A Business at a Glance
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AUTOMATIC DATA PROCESSING INC
ADP
$102.2B
Mkt Cap
$250.09
+2.97%
AUTOMATIC DATA PROCESSING INC (ADP) has a current P/E ratio of 24.0, compared to its historical median P/E of 26.2. The stock is currently considered Fair based on its historical valuation range.
AUTOMATIC DATA PROCESSING INC (ADP) has a 5-year average return on invested capital (ROIC) of 69.5%. This indicates strong capital allocation and a potential competitive advantage.
AUTOMATIC DATA PROCESSING INC (ADP) has a market capitalization of $100.2B. It is classified as a large-cap stock.
Yes, AUTOMATIC DATA PROCESSING INC (ADP) pays a dividend with a trailing twelve-month yield of 2.56%. The company also returns capital through share buybacks, with a buyback yield of 1.78%.
Based on historical P/E analysis, AUTOMATIC DATA PROCESSING INC (ADP) appears fair. The current P/E of 24.0 is 8% below its historical median of 26.2. The estimated fair value CAGR (P/E method) is 11.4%.
AUTOMATIC DATA PROCESSING INC (ADP) operates in the Services-Computer Processing & Data Preparation industry, within the Technology sector.
ADP is a global leader in human capital management (HCM) solutions serving over 1.1 million clients and paying over 42 million workers across more than 140 countries and territories. The company operates through two reportable segments: Employer Services, which provides cloud-based HCM platforms and human resources outsourcing (HRO) solutions to businesses ranging from single-employee small businesses to large enterprises, and Professional Employer Organization (PEO), which offers full-service co-employment arrangements under the ADP TotalSource brand. ADP's business model combines recurring subscription and transaction-based revenue streams, with payroll processing, benefits administration, talent management, HR management, workforce management, compliance services, insurance services, and retirement services forming the core of its offerings. The company generates revenue through software licensing, service fees, and client funds interest income, with a significant portion derived from recurring payroll processing transactions that create predictable, stable cash flows. ADP's competitive moat is built on its unparalleled dataset of over 1.1 million clients and 42 million workers globally, which powers its AI and analytics capabilities, combined with deep regulatory expertise, established client relationships, and a global distribution network that enables it to serve multinational enterprises and small businesses across diverse geographies and industries.
【AI-driven productivity acceleration】 Management expects continued margin expansion in fiscal 2026 and beyond, driven by productivity benefits from AI transformation and operational leverage as generative AI workflows become embedded in standard service operations. The company is advancing its next-generation HCM platforms, including ADP Lyric and AI-powered tools like ADP Assist, which are gaining strong market traction with new logos representing the majority of enterprise bookings. Management anticipates that AI agents deployed across major HCM roles will enable service teams to shift from transactional to more strategic activities, while the company's vast proprietary dataset positions it to deliver differentiated AI capabilities. The demand environment for HCM and outsourcing services remains healthy, with strong client satisfaction scores at record levels and retention performance exceeding expectations, supporting confidence in continued growth across both Employer Services and PEO segments.
