Automatic Data Processing, Inc. (ADP) Stock Analysis — Fair Value, Risk & Moat Rating
NMS · Technology · Software - Application
Is Automatic Data Processing, Inc. a safe investment right now?
Automatic Data Processing, Inc.'s Altman Z-Score of 2.49 places it in the gray zone. Our fair value estimate is $169.95 (Overvalued). Moat rating: 3.7/5 stars.
Could Automatic Data Processing, Inc. go bankrupt? Altman Z-Score analysis
Z-Score of 2.49 places the company in the gray zone (1.8-3.0), warranting closer scrutiny.
- Below 1.8 — Distress Zone (high bankruptcy risk)
- 1.8 to 3.0 — Gray Zone (elevated uncertainty)
- Above 3.0 — Safe Zone (financially healthy)
What drives ADP's Z-Score?
| Component | Formula | Value | Weight | Contribution |
|---|---|---|---|---|
| A · Working Capital / Total Assets | WC / TA | 0.037 | 1.2 | 0.04 |
| B · Retained Earnings / Total Assets | RE / TA | 0.4729 | 1.4 | 0.66 |
| C · EBIT / Total Assets | EBIT / TA | 0.108 | 3.3 | 0.36 |
| D · Market Cap / Total Liabilities | MCap / TL | 1.7289 | 0.6 | 1.04 |
| E · Revenue / Total Assets | Rev / TA | 0.3853 | 1.0 | 0.39 |
How has ADP's financial health changed over time?
| Year | Z-Score | Zone |
|---|---|---|
| 2022 | 1.74 | Distress |
| 2023 | 2.28 | Gray |
| 2024 | 2.27 | Gray |
| 2025 | 2.49 | Gray |
Source: Calculated from ADP's latest 10-K filing on SEC EDGAR.
What is Automatic Data Processing, Inc. actually worth?
How we calculated this
| Input | Value | Source |
|---|---|---|
| Predicted EPS (α) | $10.30 | Proprietary blend of reported actuals (2Q actual) + analyst consensus, weighted by α |
| Last Year EPS | $9.98 | Annual report (SEC EDGAR) |
| Analyst Consensus EPS (This Year) | $10.97 | 15 analysts consensus |
| Trailing P/E | 19.4x | Current market pricing |
| Fair P/E (β discount) | 16.5x | Trailing PE adjusted by value discount factor β, hard-capped |
| Earnings Trend (γ) | Stable | Directional signal: predicted vs trailing EPS |
Wall Street Reference: Analyst consensus target price is $260.60 (15 analysts). This is shown for reference only and is not used in our valuation model.
Source: Earnings data from SEC EDGAR filings. Market data via Yahoo Finance.
Does Automatic Data Processing, Inc. have a durable competitive advantage?
Moat rating: 3.7/5.
What makes up ADP's moat score?
ROIC Stability
ROIC variability over the past decade. Score: 4/5.
Gross Margin Trend
Gross margin trajectory over the past decade. Score: 4/5.
Switching Costs
Estimated customer lock-in based on margin level. Score: 3/5.
How stable is ADP's return on invested capital?
| Year | ROIC | Trend |
|---|---|---|
| 2022 | 60.0% | — |
| 2023 | 60.0% | Stable |
| 2024 | 60.0% | Stable |
| 2025 | 38.6% | Declining |
Source: ROIC calculated from SEC EDGAR filings.
Is Automatic Data Processing, Inc.'s dividend safe?
Can Automatic Data Processing, Inc. afford its dividend?
Payout ratio is 60.7%. FCF covers the dividend 1.5x. 44 consecutive years of payments.
Automatic Data Processing, Inc.'s key financial metrics
| Metric | Latest | 1Y Ago | 3Y Ago | Trend |
|---|---|---|---|---|
| Revenue | $20.6B | $19.2B | $16.5B | Rising |
| Net Income | $4.1B | $3.8B | $2.9B | Rising |
| Free Cash Flow | $4.4B | $3.6B | $2.5B | Rising |
| Gross Margin | 46.0% | 45.4% | 42.6% | Rising |
Recent events that affect our ADP analysis
ADP earnings report scheduled
Upcoming report. Consensus EPS estimate: $3.30. Revenue estimate: $5.85B. Our current Fair Value: $169.95 — a significant beat or miss could shift this estimate.
ADP analyst consensus: 22% bullish (4 of 18 analysts)
1 Strong Buy, 3 Buy, 11 Hold, 2 Sell, 1 Strong Sell. Consensus target: $260.60 (29.2% upside). Compare with our independent Fair Value: $169.95.
ADP paid $1.7000/share dividend
Dividend Safety Grade: A. Payout ratio: 60.7%.
