ADP
Automatic Data Processing, Inc.
Industrials / Human Resource & Employment Services / Roseland, NJ
AnalystScope signal
Sell
Scheduled quote
$255
Base fair value
$194
Bear / base / bull
$177 / $194 / $207
Upside / downside
-24.1 downside
Confidence
Medium
Research updated Apr 10, 2026
Daily scheduled refresh as of Jul 21, 2026, 6:05 AM UTC. Fresh through Jul 22, 2026, 6:05 AM UTC.
Informational research only. Not personalized investment advice.
Model vs published view
Current model signal differs from the latest published analyst rating.
Live current-price moves may be widening the gap versus the latest published view.
Investment summary
Current view and thesis
ADP remains a high-quality payroll and HCM compounder, but the current setup still looks closer to Hold than to a wide-gap rerating case.
Fair value $194 vs. current $255 (-24.1 downside). Current base fair value is $194 versus $255, implying -24.1 downside.
Key drivers
Payroll and HCM workflows remain mission-critical, supporting retention and durable recurring revenue.
Operating leverage and steady cash generation provide a credible valuation floor.
The current multiple is more reasonable than prior highs, but still not cheap enough to force a harder rating.
Key risks
A softer labor market could moderate client growth and payroll-linked revenue more than the base case assumes.
Client-funds and float dynamics make balance-sheet interpretation more nuanced than a simple net-cash read.
If margin progression slows while the multiple stays firm, the upside case would narrow.
What would change the view
A wider discount to fair value would make the workflow-quality story more attractive.
Stronger evidence of durable HCM cross-sell and client growth would improve conviction.
If labor-market softness persists and cash conversion weakens, the current Hold stance would deteriorate.
Valuation
Price, range, and method support
Base case $194 / -24.1 downside / medium confidence
Price vs fair value
-24.0%
Model-implied return
Scheduled quote
$255
Fair value
$194
Valuation method stack
Weighted fair value $194
Published method weights
DCF (Base)
$190 | 45%
NTM P/E Multiple
$198 | 35%
EV/EBITDA Cross-check
$195 | 20%
| Case / method | Value | Weight / support |
|---|---|---|
| DCF (Base) | $190 | 45% |
| NTM P/E Multiple | $198 | 35% |
| EV/EBITDA Cross-check | $195 | 20% |
| Bear case | $177 | Mixed |
| Base case | $194 | Supportive |
| Bull case | $207 | Supportive |
Fundamental analysis
Reported evidence and normalized model base
Normalized annual basis: FY2025
Normalized figures are AnalystScope's annual valuation model base.
| Normalized metric | Latest value | Growth / margin context |
|---|---|---|
| Revenue | $21.2B | +10.4% YoY |
| Operating income | $5.3B | 25.0% margin |
| Net income | $4.2B | EPS proxy $10.31 |
| Free cash flow | $4.6B | 21.7% margin |
| EBITDA | $5.8B | 27.4% margin |
| Net cash / (debt) | -$800.0M | -3.8% of revenue |
| Metric | Reported | AnalystScope normalized | Basis note |
|---|---|---|---|
| Revenue (TTM) | $20.6B | $21.2B | Model revenue smooths client employment growth and implementation timing rather than extrapolating one payroll cycle or labor print. |
| Operating Margin | Unavailable | 25.0% | Margin input keeps the base on durable software-and-services economics rather than temporary expense timing. |
| FCF (TTM) | Unavailable | $4.6B | FCF input adjusts for working-capital timing and avoids overstating cash generation from short-term float effects. |
| Net Cash / (Debt) | ($767.1M) | ($800.0M) | Balance-sheet treatment stays conservative around client funds and does not present that float as straightforward distributable net cash. |
Fundamental snapshot
FY2025
Normalized annual model base
Revenue
+10.4% YoY
$21.2B
Op. margin
+1.0% pts
25.0%
FCF margin
-0.2% pts
21.7%
Revenue + margin trend
Annual normalized model-base history.
Revenue
Operating margin
AnalystScope annual model-base statements in USD across FY2023 | FY2024 | FY2025.