| Metric | Target | Period |
|---|---|---|
| Consolidated Revenue Growth | 6%-7% | FY2026 |
| Adjusted EPS Growth | 10%-11% | FY2026 |
| Employer Services Revenue Growth | 6%-7% | FY2026 |
| PEO Revenue Growth | 6%-7% | FY2026 |
| Average Client Funds Balances Growth | approximately 6% | FY2026 |
| Employer Services Retention | flat to down 20 basis points | FY2026 |
| Average Worksite Employee Growth | approximately 2% | FY2026 |
| Effective Tax Rate | around 23% | FY2026 |
Consolidated Revenue Growth (FY2026): “we are increasing our fiscal 2026 consolidated revenue growth outlook to 6%-7%”
Adjusted EPS Growth (FY2026): “we are increasing our fiscal 2026 adjusted EPS growth forecast to 10%-11%”
Employer Services Revenue Growth (FY2026): “we also now expect overall ES revenue growth of 6%-7% for the fiscal year”
Generated solely from the company's own reports listed below — not from third-party data. Hallucination risk is low. · Sources: 10-K, Q4 FY2026 Earnings Call, Q3 FY2026 Earnings Call, Q2 FY2026 Earnings Call, Q1 FY2026 Earnings Call
| Segment | 2021 | 2022 | 2023 | 2024 | 2025 | % of Total |
|---|---|---|---|---|---|---|
Operating Segments | — | $7.18B | $17.20B | $18.18B | $19.37B | 33% |
Revenues, other than interest on funds held for clients and PEO revenues | $9.77B | $10.51B | $11.22B | $11.95B | $12.69B | 21% |
HCM | $6.66B | $7.18B | $7.72B | $8.16B | $8.67B | 15% |
PEO revenues | — | — | $5.98B | $6.22B | $6.68B | 11% |
PEO zero-margin benefits pass-throughs | $3.09B | $3.51B | $3.80B | $3.98B | $4.29B | 7% |
| Metric | TTM | FY2025 | FY2024 | FY2023 | FY2022 | FY2021 |
|---|---|---|---|---|---|---|
| Revenue | 21.6B | 20.6B | 19.2B | 18.0B | 16.5B | 15.0B |
| Net Income | 4.3B | 4.1B | 3.8B | 3.4B | 2.9B | 2.6B |
| EPS | $10.78 | $9.98 | $9.10 | $8.21 | $7.00 | $6.07 |
| Free Cash Flow | 5.3B | 4.8B | 3.9B | 4.0B | 2.9B | 2.9B |
| ROIC | 0.0% | 75.6% | 93.1% | 78.6% | 55.7% | 44.4% |
| Gross Margin | - | 46.0% | 45.4% | 44.7% | 42.6% | 42.4% |
| Debt/Equity | 0.63 | 1.41 | 0.66 | 0.85 | 0.93 | 0.53 |
| Dividends/Share | $6.41 | $6.02 | $5.45 | $4.79 | $4.05 | $3.70 |
| Operating Income | 0 | 5.8B | 5.2B | 4.7B | 3.9B | 3.4B |
| Operating Margin | 0.0% | 28.0% | 27.3% | 26.0% | 23.6% | 22.8% |
| ROE | 68.4% | 76.0% | 93.1% | 101.3% | 66.3% | 45.5% |
| Shares Outstanding | 401M | 409M | 412M | 416M | 421M | 428M |
| Metric | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Income Statement | |||||||||||||
| Revenue | 10.2B | 10.9B | 11.7B | 12.4B | 13.3B | 14.1B | 14.6B | 15.0B | 16.5B | 18.0B | 19.2B | 20.6B | 21.6B |
| Gross Margin | 40.9% | 41.2% | 41.4% | 41.4% | 41.6% | 43.2% | 42.1% | 42.4% | 42.6% | 44.7% | 45.4% | 46.0% | N/A |
| R&D | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | 799M | 845M | 956M | 989M | 1.0B |
| SG&A | 2.4B | 2.5B | 2.6B | 2.8B | 3.0B | 3.1B | 3.0B | 3.0B | 3.2B | 3.6B | 3.8B | 4.1B | 4.3B |
