Fact based stock research
Automatic Data Processing (NasdaqGS:ADP)

US0530151036

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For every stock, we judge its performance against its peers and rank it on a scale of 1 to 100. The higher the rank, the better the stock performs than its peers. And, we do this for six investment strategies:
Value - shows how good of a value the stock is. Green is "inexpensive"; red is "expensive".

Growth - shows a company's growth potential. Green is "high growth" expected; red is "tough times ahead".

Safety - relates to the amount of debt a company has. Green is low debt level; red is high debt level.

Combined Financial - this isn't an average of the first three ranks but rather a consolidated view across several financial indicators. Green = good; red = tread carefully.

(NEW) Sentiment - quantifies professional analyst ratings and holdings as well as market pulse. Green = positive sentiment; red = skepticism (Only available to Premium Subscribers).

(NEW) 360° View - the ultimate rating with all financial and non-financial indicators.

Automatic Data Processing stock research in summary

adp.com

ANALYSIS: With an Obermatt Combined Rank of 56 (better than 56% compared with investment alternatives), Automatic Data Processing (Data Processing & Outsourcing, USA) shares have above-average financial characteristics compared with similar stocks. Shares of Automatic Data Processing are a good value (attractively priced) with a consolidated Value Rank of 59 (better than 59% of alternatives), show above-average growth (Growth Rank of 57) but are riskily financed (Safety Rank of 44), which means above-average debt burdens. ...read more

RECOMMENDATION: A Combined Rank of 56, is a buy recommendation based on Automatic Data Processing's financial characteristics. As the company Automatic Data Processing's key financial metrics exhibit excellent performance in two areas, such as good value (Obermatt Value Rank of 59) and above-average growth (Obermatt Growth Rank of 57), it could be argued that the risk-taking in financing (Obermatt Safety Rank of only 44) indicates that the company is optimistic about the future and sees debt as an opportunity to boost returns. More debt means more shareholder returns if everything goes well. However, higher debt burdens are risky when interest rates rise or the business deteriorates in a crisis. If you believe the company's future is market-typical or even better, this could be an argument for a share purchase. Obermatt Premium subscribers can further check the stock’s Sentiment Ranks, which also flow into the Obermatt 360° View for investors. ...read more

Latest Obermatt Ranks


360° View^new
Sentiment Rank^new
Value Rank	59
Growth Rank	57
Safety Rank	44
Combined Rank	56

Country	USA
Industry	Data Processing & Outsourcing
Index	Dividends USA, Employee Focus US, Diversity USA, NASDAQ 100, NASDAQ, S&P 500
Size class	XX-Large

This stock has achievements: Top 10 Stock.

19-Dec-2024. Stock data may be delayed. Log in or sign up to get the most recent research.

Further information

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Review the performance ranks of the individual metrics that form each investment strategy.

Research History: Automatic Data Processing

RESEARCH HISTORY	2021	2022	2023	2024
VALUE
VALUE	36	31	32	59
GROWTH
GROWTH	68	41	25	57
SAFETY
SAFETY	64	100	43	44
SENTIMENT
SENTIMENT	n/a	81	83	^new
360° VIEW
360° VIEW	n/a	81	25	^new

Most recent update of the stock research: 19-Dec-2024. Financial reporting date used for calculating ranks: 30-Sep-2024. Stock research history is based on the Obermatt Method. The higher the rank, the better Automatic Data Processing is in the corresponding investment strategy.
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Combined financial peformance in Detail

RESEARCH HISTORY	2021	2022	2023	2024
VALUE
VALUE	36	31	32	59
GROWTH
GROWTH	68	41	25	57
SAFETY
SAFETY	64	100	43	44
COMBINED
COMBINED	60	67	12	56

Last update of combined financial performance: 19-Dec-2024. Stock analysis on combined financial performance: The higher the rank of Automatic Data Processing the better the performance.