Income statement
| Line item | FY2023 | FY2024 | FY2025 |
|---|---|---|---|
| Revenue | $18.0B | $19.2B | $21.2B |
| Gross Profit | $8.2B | $8.9B | $9.9B |
| Operating Income | $4.0B | $4.6B | $5.3B |
| EBITDA | $4.4B | $5.1B | $5.8B |
| Net Income | $3.3B | $3.7B | $4.2B |
Balance sheet
| Line item | FY2023 | FY2024 | FY2025 |
|---|---|---|---|
| Cash & Investments | $2.6B | $2.8B | $3.0B |
| Total Debt | $4.2B | $4.0B | $3.8B |
| Net Cash / (Debt) | ($1.6B) | ($1.2B) | ($800.0M) |
| Total Assets | $52.0B | $55.0B | $58.0B |
| Total Liabilities | $45.0B | $47.6B | $50.0B |
| Shareholders' Equity | $7.0B | $7.4B | $8.0B |
Cash flow
| Line item | FY2023 | FY2024 | FY2025 |
|---|---|---|---|
| Operating Cash Flow | $4.1B | $4.5B | $5.0B |
| Depreciation & Amortization | $400.0M | $500.0M | $500.0M |
| Capital Expenditures | ($300.0M) | ($300.0M) | ($400.0M) |
| Free Cash Flow | $3.8B | $4.2B | $4.6B |
Model assumptions
Base-case inputs and sensitivity
Published AnalystScope assumptions; private edits do not change this base case.
Revenue CAGR (5Y)
6.0%
+/- 1.0% => +/-$5/sh
Why this level: This is AnalystScope's base-case growth assumption, not a guarantee. It sits below the latest FY model-base revenue pace (2025.0%), so the model does not extend current strength too far into the outer years. Current company context: Payroll and HCM workflows remain mission-critical, supporting retention and durable recurring revenue.
Terminal Growth
2.5%
+/- 0.5% => +/-$3/sh
Why this level: This is AnalystScope's mature long-run growth assumption, not a perpetual hypergrowth claim. At 2.5%, it sits well below the 6.0% five-year revenue CAGR, so the model steps down from the explicit forecast period to a steadier long-run pace. For Automatic Data Processing, Inc., that means a durable franchise can keep compounding after year five without assuming today's faster growth profile lasts indefinitely.
WACC
8.1%
+/- 0.5% => -$5/sh
Why this level: This is AnalystScope's base-case cost-of-capital judgment, not a precise CAPM output. It reflects the current rates backdrop, equity risk premium, and the company's balance-sheet posture. Balance-sheet treatment stays conservative around client-funds complexity
Operating Margin (Year 5)
25.5%
+/- 100 bps => +/-$4/sh
Why this level: This is AnalystScope's base-case margin view, not a promise of straight-line expansion. It keeps year-five margins close to today's model-base operating margin (25.0%), which implies the current margin structure is broadly durable. Margin input keeps the base on durable software-and-services economics rather than temporary expense timing.
Sensitivity drivers
Revenue CAGR (5Y)
6.0%
+/- 1.0% => +/-$5/sh
Terminal Growth
2.5%
+/- 0.5% => +/-$3/sh
WACC
8.1%
+/- 0.5% => -$5/sh
Operating Margin (Year 5)
25.5%
+/- 100 bps => +/-$4/sh
Confidence
Medium
Method outputs are tightly grouped at +4.1% dispersion.
Why the model view could be wrong
A softer labor market could moderate client growth and payroll-linked revenue more than the base case assumes.
Client-funds and float dynamics make balance-sheet interpretation more nuanced than a simple net-cash read.
If margin progression slows while the multiple stays firm, the upside case would narrow.
Private analysis
Test your own assumptions in Scenario Builder
Private scenarios remain separate from AnalystScope's published base case.
Private workspace
Scenario Builder
Private scenario sandbox
This is a private modelling layer, not the public AnalystScope base case or printable snapshot. It keeps the public base case as the anchor, applies bounded changes to the four core valuation inputs, and updates your scenario fair-value estimate immediately.
Saved scenarios currently stay local to this browser for ADP. Base-case rationale remains in the public assumptions section above. Your scenario output reprices the published valuation methods from projected operating anchors when those anchors are available, while keeping market-multiple and capital-structure assumptions anchored to the AnalystScope framework.
Editable assumptions
Adjust your scenario inputs within the displayed plausible range for this company. The workbench stays anchored to the public AnalystScope base case.
This is a bounded scenario tool, not a free-form spreadsheet. Values outside the displayed range snap back to the nearest allowed value when you leave the field.
Matches the published AnalystScope base case.
Revenue CAGR (5Y)
Public AnalystScope base case: 6.0% | +/- 1.0% => +/-$5/sh
Allowed range: 0.0% to 12.0%
Terminal Growth
Public AnalystScope base case: 2.5% | +/- 0.5% => +/-$3/sh
Allowed range: 1.0% to 4.0%
WACC
Public AnalystScope base case: 8.1% | +/- 0.5% => -$5/sh
Allowed range: 6.1% to 10.1%
Operating Margin (Year 5)
Public AnalystScope base case: 25.5% | +/- 100 bps => +/-$4/sh
Allowed range: 17.5% to 33.5%
Saved private scenarios
Save up to 5 named scenarios for ADP. These are your scenarios: they never overwrite the public AnalystScope base case and remain clearly separate from public research.
