payments on its debt are well covered by EBIT (96.6x coverage).

Balance Sheet

Inventory Level: ADP has a low level of unsold assets or inventory.

Debt Coverage by Assets: ADP's debt is covered by short term assets (assets are 4.9x debt).

Next Steps


What is Automatic Data Processing's current dividend yield, its reliability and sustainability?


Current Dividend Yield

Upcoming Dividend Payment

Purchase Automatic Data Processing before the 'Buy Limit' to receive their next dividend payment.

Dividend Yield vs Market


Current dividend yield vs market & industry

Notable Dividend: ADP's dividend (1.85%) is higher than the bottom 25% of dividend payers in the US market (1.4%).

High Dividend: ADP's dividend (1.85%) is low compared to the top 25% of dividend payers in the US market (3.66%).

Stability and Growth of Payments

Stable Dividend: ADP's dividends per share have been stable in the past 10 years.

Growing Dividend: ADP's dividend payments have increased over the past 10 years.

Current Payout to Shareholders

Dividend Coverage: With its reasonable payout ratio (57.9%), ADP's dividend payments are covered by earnings.

Future Payout to Shareholders

Future Dividend Coverage: ADP's dividends in 3 years are forecast to be covered by earnings (50.9% payout ratio).

Next Steps


What is the CEO of Automatic Data Processing's salary, the management and board of directors tenure and is there insider trading?


Average management tenure


Carlos Rodriguez (55yo)





Mr. Carlos A. Rodriguez has been the Chief Executive Officer of Automatic Data Processing, Inc. since November 8, 2011 and has been its President since May 2011. Mr. Rodriguez served as the Chief Operating ...

CEO Compensation Analysis

Compensation vs Market: Carlos's total compensation ($USD19.00M) is above average for companies of similar size in the US market ($USD10.76M).

Compensation vs Earnings: Carlos's compensation has increased by more than 20% in the past year.

Management Age and Tenure


Average Tenure


Average Age

Experienced Management: ADP's management team is considered experienced (3 years average tenure).

Board Age and Tenure


Average Tenure


Average Age

Experienced Board: ADP's board of directors are considered experienced (7.1 years average tenure).

Insider Trading

Insider Buying: Insufficient data to determine if insiders have bought more shares than they have sold in the past 3 months.

Ownership Breakdown

Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.

Management Team

  • Carlos Rodriguez (55yo)

    CEO, President & Director

    • Tenure: 8.2yrs
    • Compensation: US$19.00m
  • Michael Bonarti (54yo)

    Corporate VP

    • Tenure: 9.5yrs
    • Compensation: US$4.40m
  • Kathleen Winters (51yo)

    Corporate Vice President & CFO

    • Tenure: 0.8yrs
    • Compensation: US$2.13m
  • Doug Politi (57yo)

    President of Compliance Solutions

    • Tenure: 2yrs
  • Maria Black (45yo)

    President of Small Business Solutions & Human Resources Outsourcing

    • Tenure: 3yrs
    • Compensation: US$3.75m
  • Tom Perrotti (50yo)

    President of Worldwide Sales & Marketing

    • Tenure: 3yrs
    • Compensation: US$3.77m
  • Brock Albinson (44yo)

    Corporate Controller & Principal Accounting Officer

    • Tenure: 4.8yrs
  • Don Weinstein (50yo)

    Corporate Vice President of Global Product & Technology

    • Tenure: 1.5yrs
  • Christian Greyenbuhl

    Vice President of Investor Relation

    • Tenure: 4yrs
  • Allyce Hackmann

    Senior Director of Public Relations

    Board Members

    • Eric Fast (70yo)

      Independent Director

      • Tenure: 12.3yrs
      • Compensation: US$318.50k
    • John Jones (68yo)

      Non-Executive Chairman of the Board

      • Tenure: 4.2yrs
      • Compensation: US$500.00k
    • Dick Clark (73yo)

      Independent Director

      • Tenure: 8.3yrs
      • Compensation: US$335.00k
    • Sandra Wijnberg (63yo)

      Independent Director

      • Tenure: 3.6yrs
      • Compensation: US$335.00k
    • Scott Powers (59yo)

      Independent Director

      • Tenure: 1.8yrs
      • Compensation: US$300.00k
    • Mike Gregoire (53yo)

      Independent Director

      • Tenure: 6yrs
      • Compensation: US$355.00k
    • Linda Gooden (66yo)

      Independent Director

      • Tenure: 10.9yrs
      • Compensation: US$325.00k
    • Carlos Rodriguez (55yo)

      CEO, President & Director

      • Tenure: 8.2yrs
      • Compensation: US$19.00m
    • Robert Hubbard (60yo)

      Independent Director

      • Tenure: 16yrs
      • Compensation: US$320.00k
    • Peter Bisson (62yo)

      Independent Director

      • Tenure: 4.4yrs
      • Compensation: US$320.00k

    Company Information

    Automatic Data Processing, Inc.'s company bio, employee growth, exchange listings and data sources

    Key Information

    • Name: Automatic Data Processing, Inc.
    • Ticker: ADP
    • Exchange: NasdaqGS
    • Founded: 1949
    • Industry: Data Processing and Outsourced Services
    • Sector: Software
    • Market Cap: US$77.163b
    • Shares outstanding: 432.70m
    • Website:

    Number of Employees


    • Automatic Data Processing, Inc.
    • One ADP Boulevard
    • Roseland
    • New Jersey
    • 7068
    • United States


    TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
    ADPNasdaqGS (Nasdaq Global Select)YesCommon StockUSUSDJan 1968
    ADPDB (Deutsche Boerse AG)YesCommon StockDEEURJan 1968
    ADPSNSE (Santiago Stock Exchange)YesCommon StockCLUSDJan 1968
    ADPWBAG (Wiener Boerse AG)YesCommon StockATEURJan 1968
    0HJILSE (London Stock Exchange)YesCommon StockGBUSDJan 1968
    ADPETLX (Eurotlx)YesCommon StockITEURJan 1968
    ADPR34BOVESPA (Bolsa de Valores de Sao Paulo)BDR EACH REP 0.5 COM USD0.10BRBRLMay 2019


    Automatic Data Processing, Inc. provides cloud-based human capital management solutions worldwide. It operates through two segments, Employer Services and Professional Employer Organization (PEO) Services. The Employer Services segment offers strategic, cloud-based platforms, and human resources (HR) outsourcing solutions. Its offerings include payroll, benefits administration, talent management, HR management, workforce management, insurance, retirement, and compliance services. The PEO Services segment provides HR outsourcing solutions through a co-employment model. This segment offers protection and compliance, talent engagement, comprehensive outsourcing, and recruitment process outsourcing services. The company was founded in 1949 and is headquartered in Roseland, New Jersey. 

    Company Analysis and Financial Data Status

    All financial data provided by Standard & Poor's Capital IQ.
    DataLast Updated (UTC time)
    Company Analysis2020/01/23 23:32
    End of Day Share Price2020/01/23 00:00
    Annual Earnings2019/06/30

    Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.