Value Metrics in Detail

ANALYSIS: With an Obermatt Value Rank of 59 (better than 59% compared with alternatives), Automatic Data Processing shares are more attractively priced than the majority of comparable stocks. The Value Rank is based on consolidating four value indicators, with half of the indicators below and half above average for Automatic Data Processing. Price-to-Profit (also referred to as price-earnings, P/E) is 50 which means that the stock price compared with what market professionals expect for future profits is lower than for 50% of comparable companies, indicating a good value concerning Automatic Data Processing's profit levels. The same is valid for Price-to-Book Capital (also referred to as market-to-book ratio) with a Price-to-Book Rank of 6, which means that the stock price is lower as regards to invested capital than for 6% of comparable investments. On the other hand, Price-to-Sales is less favorable than 60% of alternatives (only 40% of peers have an even less favorable ratio). The same is valid for dividend yield, which is lower than 1% of comparable companies, making the stock more expensive as regards to the company's expected dividend payouts. ...read more

RECOMMENDATION: The overall picture with a consolidated Value Rank of 59, is a buy recommendation based on Automatic Data Processing's stock price compared with the company's operational size and dividend yields. This is a puzzling picture, because it means that profits are high while dividends are low. Since the stock price is low compared with invested capital but high in respect to expected revenues, it means that the company has more invested capital than peers for generating the same amount of revenue. Since profits are higher, it could be a "cash cow" situation (using the classic Boston Consulting BCG matrix naming convention) where the company is on a downward trend, still living from the profits of past products. As the company pays low dividends, it may harbor the opinion that a turnaround is possible, and it rather invests the cash than pay it out to shareholders, thus sealing the company's fate early. Any investment optimism should only be a buy trigger once thorough research is completed. We recommend further analyzing the stock with Obermatt’s Value, Safety, and Sentiment Ranks, including the 360° View, before making an investment decision, which is especially important in this case, as the financial indicators are inconclusive. ...read more

VALUE METRICS	2021	2022	2023	2024
PRICE VS. REVENUES (P/S)
PRICE VS. REVENUES (P/S)	20	25	18	40
PRICE VS. PROFITS (P/E)
PRICE VS. PROFITS (P/E)	64	20	29	50
PRICE VS. CAPITAL (Market-to-Book)
PRICE VS. CAPITAL (Market-to-Book)	4	11	3	6
DIVIDEND YIELD
DIVIDEND YIELD	78	91	90	99
CONSOLIDATED RANK: VALUE
CONSOLIDATED RANK: VALUE	36	31	32	59

Last update of Value Rank: 19-Dec-2024. Stock analysis on value ratios: The higher the rank, the lower the value ratio of Automatic Data Processing; except for dividend yield where the rank is higher, the higher the yield.

Growth Metrics in Detail

ANALYSIS: With an Obermatt Growth Rank of 57 (better than 57% compared with alternatives), Automatic Data Processing shows an above-average growth dynamic in its industry. Investors also speak of positive momentum. The Growth Rank is based on consolidating four value indicators, with half of the indicators below and half above average for Automatic Data Processing. Capital Growth has a rank of 51, which means that currently professionals expect the company to grow its invested capital more than 37% of its competitors. Investors welcomed this, visible in the Stock Returns rank of 81 (above 81% of alternative investments). But Sales Growth has only a rank of 27, which means that, currently, professionals expect the company to grow less than 73% of its competitors, and Profit Growth is also low at a rank of 37. ...read more

RECOMMENDATION: The overall picture with a consolidated Growth Rank of 57, is a buy recommendation for growth and momentum investors. This is an ambiguous picture. Revenue growth and capital growth are strong, but the growth in profit, which seems good, can also be an indication that growth momentum may be negative. The fact that stock returns have been above average doesn't help much, as stock returns are less reliable in showing a company’s future growth potential. Prices may perform well for the simple reason that investors were too pessimistic in the past and are now correcting their opinions and moving the stock price to a more reasonable level. As the growth picture is mixed for Automatic Data Processing, investors may want to look at value and sentiment indicators for a well-rounded picture of this stock. While momentum is a popular investment factor, the value aspect might be the more important one, in the longer term. We recommend analyzing the stock with Obermatt’s Value, Safety, and Sentiment Ranks to arrive at a 360° View of the stock purchase case, especially since the growth performance is mixed here. ...read more