Checking private workspace session...
Private scenario note
Keep a short thesis, main risk, or why this case differs from the published base case.
0 / 280
Notes stay local to this browser unless you sign in to the private workspace, and they never appear as published AnalystScope research.
No private scenarios saved yet. Make a change to the published base case, then save a named scenario here.
Published base case
Fair value
$194
Upside / Downside
-24.1 downside
Model signal
Sell
Published base-case output
Scenario output reprices the published DCF and multiple methods from projected year-5 revenue, margin, free cash flow, EBITDA, and EPS anchors. Market multiples and capital structure stay anchored to the published base framework.
Fair value
$194
$0/sh vs published base case
Upside / Downside
-24.1 downside
+0.0 pts vs published base case
Model signal
Sell
Unchanged versus the published base case.
Method movement inside the scenario
This breakdown shows what moved inside the published valuation framework when you edit the scenario. The published AnalystScope base case stays anchored, and any method without a clean projected anchor remains pinned to that framework.
Method rows below reflect the current edited scenario state, not just the saved scenario snapshots.
Influence tags are directional rather than exact attribution. They estimate which edited input is moving each method most by reverting one assumption at a time while the other edited inputs stay in place.
| Method | Published base | Edited scenario | Delta | How it moved / main drivers |
|---|---|---|---|---|
DCF (Base) DCF-style | 45% weight | $190 | $190 | $0/sh | Base-aligned This method is supported by the model-native bridge and currently stays aligned with the published base case. Edited inputs are largely offsetting each other, so this row stays close to the published base case. |
NTM P/E Multiple P/E-style | 35% weight | $198 | $198 | $0/sh | Base-aligned This method is supported by the model-native bridge and currently stays aligned with the published base case. Edited inputs are largely offsetting each other, so this row stays close to the published base case. |
EV/EBITDA Cross-check EV-based multiple | 20% weight | $195 | $195 | $0/sh | Base-aligned This method is supported by the model-native bridge and currently stays aligned with the published base case. Edited inputs are largely offsetting each other, so this row stays close to the published base case. |
Weighted fair value Published framework result | Published framework result | $194 | $194 | -$0/sh | Moved Combines the repriced method outputs using the published AnalystScope weights. No single edited assumption is dominating this move in a material way. |
Published base case vs private scenarios
Compare the published AnalystScope base case against your saved private scenarios in one view. Saved scenarios remain local to this browser, and the table below reflects saved snapshots rather than any unsaved edits currently sitting in the editor.
Fair-value comparisons use the same workbench recalculation path as the editor above.
Published base case stays pinned as the anchor row.
| Scenario | Revenue CAGR (5Y) | Terminal Growth | WACC | Op. Margin (Y5) | Fair Value | Upside / Downside | Model Signal | Delta vs Base | Action |
|---|---|---|---|---|---|---|---|---|---|
AnalystScope base case PublishedOfficial AnalystScope anchor row. | 6.0% | 2.5% | 8.1% | 25.5% | $194 | -24.1 downside | Sell | Published anchor |
Supporting research
Quality, normalization, and monitoring evidence
Annual model base: FY2023 | FY2024 | FY2025
Thesis scorecard
Growth
ModerateRecurring payroll and HCM demand supports steady growth, though not a high-velocity profile.
Profitability
StrongScale and retention support durable operating leverage.
Balance sheet
ModerateThe balance sheet is manageable, but client-funds complexity warrants conservative treatment.
Valuation
ModerateThe recent drawdown helps, but the valuation spread still looks contained.
Execution / Resilience
StrongPayroll mission-criticality and retention support resilience.
Current source status
Quote: Daily scheduled refresh as of Jul 21, 2026, 6:05 AM UTC. Fresh through Jul 22, 2026, 6:05 AM UTC.
Reported fundamentals: Fundamentals refreshed 21 Jul 2026, 00:39 UTC. Fresh through 21 Jul 2026, 12:39 UTC.
Latest filing: 4 filed Jul 2, 2026 | Reporting period Jul 1, 2026. Filing refreshed Jul 21, 2026, 12:39 AM UTC. Fresh through Jul 21, 2026, 12:39 PM UTC.
Annual model-base income-statement, cash-flow, and balance-sheet metrics, plus cross-statement quality relationships with compact prior-FY direction cues, derived from the curated statement backbone.
Basis: FY2023 | FY2024 | FY2025. Live reported fundamentals remain available in the reconciliation section.
