ADPADP
US • —
$232.58
P/E
21.68
PEG
2.21
FCF Yield
—
Rev Growth YoY
+6.9% YoY
Gross Margin
46.4%
Health Score
7/10
D/E Ratio
1.41
Confidence
LOW
Business Snapshot
Automatic Data Processing (ADP) is a leading provider of cloud-based human capital management (HCM) solutions, including payroll, benefits administration, and talent management services. The company operates in the highly competitive HCM and payroll processing market, where it holds a dominant position alongside a few other major players. As a large-cap company, ADP generates substantial revenue from a recurring, subscription-based model that provides a high degree of revenue visibility. A defining characteristic of ADP is its strong economic moat, built on decades of client relationships, high switching costs, and a massive recurring revenue base.
Financial Health
ADP demonstrates strong profitability with a gross margin of 46.4% and a net margin of 20.1%, indicating efficient operations and significant pricing power. The balance sheet is moderately leveraged, with a debt-to-equity ratio of 1.41x and a current ratio of 1.05x, suggesting adequate short-term liquidity but a notable reliance on debt financing...
Risk Assessment
- VALUATION — The Price/Book ratio of 20.2x is extremely high, indicating the market is paying a substantial premium over net asset value.
- DEBT / LIQUIDITY — Debt/equity of 1.41x and a current ratio of 1.05x point to a balance sheet with moderate leverage and tight short-term liquidity.
- INSIDER — Over the last 90 days, there have been 7 insider sells versus only 1 buy, a net-selling pattern that can signal a lack of confidence from company executives.
- EARNINGS QUALITY — While the company beat estimates in all of the last 4 quarters, strong beats do not inherently present a risk.
- TECHNICALS — RSI, MACD, and moving average data unavailable for this period; momentum cannot be independently confirmed....
ADP demonstrates strong profitability with a gross margin of 46.4% and a net margin of 20.1%, indicating efficient operations and significant pricing power. The balance sheet is moderately leveraged, with a debt-to-equity ratio of 1.41x and a current ratio of 1.05x, suggesting adequate short-term liquidity but a notable reliance on debt financing. Return on equity is exceptionally high at 68.7%, reflecting the company's ability to generate substantial profit from shareholder equity. Free cash flow data is unavailable for this analysis, making it difficult to fully assess cash generation capacity and dividend coverage. Overall, ADP's financial health is solid, characterised by strong margins and high returns, though its debt level and the absence of cash flow data warrant attention.
- VALUATION — The Price/Book ratio of 20.2x is extremely high, indicating the market is paying a substantial premium over net asset value. - DEBT / LIQUIDITY — Debt/equity of 1.41x and a current ratio of 1.05x point to a balance sheet with moderate leverage and tight short-term liquidity. - INSIDER — Over the last 90 days, there have been 7 insider sells versus only 1 buy, a net-selling pattern that can signal a lack of confidence from company executives. - EARNINGS QUALITY — While the company beat estimates in all of the last 4 quarters, strong beats do not inherently present a risk. - TECHNICALS — RSI, MACD, and moving average data unavailable for this period; momentum cannot be independently confirmed.
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