ADP  Automatic Data Processing Inc.

Exchange

NASDAQ

Sector

Technology

Industry

EDP Services

Market Cap.

45.35B

Vuru Grade

62.11/100

Current Price

$101.35
+0.19 (+0.19%)

Growth Price

$31.74
Overvalued by 68.68%

Stability Price

$27.33
Overvalued by 73.03%

Company Metrics

  • P/E 26.22
  • P/S 3.71
  • P/B 11.04
  • EPS 3.87
  • Cash ROIC 30.69%
  • Cash Ratio 0.09
  • Dividend 2.28 / 2.25 %
  • Avg. Vol. 1.88M
  • Shares 447.46M
  • Market Cap. 45.35B

Company Description

Automatic Data Processing, Inc. provides technology-based outsourcing solutions to employers, and vehicle retailers and manufacturers worldwide. It operates in three segments: Employer Services, Professional Employer Organization Services, and Dealer Services. The Employer Services segment offers a range of human resource (HR)information, payroll processing, and tax and benefits administration sol... more


Download 10 Years of Financial Statements:
Income Statement   Balance Sheet   Cash Flow

News

Automatic Data Processing Reaches Analyst Target Price
Nasdaq - May 26, 2017
In recent trading, shares of Automatic Data Processing Inc. (Symbol: ADP) have crossed above the average analyst 12-month target price of $100.91, changing hands for $101.16/share.
Automatic Data Processing (ADP) Stake Maintained by CAPROCK Group Inc. - The Cerbat Gem
Analyst Observation On 2 Stocks: Automatic Data Processing, Inc. (ADP ... - Post Analyst
Automatic Data Processing (ADP) Q3 2017 Results - Earnings Call Transcript
Seeking Alpha - May 3, 2017
Good morning. My name is Crystal, and I will be your conference operator. At this time, I'd like to welcome everyone to ADP's Third Quarter Fiscal 2017 Earnings Call. I would like to inform you that this conference is being recorded, and all lines have ...
Automatic Data Processing (ADP) Beats on Q3 Earnings - Nasdaq
Palisade Asset Management LLC Has $2777000 Stake in Automatic Data Processing ... - Sports Perspectives
Automatic Data Processing Bookings Fall 7%
Motley Fool - May 8, 2017
Automatic Data Processing (NASDAQ:ADP) reported fiscal third-quarter financial results on May 3. The leading provider of human capital management services delivered continues to deliver steady gains in revenue and earnings, but sluggish new business ...
One must not overlook these names while making investment: Automatic Data ... - The USA Commerce
Analyst's Predictions on Automatic Data Processing, Inc. (ADP), US Silica ... - StockNewsJournal
ADP Update: 42 Years Of Dividend Increases
Seeking Alpha - May 22, 2017
Automatic Data Processing, Inc (NASDAQ:ADP) is 2.96% of my retirement income portfolio. Its current yield of 2.31% is 3rd lowest in the portfolio, after Apple (NASDAQ:AAPL) at 1.65% and Microsoft (NASDAQ:MSFT) at 2.30%.
Automatic Data Processing a Top Ranked SAFE Dividend Stock With 2.3% Yield (ADP)
Nasdaq - May 19, 2017
Automatic Data Processing Inc. (Symbol: ADP) has been named to the Dividend Channel ''S.A.F.E. 25'' list, signifying a stock with above-average ''DividendRank'' statistics including a strong 2.3% yield, as well as a superb track record of at least two ...
These two stocks are dominating the market, As Expected: Automatic Data ... - StockNewsJournal
Automatic Data Processing (ADP) Posts Earnings Results, Beats Expectations By ... - The Cerbat Gem
Risk Malaise Alert in Option Market: Automatic Data Processing Inc Implied ...
CML News - 17 hours ago
Before we dive into any analysis we simply note that Automatic Data Processing Inc (NASDAQ:ADP) risk is actually priced pretty low by the option market as of right now.
Automatic Data Processing (ADP) Q3 Earnings: What's Up?
Zacks.com - May 1, 2017
Automatic Data Processing Inc. (ADP - Free Report) is set to release third-quarter fiscal 2017 earnings on May 3. Notably, the company has beaten the Zacks Consensus Estimate in the three of the trailing four quarters, with an average positive surprise ...
Automatic Data Processing, Inc. (NASDAQ:ADP) Recent Ownership Changes - Post Analyst
Automatic Data Processing (ADP) Stock Is a Trader's Dream Right Now
Investorplace.com - May 15, 2017
Shares of payment processing company Automatic Data Processing (NASDAQ:ADP) have dropped about 7% over the past two weeks in response to its May 3 earnings report.
The Chart Is Speaking Loud And Clear For Automatic Data Processing, Inc. (ADP) - NY Stock News
Under Analysts Radar: Automatic Data Processing (NASDAQ:ADP) - ExpertGazette
Mackenzie Financial Corp Buys C.R. Bard Inc, Automatic Data Processing Inc ...
Nasdaq - May 25, 2017
Mackenzie Financial Corp initiated holdings in Automatic Data Processing Inc. The purchase prices were between $95.25 and $105.11, with an estimated average price of $102.
Critical Chart Information For Automatic Data Processing, Inc. (ADP)
NY Stock News - May 11, 2017
The technicals for Automatic Data Processing, Inc. (ADP) have taken shape, and with them a comprehensive picture has emerged.
Vigilant Capital Management LLC Continues to Hold Stake in Automatic Data ... - Transcript Daily
Today Analysts Focus on AMETEK, Inc. (AME), Automatic Data Processing, Inc. (ADP) - StockNewsJournal
Growth Rate Assumed by Market