Operating and cash-flow trends
Revenue growth (1Y)
+10.4%
Gross margin
46.7%
Operating margin
25.0%
Operating margin change vs prior FY
+1.0 pts
EBITDA margin
27.4%
EBITDA margin change vs prior FY
+0.8 pts
Operating income growth (1Y)
+15.2%
Net margin
19.8%
FCF margin
21.7%
FCF margin change vs prior FY
-0.2 pts
FCF growth (1Y)
+9.5%
Balance sheet quality
Cash & investments
$3.0B
Total debt
$3.8B
Net cash / (debt)
Net debt $800.0M
Net cash / (debt) as % of revenue
Net debt 3.8% of revenue
Liabilities / assets
vs FY2024 (-0.3 pts)
86.2%
Cross-statement quality
Gross-to-operating spread
21.7 pts
Operating cash flow / net income
vs FY2024 (-0.0x)
1.2x
Operating cash flow / EBITDA
vs FY2024 (-0.0x)
0.9x
Free cash flow / net income
vs FY2024 (-0.0x)
1.1x
CapEx as % of revenue
vs FY2024 (+0.3 pts)
1.9%
CapEx as % of operating cash flow
vs FY2024 (+1.3 pts)
8.0%
CapEx / D&A
vs FY2024 (+0.2x)
0.8x
Cash & investments / total debt
vs FY2024 (+0.1x)
0.8x
Shareholders' equity as % of revenue
37.7%
Asset turnover
vs FY2024 (+0.0x)
0.4x
Compact model-base diagnostics for analyst triage, highlighting where the durable valuation base is diverging most clearly from the latest reported picture.
Revenue momentum
Improving+10.4% latest 1Y growth
vs +6.7% prior 1Y
Operating margin trend
Improving25.0% latest margin
+104 bps vs prior FY
FCF margin trend
Stable21.7% latest FCF margin
-18 bps vs prior FY
Balance-sheet posture
StableNet debt 3.8% of revenue
vs Net debt 6.3% of revenue prior FY
How to read this
Reported = the latest company-reported figure. Model base = AnalystScope's comparable operating base used for valuation and thesis work. It may include standardization, conservative balance-sheet treatment, working-capital cleanup, and through-cycle adjustments when current reported numbers do not look durable.
This is an analyst model base, not a claim of perfect adjusted truth. Larger gaps can reflect deliberate cyclical or base-case adjustments, not just light accounting cleanup.
Why the model base differs
For ADP, the model base is intended to capture durable payroll and HCM economics while being conservative around client-funds and timing noise.
Rows are sorted by largest comparable adjustment first.
| Metric | Model base | Live reported | Variance vs reported | Adjustment size | Why lower / higher? |
|---|---|---|---|---|---|
Revenue (TTM) | $21.2B FY2025 model base | $20.6B Live reported TTM | +$600.0M / +3% | Close to reported | Model base is higher than live reported because the thesis does not assume the latest reported softness is the durable revenue run-rate. It smooths client employment growth and implementation timing rather than extrapolating one payroll cycle or labor print. |
Net Cash / (Debt) | ($800.0M) FY2025 model base | ($767.1M) Live reported balance sheet | -$32.9M / 0% of revenue | Close to reported | Model base is more conservative than the live reported balance-sheet figure. It stays conservative around client funds and does not present that float as straightforward distributable net cash. |
Operating Margin | 25.0% FY2025 model base | Unavailable Live reported margin | Unavailable | Unavailable | AnalystScope keeps a separate model base when the latest reported figure is unavailable or not directly comparable. It keeps the base on durable software-and-services economics rather than temporary expense timing. |
FCF (TTM) | $4.6B FY2025 model base | Unavailable Live reported TTM | Unavailable | Unavailable | AnalystScope keeps a separate model base when the latest reported figure is unavailable or not directly comparable. It adjusts for working-capital timing and avoids overstating cash generation from short-term float effects. |
Near-term catalysts
Client-retention, pays-per-control, and HCM attach commentary remain the clearest near-term drivers.
Margin flow-through matters more than a single quarter of payroll-volume noise in this setup.
Any clearer read on labor-market resilience would help frame the current revenue base.
What we are watching
Whether client growth and retention stay solid through a softer labor backdrop.
How much current cash conversion is structural versus influenced by float and timing effects.
Whether HCM mix is strengthening enough to offset any slower payroll-volume growth.
| Date | Event | Published rating | Note |
|---|---|---|---|
| Apr 10, 2026 | New | Hold | Started coverage with a Hold view on recurring payroll economics and a still-contained spread to fair value. |