ADP filed quarterly report (10-Q)
Quarterly update with interim financials. May signal changes to earnings trajectory and balance sheet health. View on SEC EDGAR →
ADP beat EPS estimates by 2.0%
Reported EPS: $2.62 vs estimate $2.57. Earnings strength supports our Fair Value of $169.95 (15.7% below current price).
ADP filed 8-K (material event)
8-K filings disclose material events — acquisitions, leadership changes, or guidance revisions that may affect valuation. View on SEC EDGAR →
ADP paid $1.7000/share dividend
Dividend Safety Grade: A. Payout ratio: 60.7%.
ADP filed 8-K (material event)
8-K filings disclose material events — acquisitions, leadership changes, or guidance revisions that may affect valuation. View on SEC EDGAR →
ADP filed quarterly report (10-Q)
Quarterly update with interim financials. May signal changes to earnings trajectory and balance sheet health. View on SEC EDGAR →
ADP beat EPS estimates by 1.9%
Reported EPS: $2.49 vs estimate $2.44. Earnings strength supports our Fair Value of $169.95 (15.7% below current price).
ADP filed 8-K (material event)
8-K filings disclose material events — acquisitions, leadership changes, or guidance revisions that may affect valuation. View on SEC EDGAR →
ADP paid $1.5400/share dividend
Dividend Safety Grade: A. Payout ratio: 60.7%.
ADP filed annual report (10-K)
Annual filing with full-year financials. Our Altman Z-Score, Moat, and Fair Value models are derived from this data. View on SEC EDGAR →
ADP beat EPS estimates by 1.5%
Reported EPS: $2.26 vs estimate $2.23. Earnings strength supports our Fair Value of $169.95 (15.7% below current price).
ADP filed 8-K (material event)
8-K filings disclose material events — acquisitions, leadership changes, or guidance revisions that may affect valuation. View on SEC EDGAR →
ADP filed 8-K (material event)
8-K filings disclose material events — acquisitions, leadership changes, or guidance revisions that may affect valuation. View on SEC EDGAR →
ADP paid $1.5400/share dividend
Dividend Safety Grade: A. Payout ratio: 60.7%.
ADP filed 8-K (material event)
8-K filings disclose material events — acquisitions, leadership changes, or guidance revisions that may affect valuation. View on SEC EDGAR →
ADP filed 8-K (material event)
8-K filings disclose material events — acquisitions, leadership changes, or guidance revisions that may affect valuation. View on SEC EDGAR →
ADP filed quarterly report (10-Q)
Quarterly update with interim financials. May signal changes to earnings trajectory and balance sheet health. View on SEC EDGAR →
ADP beat EPS estimates by 2.9%
Reported EPS: $3.06 vs estimate $2.97. Earnings strength supports our Fair Value of $169.95 (15.7% below current price).
ADP filed 8-K (material event)
8-K filings disclose material events — acquisitions, leadership changes, or guidance revisions that may affect valuation. View on SEC EDGAR →
ADP filed 8-K (material event)
8-K filings disclose material events — acquisitions, leadership changes, or guidance revisions that may affect valuation. View on SEC EDGAR →
ADP paid $1.5400/share dividend
Dividend Safety Grade: A. Payout ratio: 60.7%.
ADP filed quarterly report (10-Q)
Quarterly update with interim financials. May signal changes to earnings trajectory and balance sheet health. View on SEC EDGAR →
ADP beat EPS estimates by 2.4%
Reported EPS: $2.35 vs estimate $2.30. Earnings strength supports our Fair Value of $169.95 (15.7% below current price).
ADP filed 8-K (material event)
8-K filings disclose material events — acquisitions, leadership changes, or guidance revisions that may affect valuation. View on SEC EDGAR →
Common questions about Automatic Data Processing, Inc.
What is Automatic Data Processing, Inc. stock price today?
Automatic Data Processing, Inc. (ADP) stock price is $201.69 as of the latest market close, traded on the NASDAQ exchange.
What does Automatic Data Processing, Inc. do?
Automatic Data Processing, Inc. provides cloud-based human capital management (HCM) solutions worldwide. It operates in two segments, Employer Services and Professional Employer Organization (PEO).
What is Automatic Data Processing, Inc. market cap?
Automatic Data Processing, Inc. has a market capitalization of $81.57B, classifying it as a large-cap stock in the Technology sector.
What sector and industry is ADP in?
Automatic Data Processing, Inc. operates in the Technology sector, specifically within the Software - Application industry. It trades on the NASDAQ under the ticker symbol ADP.
Is ADP stock overvalued or undervalued?
Based on our valuation model, Automatic Data Processing, Inc. trades 18.7% above our fair value estimate — potentially overvalued.
- FairValueLabs Fair Value: $169.95
- Current Price: $201.69
- Valuation Zone: Overvalued
What is ADP stock forecast and analyst target price?
Based on 15 Wall Street analysts, the consensus price target for Automatic Data Processing, Inc. is $260.60, implying upside of 29.2% from the current price.