We did a reverse valuation to calculate the growth rate the market is assuming for ADP to be considered fairly valued at its current market price. It's useful to compare this to the growth rate we're assuming for the Growth Price.

Future Free Cash Flow Growth Rate

This is the annual growth rate we've applied to calculate ADP's Free Cash Flow for the next 10 years. To calculate it, we looked at several time periods of the last 10 years. Feel free to adjust it, but we limit the initial growth rate to 20% and slow it down over the years. Otherwise, long-term sustainability issues come into play.

Discount Rate

The discount rate is the annual rate of return an investor requires to take the risk of investing in a single stock. To account for that risk, this should be above 8-10%, as this is the avg. annual rate of return for the S&P500 over the past 100 years.

$101.35 Current Price

$31.74 Growth Price (DCF)

Overvalued by 68.68%


Growth Rate Assumed by Market: 35.29%


Future Free Cash Flow Growth Rate: 0.6%


Discount Rate: 15.0%


Show Free Cash Flow numbers

$27.33 Stability Price (EPV)

Overvalued by 73.03%


Discount Rate: 15.0%

$0.70 NCA Price

Overvalued by 99.31%

$52.94 Book Price

Overvalued by 47.76%


Excellent Cash Return on Invested Capital over the past 5 years

ADP has efficiently invested its financial resources in buildings, projects, and equipment, resulting in strong returns. Annual Reports can be useful in identifying the cause of one-time events and future sustainability.

ADP has created $30.69 of cash for every $100 invested.
Figures in USD. Fiscal year ends in June
20122013201420152016
Free Cash Flow 1.66B 1.29B 1.45B 1.57B 1.47B
divided by
Invested Capital 6.00B 5.81B 4.13B 4.33B 4.61B
Cash ROIC 27.69% 22.28% 35.22% 36.25% 31.99%

Excellent Return on Equity over the past 5 years

Over the past 5 years, ADP has generated strong profits with money shareholders have invested. This is considered one of the best indicators of quality management. Beware of extremely high Return on Equity (> 50%) as this is often unsustainable.

ADP has generated $26.33 of Earnings for every $100 of Shareholders' Equity.
Figures in USD. Fiscal year ends in June
20122013201420152016
Net Income 1.39B 1.41B 1.52B 1.45B 1.49B
divided by
Stockholders' Equity 6.11B 6.19B 6.67B 4.81B 4.48B
Return on Equity 22.71% 22.71% 22.73% 30.21% 33.30%

Excellent Business Performance over the past 10 years

ADP has been able to maintain profitability in good times and bad. This could mean ADP has an extremely strong business or has the ability to scale down costs when needed. This should be a fairly resilient business, but double check for future sustainability by looking at its Risk Factors in the Annual Report.

ADP has created positive free cash flow for 9 or more of the past 10 years.
Figures in USD. Fiscal year ends in June
2007200820092010201120122013201420152016
Free Cash Flow 975.20M 1.51B 1.40B 1.58B 1.52B 1.66B 1.29B 1.45B 1.57B 1.47B

Weak Balance Sheet

ADP's financial position is not ideal. The key is to check whether ADP is using debt to fuel its growth and the sustainability of that tendency. Highly capital intensive businesses (see Economic Moat) follow this route, which can deeply impact the future prospects of the business.
Figures in USD. Fiscal year ends in June
2007200820092010201120122013201420152016
Cash 1.82B 1.58B 2.30B 1.67B 1.43B 1.58B 1.73B 4.02B 1.67B 3.21B
Current Assets 3.36B 18.81B 20.70B 22.32B 28.58B 25.16B 26.20B 25.83B 28.81B 39.50B
Total Assets 26.65B 23.73B 25.35B 26.86B 34.24B 30.82B 32.27B 32.05B 33.11B 43.67B
Current Liabilities 1.79B 17.34B 18.76B 20.05B 26.79B 23.24B 24.73B 23.91B 27.11B 35.85B
Total Liabilities 21.50B 18.65B 20.03B 21.38B 28.23B 24.70B 26.08B 25.38B 28.30B 39.19B
Stockholder' Equity 5.15B 5.09B 5.32B 5.48B 6.01B 6.11B 6.19B 6.67B 4.81B 4.48B
Current Ratio 1.88 1.08 1.10 1.11 1.07 1.08 1.06 1.08 1.06 1.10
TL-to-TA 0.81 0.79 0.79 0.80 0.82 0.80 0.81 0.79 0.85 0.90