| EBIT | 2.2B | 2.2B | 2.3B | 2.7B | 2.4B | 3.1B | 3.3B | 3.4B | 3.9B | 4.7B | 5.2B | 5.8B | 0 |
| Op. Margin | 21.1% | 19.7% | 19.6% | 21.8% | 18.0% | 22.2% | 22.5% | 22.8% | 23.6% | 26.0% | 27.3% | 28.0% | 0.0% |
| Net Income | 1.5B | 1.5B | 1.5B | 1.8B | 1.9B | 2.3B | 2.5B | 2.6B | 2.9B | 3.4B | 3.8B | 4.1B | 4.3B |
| Net Margin | 14.8% | 13.3% | 12.8% | 14.5% | 14.2% | 16.2% | 16.9% | 17.3% | 17.9% | 18.9% | 19.5% | 19.8% | 20.1% |
| Non-Recurring | 0 | 43M | 14M | 92M | 45M | 23M | 36M | 30M | 31M | 2.1M | 17M | 5.0M | 5.0M |
| Returns on Capital | |||||||||||||
| ROIC | 27.4% | 27.3% | 45.1% | 53.1% | 48.8% | 45.4% | 41.4% | 44.4% | 55.7% | 78.6% | 93.1% | 75.6% | 0.0% |
| ROE | 23.6% | 25.3% | 32.1% | 42.3% | 43.3% | 45.2% | 44.2% | 45.5% | 66.3% | 101.3% | 93.1% | 76.0% | 68.4% |
| ROA | 4.7% | 4.5% | 3.9% | 4.3% | 4.8% | 5.7% | 6.1% | 5.9% | 5.3% | 6.0% | 7.1% | 7.6% | 6.7% |
| Cash Flow | |||||||||||||
| Op. Cash Flow | 1.8B | 2.0B | 1.9B | 2.1B | 2.5B | 2.7B | 3.0B | 3.1B | 3.1B | 4.2B | 4.2B | 4.9B | 5.5B |
| Free Cash Flow | 1.7B | 1.8B | 1.7B | 1.9B | 2.3B | 2.5B | 2.9B | 2.9B | 2.9B | 4.0B | 3.9B | 4.8B | 5.3B |
| Owner Earnings | 1.4B | 1.6B | 1.5B | 1.7B | 2.0B | 2.1B | 2.4B | 2.4B | 2.4B | 3.4B | 3.4B | 4.1B | 4.6B |
| CapEx | 160M | 159M | 169M | 240M | 206M | 162M | 173M | 179M | 174M | 206M | 208M | 169M | 158M |
| Maint. CapEx | 267M | 278M | 289M | 316M | 378M | 409M | 480M | 511M | 515M | 549M | 562M | 582M | 584M |
| Growth CapEx | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| D&A | 267M | 278M | 289M | 316M | 378M | 409M | 480M | 511M | 515M | 549M | 562M | 582M | 584M |
| CapEx/OCF | 8.8% | 8.3% | 8.9% | 11.3% | 8.2% | 6.0% | 5.7% | 5.8% | 5.6% | 4.9% | 5.0% | 3.4% | 2.9% |
| Capital Allocation | |||||||||||||
| Dividends Paid | 883M | 928M | 944M | 995M | 1.1B | 1.3B | 1.5B | 1.6B | 1.7B | 1.9B | 2.2B | 2.4B | 2.6B |
| Dividend Yield | 3.6% | 3.1% | 3.0% | 2.8% | 2.5% | 2.3% | 2.4% | 2.4% | 2.0% | 2.1% | 2.3% | 2.1% | 2.6% |
| Share Buybacks | 667M | 1.6B | 1.2B | 1.3B | 989M | 938M | 1.0B | 1.4B | 2.0B | 1.1B | 1.2B | 1.3B | 1.8B |
| Buyback Yield | 2.5% | 4.9% | 3.5% | 3.3% | 1.9% | 1.5% | 1.8% | 1.8% | 2.4% | 1.3% | 1.3% | 1.0% | 1.8% |
| Stock-Based Comp | 117M | 143M | 138M | 139M | 175M | 167M | 131M | 175M | 202M | 220M | 244M | 266M | 247M |
| Debt Repayment | 3.3M | 2.3M | 1.5M | 2.0M | 7.3M | 2.1M | 2.2M | 1.0B | 900K | 1.0M | 900K | 1.0B | 1.0B |
| Balance Sheet | |||||||||||||
| Net Debt | -1.8B | -1.7B | -1.2B | -773M | -168M | 45M | 1.1B | 401M | 1.5B | 892M | -305M | 899M | 750M |
| Cash & Equiv. | 2.0B | 1.6B | 3.2B | 2.8B | 2.2B | 1.9B | 1.9B | 2.6B | 1.4B | 2.1B | 2.9B | 3.3B | 3.2B |
| Long-Term Debt | N/A | N/A | 2.0B | 2.0B | 2.0B | 2.0B | 1.0B | 3.0B | 3.0B | 3.0B | 3.0B | 4.0B | 4.0B |
| Debt/Equity | 0.33 | 0.00 | 0.45 | 0.51 | 0.42 | 0.37 | 0.52 | 0.53 | 0.93 | 0.85 | 0.66 | 1.41 | 0.63 |