- Analyst High Target: $332.00
- Analyst Low Target: $208.00
Note: Analyst targets are shown for reference and are not used in our valuation model.
Is Automatic Data Processing, Inc. revenue and earnings growing?
Here are the analyst consensus growth estimates for Automatic Data Processing, Inc.:
- Revenue growth (current year est.): 6.0%
- EPS growth (current year est.): 9.6%
- Revenue growth (next year est.): 5.7%
- EPS growth (next year est.): 9.1%
What are Automatic Data Processing, Inc.'s key financial metrics?
| Metric | Latest | Trend |
|---|---|---|
| Revenue | $20.6B | Rising |
| Net Income | $4.1B | Rising |
| Free Cash Flow | $4.4B | Rising |
| Gross Margin | 46.0% | Rising |
What is ADP's P/E ratio?
The price-to-earnings ratio measures how much investors pay per dollar of earnings:
- Trailing P/E (last 12 months): 19.4x
- Forward P/E (next 12 months est.): 16.9x
- FairValueLabs Fair P/E: 16.5x
How volatile is ADP stock?
Automatic Data Processing, Inc. has a beta of 0.86, meaning it is less volatile than the broader market. A beta above 1.0 indicates higher price swings relative to the S&P 500, while below 1.0 suggests more stability.
How much cash and debt does Automatic Data Processing, Inc. have?
Automatic Data Processing, Inc.'s balance sheet shows:
- Total Cash: $2.42B
- Total Debt: $4.48B
- Net Cash Position: $-2.05B
A positive net cash position means the company holds more cash than debt, reducing financial risk.
What is Automatic Data Processing, Inc.'s free cash flow?
Automatic Data Processing, Inc. generated $3.46B in trailing twelve-month free cash flow (from $4.74B in operating cash flow). Free cash flow represents the cash available for dividends, buybacks, and debt reduction after all capital expenditures.
Does Automatic Data Processing, Inc. pay a dividend, and is it safe?
Yes, Automatic Data Processing, Inc. pays a regular dividend. Here are the key metrics:
- Dividend Yield: 3.1%
- Payout Ratio: 60.7%
- Consecutive Years Paid: 44
- 5-Year Dividend Growth: -15.0%
- FairValueLabs Safety Grade: A
Is Automatic Data Processing, Inc. at risk of going bankrupt?
Automatic Data Processing, Inc.'s Altman Z-Score is 2.49, placing it in the gray zone (1.8–3.0) — some financial uncertainty. The Z-Score uses five balance sheet ratios to predict bankruptcy probability within two years.
Does Automatic Data Processing, Inc. have a durable competitive advantage?
Automatic Data Processing, Inc. scores 3.7/5 stars (Solid moat · eroding) in our moat analysis:
- ROIC Stability: 4/5
- Gross Margin Trend: 4/5
- Switching Costs: 3/5
A score above 3.5 suggests meaningful pricing power and a defensible market position.
What is ADP's return on equity (ROE)?
Automatic Data Processing, Inc.'s return on equity is 73.8%. ROE measures how efficiently a company generates profits from shareholder equity. An ROE above 15% is generally considered strong, while below 10% may signal inefficiency.
How do I buy ADP stock?
ADP shares can be purchased through any brokerage account that provides access to the NASDAQ. Common steps:
- Open an account with a broker (e.g., Fidelity, Schwab, Interactive Brokers)
- Search for ticker symbol ADP
- Place a market or limit order for your desired number of shares
This is not investment advice. Always do your own research before buying any stock.
Is ADP a value stock or speculative?
FairValueLabs classifies Automatic Data Processing, Inc. as Value Investment. It exhibits consistent profitability, reasonable valuation, and financial stability — characteristics of a traditional value investment.
Who is the CEO of Automatic Data Processing, Inc.?
The current CEO of Automatic Data Processing, Inc. is Ms. Maria Black.
What is ADP's earnings per share (EPS)?
Earnings per share measures the company's profit allocated to each outstanding share:
- Trailing EPS (last 12 months): $10.41
- Forward EPS (next 12 months est.): $11.96
- Analyst consensus EPS (this year): $10.97
- Analyst consensus EPS (next year): $11.96
Other Technology companies analyzed by FairValueLabs
FairValueLabs Disclaimer
All valuations, scores, ratings, and classifications on this page are produced by the FairValueLabs internal valuation system. They do not represent actual market value, guaranteed outcomes, or professional investment advice. These are analytical estimates for educational and research purposes only.
This is not financial advice. All data is sourced from SEC EDGAR public filings. Always consult a qualified financial advisor before making investment decisions.
Last updated: Apr 22, 2026. Data sources: SEC EDGAR (financial statements), Yahoo Finance (market data, analyst consensus). Data may not reflect the most recent quarter.
ADP analysis methodology: How we calculate fair value, Z-Scores, and moat ratings