Automatic Data Processing, Inc. (ADP)
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.
This page preserves the published note at the report date shown below. For the live workspace with the latest daily scheduled quote, filing, fundamentals, and refreshed model output, return to the company page.
Current workspace reference
Kept here as reference beside the published report: the current workspace now shows a Sell signal with medium confidence as shares are currently being evaluated against an older daily scheduled quote of $221 versus $194 fair value, implying -12.2 downside.
Current workspace signal
Sell
Confidence
Medium
Stale scheduled quote
$221
Fair value
$194
-12.2 downside
Reference freshness
Price basis
Stale scheduled quote
Latest daily scheduled quote is past the freshness window. Daily scheduled refresh as of May 21, 2026, 6:52 AM UTC. Fresh through May 22, 2026, 6:52 AM UTC.
Filing reference
4 filed May 11, 2026 | Reporting period May 7, 2026
Filing refreshed Jun 6, 2026, 6:27 AM UTC. Fresh through Jun 6, 2026, 6:27 PM UTC.
Fundamentals reference
Live SEC companyfacts currently cover revenue and net cash / net debt. Reporting period end 2025-06-30.
Fundamentals refreshed 6 Jun 2026, 06:27 UTC. Fresh through 6 Jun 2026, 18:27 UTC.
Model vs published view
Current model signal differs from the latest published analyst rating.
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.
Bull / Base / Bear scenarios
Bull case
$207
Normalized support: Growth, margin, and cash-flow trends are supportive of the upside case.
Base case
$194
Normalized support: Current margin, cash-generation, and balance-sheet profile support the base case.
Bear case
$177
Downside protection: Cash generation and balance-sheet support are mixed in the bear case.
Base-case assumptions
These are the published base-case assumptions behind the note. They are reasoned valuation inputs at the report date, not reported facts.
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.
How to read the assumptions and sensitivities
These are base-case assumptions used to estimate fair value. They are reasonable model inputs, not reported facts.
Each sensitivity line shows the estimated fair-value-per-share change from a small move in that one input while the other inputs stay fixed.
bps means basis points. 100 bps equals 1.00 percentage point.
WACC sensitivity moves in the opposite direction because a higher discount rate lowers present value, while a lower discount rate raises it.
Model base vs reported fundamentals
Side-by-side view of the latest live reported fundamentals versus the current AnalystScope model base used in public valuation and thesis work.
Reported numbers show the latest company print. Model base is the comparable operating base AnalystScope uses for valuation work, which can include standardization, conservative balance-sheet treatment, working-capital cleanup, and through-cycle adjustments when current reported figures do not look durable.
Reported fundamentals source
SEC XBRL companyfacts API
Live SEC companyfacts currently cover revenue and net cash / net debt. Reporting period end 2025-06-30.
Fundamentals refreshed 6 Jun 2026, 06:27 UTC. Fresh through 6 Jun 2026, 18:27 UTC.
Model-base impact on the thesis
For ADP, the model base is intended to capture durable payroll and HCM economics while being conservative around client-funds and timing noise.
| Metric | Live reported | Status | Model base | Status |
|---|---|---|---|---|
| Revenue (TTM) | $20.6B | Live reported | $21.2B +10.4% YoY Adjustment: Model revenue smooths client employment growth and implementation timing rather than extrapolating one payroll cycle or labor print. | Model base |
| Operating Margin | Unavailable | Unavailable | 25.0% +104 bps YoY Adjustment: Margin input keeps the base on durable software-and-services economics rather than temporary expense timing. | Model base |
| FCF (TTM) | Unavailable | Unavailable | $4.6B 21.7% margin Adjustment: FCF input adjusts for working-capital timing and avoids overstating cash generation from short-term float effects. | Model base |
| Net Cash / (Debt) | ($767.1M) | Live reported | ($800.0M) Balance-sheet treatment stays conservative around client-funds complexity Adjustment: Balance-sheet treatment stays conservative around client funds and does not present that float as straightforward distributable net cash. | Model base |
Published investment view
The published report remains anchored to a Hold rating, with the latest note event recorded as New. The current workspace now evaluates the stock against $221 versus a base-case fair value of $194, implying -12.2 downside.
Fair value $194 vs. current $221 (-12.2 downside).
Confidence framing
Method agreement / dispersion
Valuation methods are tightly grouped, with implied values ranging from $190 to $198.
Margin strength
Operating margin is 25.0%, with +104 bps vs prior FY.
Balance sheet position
Balance sheet positioning is ($800.0M), with balance-sheet treatment stays conservative around client-funds complexity.
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 our 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.
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.
Report archive context
Archive metadata below keeps the published report context visible. Current workspace valuation and quote context stay secondary on this page.
How to read note event vs rating
Note event tells you what changed in the latest published note. Published rating shows the stance after that event.
Both were published Apr 10, 2026.
Report updated
Apr 10, 2026
Coverage status
Active coverage
Latest note event
New
Published Apr 10, 2026
Current published rating
Hold
Published Apr 10, 2026
Analyst note
Watching labor-market sensitivity, client retention, and whether cash conversion remains durable after float-related normalization.
What changed in the report
Apr 10, 2026
Added to AnalystScope coverage
Impact: New Hold view on durable payroll-and-HCM economics
Apr 10, 2026
Kept balance-sheet treatment conservative
Impact: Avoids overstating support from client-funds-related cash balances
Report timeline
Apr 10, 2026
Started coverage with a Hold view on recurring payroll economics and a still-contained spread to fair value.