Automatic Data Processing, Inc.ADP
NasdaqGS•Technology•Software - Application
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). The Employer Services segment offers strategic, cloud-based platforms, and human resources (HR) outsourcing solutions. This segment's offerings include RUN Powered by ADP, a software platform for small business payroll, HR, and compliance; ADP Workforce Now, a HCM solution used across mid-sized and large businesses to manage employees; and ADP Lyric HCM, a solution for HR management, payroll, workforce management, talent, and data analytics. The PEO Services segment provides HR and employment administration outsourcing solutions under ADP TotalSource name to businesses through a co-employment model. The segment also provides guidance, user-friendly technology, comprehensive employee benefits, and a risk management, safety, and workers' compensation program. The company was founded in 1949 and is headquartered in Roseland, New Jersey.
as of March 2026
Are revenues and earnings expanding?
$21.60B in TTM revenue grew 6.9% YoY, reaching $5.94B last quarter. TTM EBITDA of $6.31B on operating income of $1.79B shows growth is flowing through. Net income of $4.35B TTM confirms the company is converting revenue into profit. Revenue is growing at a healthy pace — a signal to hold.
Is revenue turning into profit effectively?
Op. margin of 30.1% is up 0.7% YoY — cost efficiency is improving. Net margin at 22.9% and gross margin of 48.3%. ROE of 68.4% shows the company generates solid returns on shareholder equity.
Is the stock cheap or expensive?
At 20.2x P/E, the stock trades in line with market averages — fairly valued. P/S of 4.1x and P/B of 13.8x provide additional context. Assess whether the current multiple is justified by the company's growth and profitability trajectory.
Is the company financially stable?
With $64.48B in assets and $3.98B in long-term debt, the D/E of 0.6 shows a conservative capital structure — the company has a strong financial cushion to weather downturns.
Is the business self-funding?
FCF of $2.19B on $2.24B in operating cash flow. The FCF / Net Income ratio of 0.5x indicates partial cash conversion — earnings quality needs attention. Cash reserves of $3.23B provide financial flexibility.
Competitive analysis based on 67 quarters of fundamental data
Operating margins are stable at ~26.3%, suggesting durable pricing power and cost discipline.
Consistently high ROE averaging 70.7% suggests a durable competitive advantage and efficient capital allocation.
Free cash flow is consistently positive and growing — a hallmark of a capital-light business that can self-fund growth.
TTM revenue has grown consistently (7 of 7 quarters up), with ~12.5% growth over the period. Strong demand durability.
Data-driven red flags and warnings across 67 quarters
Margins are stable or improving at ~26.4% — no sign of cost or pricing stress.
FCF covers net income by 1.2x on average — earnings are well-supported by cash generation.
Debt-to-equity has risen 23.0% recently — increasing financial risk even if the current ratio is manageable.
Revenue is stable or growing over recent quarters — demand appears durable.
Free cash flow is consistently positive — the business self-funds without external capital reliance.
Share count is stable — no significant dilution or buyback activity.