GROWTH METRICS	2021	2022	2023	2024
REVENUE GROWTH
REVENUE GROWTH	40	26	26	27
PROFIT GROWTH
PROFIT GROWTH	41	22	57	37
CAPITAL GROWTH
CAPITAL GROWTH	n/a	36	18	51
STOCK RETURNS
STOCK RETURNS	86	93	31	81
CONSOLIDATED RANK: GROWTH
CONSOLIDATED RANK: GROWTH	68	41	25	57

Last update of Growth Rank: 19-Dec-2024. Stock analysis on growth metrics: The higher the rank, the higher the growth and returns of Automatic Data Processing.

Safety Metrics in Detail

ANALYSIS: With an Obermatt Safety Rank of 44 (better than 44% compared with alternatives), the company Automatic Data Processing has financing practices on the riskier side, which means that their overall debt burden is above the industry average. This doesn't mean that the business of Automatic Data Processing is also risky, it only means that the company is on the riskier side in respect to bankruptcy in case things turn sour, assuming that public reporting is correct. The Safety Rank is based on consolidating three financing indicators, with just one indicator above average for Automatic Data Processing. Liquidity is at 84, meaning the company generates more profit to service its debt than 84% of its competitors. This indicates that the company is safer when it comes to debt service. But Refinancing is riskier at a rank of 20, which means that the portion of the debt that is about to be refinanced is above average. It has more debt in the refinancing stage than 80% of its competitors. Leverage is also high at a rank of 41, which means that the company has an above-average debt-to-equity ratio. It has more debt than 59% of its competitors. ...read more

RECOMMENDATION: With a consolidated Safety Rank of 44 (worse than 56% compared with alternatives), Automatic Data Processing has a financing structure that is riskier than that of its competitors. High Leverage (a low Obermatt Leverage Rank) is good in good times, because it usually indicates that shareholders get higher returns. The good Liquidity performance of the company is an indicator that this is the case. However, if you expect an economic downturn, you may stay clear of this stock because they have an above-average debt level that needs refinancing soon. If the company is sailing with good winds, as may be visible from the Growth and Sentiment performance, the refinancing risk may be lower than the low Refinancing rank suggests. ...read more

SAFETY METRICS	2021	2022	2023	2024
LEVERAGE
LEVERAGE	49	72	52	41
REFINANCING
REFINANCING	57	96	6	20
LIQUIDITY
LIQUIDITY	76	98	89	84
CONSOLIDATED RANK: SAFETY
CONSOLIDATED RANK: SAFETY	64	100	43	44

Last update of Safety Rank: 19-Dec-2024. Stock analysis on safety metrics: The higher the rank, the lower the leverage of Automatic Data Processing and the more cash is available to service its debt.

Sentiment Metrics in Detail

SENTIMENT	2021	2022	2023	2024
ANALYST OPINIONS
ANALYST OPINIONS	n/a	17	7	^new
OPINIONS CHANGE
OPINIONS CHANGE	n/a	35	55	^new
PRO HOLDINGS
PRO HOLDINGS	n/a	96	98	^new
MARKET PULSE
MARKET PULSE	n/a	86	93	^new
CONSOLIDATED RANK: SENTIMENT
CONSOLIDATED RANK: SENTIMENT	n/a	81	83	^new

Last update of Sentiment Rank: 19-Dec-2024. Stock analysis on sentiment metrics: The higher the rank, the more positive the sentiment for Automatic Data Processing.
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