| Interest Coverage | 353.9 | 331.3 | 40.7 | 33.7 | 23.2 | 24.1 | 30.7 | 57.3 | 47.4 | 18.5 | 14.5 | 12.6 | 12.6 |
| Equity | 6.7B | 4.8B | 4.5B | 4.0B | 4.7B | 5.4B | 5.8B | 5.7B | 3.2B | 3.5B | 4.5B | 6.2B | 6.4B |
| Total Assets | 32.1B | 33.1B | 43.7B | 38.9B | 38.8B | 41.9B | 39.2B | 48.8B | 63.1B | 51.0B | 54.4B | 53.4B | 64.5B |
| Total Liabilities | 25.4B | 28.3B | 39.2B | 33.2B | 34.1B | 36.5B | 33.4B | 43.1B | 59.8B | 47.5B | 49.8B | 47.2B | 58.1B |
| Intangibles | 491M | 503M | 534M | 620M | 886M | 1.1B | 1.2B | 1.2B | 1.3B | 1.3B | 1.3B | 1.6B | 1.6B |
| Retained Earnings | 13.6B | 13.5B | 14.0B | 14.7B | 16.5B | 17.5B | 18.4B | 19.5B | 20.7B | 22.1B | 23.6B | 25.2B | 26.7B |
| Working Capital | 3.3B | 1.7B | 3.7B | 2.8B | 1.4B | 1.7B | 1.4B | 2.6B | -354M | -597M | 463M | 2.0B | 2.2B |
| Current Assets | 27.5B | 28.8B | 39.5B | 32.7B | 31.8B | 34.3B | 31.6B | 40.7B | 54.8B | 42.2B | 45.5B | 43.3B | 54.2B |
| Current Liabilities | 24.2B | 27.1B | 35.8B | 29.8B | 30.4B | 32.6B | 30.1B | 38.1B | 55.2B | 42.8B | 45.1B | 41.3B | 52.0B |
| Per Share Data | |||||||||||||
| EPS | 3.14 | 3.05 | 3.25 | 3.97 | 4.25 | 5.24 | 5.70 | 6.07 | 7.00 | 8.21 | 9.10 | 9.98 | 10.78 |
| Owner EPS | 2.98 | 3.26 | 3.20 | 3.71 | 4.42 | 4.83 | 5.58 | 5.62 | 5.66 | 8.27 | 8.13 | 10.01 | 11.54 |
| Book Value | 13.82 | 10.10 | 9.76 | 8.83 | 10.68 | 12.34 | 13.29 | 13.25 | 7.66 | 8.44 | 11.03 | 15.14 | 15.85 |
| Cash Flow/Share | 3.77 | 4.15 | 4.13 | 4.72 | 5.67 | 6.14 | 6.99 | 7.23 | 7.36 | 10.12 | 10.08 | 12.08 | 12.31 |
| Dividends/Share | 1.88 | 1.95 | 2.08 | 2.24 | 2.52 | 3.06 | 3.52 | 3.70 | 4.05 | 4.79 | 5.45 | 6.02 | 6.41 |
| Shares Out. | 482.8M | 476.2M | 459.2M | 450.3M | 443.5M | 437.6M | 432.7M | 428.1M | 421.3M | 415.6M | 412.3M | 408.8M | 400.6M |
| Valuation | |||||||||||||
| P/E Ratio | 17.3 | 21.8 | 22.1 | 22.3 | 27.0 | 27.5 | 22.6 | 29.5 | 28.4 | 24.9 | 25.4 | 30.1 | 23.2 |
| P/FCF | 15.8 | 17.4 | 19.1 | 20.5 | 22.0 | 24.9 | 19.5 | 26.3 | 28.6 | 21.2 | 24.1 | 25.7 | 18.9 |
| EV/EBIT | 11.5 | 13.9 | 284.8 | 123.4 | N/A | 20.1 | 371.4 | 21.8 | 21.6 | 455.9 | 331.3 | 348.8 | N/A |
| Price/Book | 3.9 | 6.6 | 7.4 | 9.7 | 10.7 | 11.7 | 9.7 | 13.5 | 25.9 | 24.2 | 21.0 | 19.8 | 15.8 |
| Price/Sales | 2.4 | 2.8 | 2.7 | 2.9 | 3.3 | 3.9 | 4.1 | 4.3 | 5.1 | 5.0 | 5.0 | 5.7 | 4.6 |
| FCF Yield | 6.3% | 5.7% | 5.2% | 4.9% | 4.5% | 4.0% | 5.1% | 3.8% | 3.5% | 4.7% | 4.1% | 3.9% | 5.3% |
| Market Cap | 26.2B | 31.6B | 33.0B | 38.6B | 50.8B | 63.0B | 55.8B | 76.6B | 83.6B | 84.8B | 95.3B | 122.6B | 100.2B |
| Avg. Price | 51.21 | 63.71 | 68.04 | 79.71 | 97.85 | 127.01 | 139.59 | 150.79 | 198.39 | 215.63 | 230.80 | 284.18 | 250.09 |
| Year-End Price | 54.30 | 66.35 | 71.78 | 85.78 | 114.57 | 143.99 | 128.89 | 179.00 | 198.54 | 204.14 | 231.14 | 299.94 | 250.09 |
AUTOMATIC DATA PROCESSING INC passes 6 of 9 quality checks, suggesting mixed fundamentals.