Low or No Reinvestment of Profits over the past 10 years

ADP has either been retaining a small amount of their earnings or has done so inconsistently. A lack of consistency could be due to ADP operating at a loss or them having such a strong economic moat they feel comfortable spending profits on growth. Be wary of future prospects and if applicable, inspect the moat's sustainability.
Figures in USD. Fiscal year ends in June
2007200820092010201120122013201420152016
Retained Earnings 9.38B 10.03B 10.72B 11.25B 11.80B 12.44B 13.02B 13.63B 13.46B 14.00B
Retained Earnings Growth - 6.94% 6.85% 5.00% 4.90% 5.37% 4.68% 4.70% -1.27% 4.03%

Potential Competitive Advantage over the past 10 years

ADP potentially has a competitive advantage. This could be strong branding, the ability to keep costs low, or some other characteristic that is hard to replicate. Look at its future prospects to determine sustainability and whether the economic moat will strengthen.

$13.39 of every $100 of Revenue have been pure profit, on average over the past 10 years.
Figures in USD. Fiscal year ends in June
2007200820092010201120122013201420152016
Net Income 1.14B 1.24B 1.33B 1.21B 1.25B 1.39B 1.41B 1.52B 1.45B 1.49B
divided by
Revenue 7.80B 8.78B 8.87B 8.93B 9.88B 10.67B 11.31B 12.21B 10.94B 11.67B
Net Profit Margin 14.60% 14.08% 15.03% 13.57% 12.69% 13.02% 12.43% 12.42% 13.28% 12.79%

Strong Pricing Power over the past 10 years

ADP has maintained substantial gross margins, suggesting that they have been able to set prices without consideration of the cost of goods sold. This potentially leaves flexibility in inflationary environments to raise prices on consumers and maintain profitability.

$44.91 of every $100 worth of sales have been Gross Profit, on average over the past 10 years.
Figures in USD. Fiscal year ends in June
2007200820092010201120122013201420152016
Gross Profit 4.41B 4.86B 4.03B 3.90B 4.15B 4.43B 4.66B 4.99B 4.51B 4.83B
divided by
Revenue 7.80B 8.78B 8.87B 8.93B 9.88B 10.67B 11.31B 12.21B 10.94B 11.67B
Gross Margin 56.51% 55.38% 45.42% 43.66% 41.99% 41.49% 41.21% 40.84% 41.24% 41.37%

Low Capital Intensity over the past 10 years

ADP has consistently used a small portion of their Net Income buying new equipment or investing in new facilities. This indicates that ADP may require minimal investment to stay competitive. This leaves them with extra money to spend on growing their business and potentially buying back stock.

19.70% of Profits are being spent on Capital Expenditures, like Property, Plant, & Equipment, required to run the business.
Figures in USD. Fiscal year ends in June
2007200820092010201120122013201420152016
Capital Expenditure 322.80M 277.60M 157.90M 102.90M 181.90M 249.60M 282.90M 367.70M 335.50M 386.00M
divided by
Net Income 1.14B 1.24B 1.33B 1.21B 1.25B 1.39B 1.41B 1.52B 1.45B 1.49B
Capital Expenditure Ratio 28.35% 22.46% 11.85% 8.49% 14.50% 17.98% 20.12% 24.26% 23.10% 25.86%

Very Strong Dividend History over the past 10 years

ADP has consistently distributed a dividend for at least the past 10 years. Such a long dividend history suggests ADP is very established in its market and that its dividend distribution is likely to continue for a significant period of time.
Figures in USD. Fiscal year ends in June
2007200820092010201120122013201420152016
Dividend Paid 461.30M 548.90M 629.40M 673.40M 692.40M 739.70M 805.50M 883.10M 927.60M 943.60M
divided by
Shares Outstanding 557.90M 527.20M 505.80M 503.70M 498.30M 492.20M 487.10M 483.10M 475.80M 459.10M
Dividend Paid Per Share 0.83 1.04 1.24 1.34 1.39 1.50 1.65 1.83 1.95 2.06
Price at Year End 39.45 35.54 40.68 45.10 54.01 56.33 81.08 84.13 86.38 102.78
Dividend Yield 2.10% 2.93% 3.06% 2.96% 2.57% 2.67% 2.04% 2.17% 2.26% 2.00%

Strong History of Stock Buybacks over the past 10 years

ADP has a strong history of delivering increased value for shareholders in the form of stock buybacks. These have helped improve financial metrics and increase each shareholders' relative ownership stake in the company, due to fewer shares outstanding and holding the same number of shares.
Figures in USD. Fiscal year ends in June
2007200820092010201120122013201420152016
Shares Outstanding 557.90M 527.20M 505.80M 503.70M 498.30M 492.20M 487.10M 483.10M 475.80M 459.10M
Stock Bought Back - 5.82% 4.23% 0.42% 1.08% 1.24% 1.05% 0.83% 1.53% 3.64%
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