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 51 (better than 51% 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 55 (better than 55% of alternatives), are safely financed (Safety Rank of 53, which means low debt burdens), but show below-average growth (Growth Rank of 47). ...read more

RECOMMENDATION: A Combined Rank of 51, is a buy recommendation based on Automatic Data Processing's financial characteristics. As the company Automatic Data Processing's key financial metrics exhibit good value (Obermatt Value Rank of 55) but low growth (Obermatt Growth Rank of 47) while being safely financed (Obermatt Safety Rank of 53), it may be a safer investment because companies with low debt can better withstand times of crises. Yet the good value, better than 55% of comparable companies, may also indicate that the company's future is challenging. If you believe that low growth is temporary or just due to a specific current event, you may conclude that the good value of the stock provides an attractive investment opportunity and the downside is limited due to below-average financing risks. 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	55
Growth Rank	47
Safety Rank	53
Combined Rank	51

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

14-Nov-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	55
GROWTH
GROWTH	68	41	25	47
SAFETY
SAFETY	64	100	43	53
SENTIMENT
SENTIMENT	n/a	81	83	^new
360° VIEW
360° VIEW	n/a	81	25	^new

Most recent update of the stock research: 14-Nov-2024. Financial reporting date used for calculating ranks: 30-Jun-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	55
GROWTH
GROWTH	68	41	25	47
SAFETY
SAFETY	64	100	43	53
COMBINED
COMBINED	60	67	12	51

Last update of combined financial performance: 14-Nov-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 55 (better than 55% 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 three out of four indicators below average for Automatic Data Processing. Only the metric dividend yield has an above-average rank, reflecting that dividend practices are expected to be higher than 99% of comparable companies, making the stock an attractive buy for dividend investors. However, dividend investors may get disappointed because all other critical financial indicators are below the market median: Price-to-Sales is 38 which means that the stock price compared with what market professionals expect for future profits is higher than 62% of comparable companies, indicating a low value concerning Automatic Data Processing's sales levels. The same is valid for Price-to-Profit (also referred to as price-earnings, P/E) with a rank of 44 which means that the stock price compared with what market professionals expect for future profit levels is higher than 56% of comparable companies. In addition, Price-to-Book (also referred to as market-to-book ratio) with a Price-to-Book Rank of 6 is also low. Compared with invested capital, the stock price is higher than for 94% of comparable investments. ...read more

RECOMMENDATION: The overall picture with a consolidated Value Rank of 55, is a buy recommendation based on Automatic Data Processing's stock price compared with the company's operational size and dividend yields. Should dividend investors pick Automatic Data Processing? The company-reported financials speak against it. The company is expensive compared with revenue and invested capital levels, two reliable company size indicators. In addition, it currently has a low level of profits. How can future dividends be paid in the case that profits remain low? Dividend investors should choose Automatic Data Processing only if they reasonably expect the low current profit levels to be transitory. 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 essential 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	38
PRICE VS. PROFITS (P/E)
PRICE VS. PROFITS (P/E)	64	20	29	44
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	55

Last update of Value Rank: 14-Nov-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 47 (better than 47% compared with alternatives), Automatic Data Processing shows a below-average growth dynamic in its industry. There is limited momentum in this company. The Growth Rank is based on consolidating four value indicators, with three out of four indicators below average for Automatic Data Processing. Sales Growth has a below market rank of 29, which means that, currently, professionals expect the company to grow less than 71% of its competitors. The same is valid for Capital Growth, with a rank of 46, and Profit Growth, with a rank of 36. Currently, professionals expect the company to grow its profits less than 64% of its competitors). Only shareholders are optimistic. Stock Returns are above average at a rank of 73, which means that the stock returns have recently been above 73% of alternative investments. ...read more

RECOMMENDATION: The overall picture with a consolidated Growth Rank of 47, is a hold recommendation for growth and momentum investors. That picture may be the result for a company that has reached the bottom. All went south for Automatic Data Processing, and it still looks bad, but some investors already see light at the end of the tunnel, rewarding the stock with recent above-market stock returns. It could also mean that investors are correcting an overreaction to negative news. If that were the case, the positive stock returns are not yet a sign of recovery. Investors should look closely at the Value and Sentiment indicators before they make a stock purchasing decision, because growth is unlikely to be the driving argument behind this investment. 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 low here. ...read more

GROWTH METRICS	2021	2022	2023	2024
REVENUE GROWTH
REVENUE GROWTH	40	26	26	29
PROFIT GROWTH
PROFIT GROWTH	41	22	57	36
CAPITAL GROWTH
CAPITAL GROWTH	n/a	36	18	46
STOCK RETURNS
STOCK RETURNS	86	93	31	73
CONSOLIDATED RANK: GROWTH
CONSOLIDATED RANK: GROWTH	68	41	25	47

Last update of Growth Rank: 14-Nov-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 53 (better than 53% compared with alternatives), the company Automatic Data Processing has financing practices on the safer side, which mean that their overall debt burden is lower than average. This doesn't mean that the business of Automatic Data Processing is safe, it only means that the company is on the safer side regarding possible bankruptcy, 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 87, meaning the company generates more profit to service its debt than 87% 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 53 (better than 53% compared with alternatives), Automatic Data Processing has a financing structure that is safer 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	87
CONSOLIDATED RANK: SAFETY
CONSOLIDATED RANK: SAFETY	64	100	43	53

Last update of Safety Rank: 14-Nov-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: 14-Nov-2024. Stock analysis on sentiment metrics: The higher the rank, the more positive the sentiment for Automatic Data Processing.
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