AUTOMATIC DATA PROCESSING INC trades at 24.0x trailing earnings, compared to its 15-year median P/E of 26.2x, suggesting it is currently Fair relative to its historical range. On a free-cash-flow basis, the stock trades at 21.9x vs a median of 23.1x. The company's 5-year average ROIC is 69.5% with a gross margin of 44.3%. Total shareholder yield (dividends + buybacks) is 4.3%. At current prices, the estimated annualized return to fair value is +10.9%.
AUTOMATIC DATA PROCESSING INC (ADP) reported annual revenue of $20.6 billion in its most recent fiscal year, based on SEC EDGAR filings.
AUTOMATIC DATA PROCESSING INC (ADP) has a net profit margin of 19.8%. This is a healthy margin.
AUTOMATIC DATA PROCESSING INC (ADP) generated $4.8 billion in free cash flow in its most recent fiscal year. Positive free cash flow supports dividends, buybacks, and debt reduction.
AUTOMATIC DATA PROCESSING INC (ADP) has a debt-to-equity ratio of 1.41. This indicates moderate leverage.
AUTOMATIC DATA PROCESSING INC (ADP) reported earnings per share (EPS) of $9.98 in its most recent fiscal year.
AUTOMATIC DATA PROCESSING INC (ADP) has a return on equity (ROE) of 76.0%. This indicates the company generates strong returns for shareholders.
AUTOMATIC DATA PROCESSING INC (ADP) has a 5-year average gross margin of 44.3%. This indicates decent pricing power.
The Ledger Terminal provides 18 years of financial data for AUTOMATIC DATA PROCESSING INC (ADP), sourced directly from SEC EDGAR filings. This includes income statements, balance sheets, cash flow statements, and key financial ratios.
AUTOMATIC DATA PROCESSING INC (ADP) has a book value per share of $15.14, based on its most recent annual SEC filing.
Based on recent SEC filings and earnings disclosures, Management expects continued margin expansion in fiscal 2026 and beyond, driven by productivity benefits from AI transformation and operational leverage as generative AI workflows become embedded in standard service operations. The company is advancing its next-generation HCM platforms, including ADP Lyric and AI-powered tools like ADP Assist, which are gaining strong market traction with new logos representing the majority of enterprise bookings. Management anticipates that AI agents deployed across major HCM roles will enable service teams to shift from transactional to more strategic activities, while the company's vast proprietary dataset positions it to deliver differentiated AI capabilities. The demand environment for HCM and outsourcing services remains healthy, with strong client satisfaction scores at record levels and retention performance exceeding expectations, supporting confidence in continued growth across both Employer Services and PEO segments.
Based on recent SEC filings and earnings calls, AUTOMATIC DATA PROCESSING INC (ADP) has provided the following forward guidance: Consolidated Revenue Growth: 6%-7% (FY2026); Adjusted EPS Growth: 10%-11% (FY2026); Employer Services Revenue Growth: 6%-7% (FY2026); PEO Revenue Growth: 6%-7% (FY2026); Average Client Funds Balances Growth: approximately 6% (FY2026), plus 3 additional metrics.
PEO Revenue Growth (FY2026): “we are increasing our full year PEO revenue growth guidance to 6%-7%”
Average Client Funds Balances Growth (FY2026): “We are increasing our full year average client funds balances growth forecast to about 6%”
Employer Services Retention (FY2026): “we are improving our guidance range by 10 basis points and now forecast ES retention to be flat to down 20 basis points for the year”
Average Worksite Employee Growth (FY2026): “We continue to forecast fiscal 2026 average worksite employee growth of about 2%”
Effective Tax Rate (FY2026): “Our full year effective tax rate guidance of around 23% is unchanged”