ADP
Automatic Data Processing, Inc.$214.97
Unclear
Target $225.43
Report: Mar 07, 2026Industrials • Staffing & Employment Services • Mature CompounderSnapshot
Decision-first overview with recommendation, valuation anchor, and current setup.
Company Overview
Research Snapshot
Price History
Pelican View
Current$214.97+4.9%
Rec: UnclearConviction: High
Entry Target
$173.41
(19% below current)
Fair Value
$225.43
(5% above current)
Stop Loss
$201.00
(6% below current)
Position Size
Half
Time Horizon
Long-Term
Key Metrics
Live Snapshot
Market Data
52 Week High$329.93
52 Week Low$198.59
Avg. 3 Month Volume3.52M
Efficiency
LTM Gross Margin46.0%
LTM EBITDA Margin30.8%
LTM EBIT Margin28.1%
LTM Operating Margin26.3%
LTM ROA6.8%
LTM ROE68.3%
LTM ROIC53.4%
LTM ROCE51.9%
Capital Structure
Market Cap (MM)$81.8B
Enterprise Value (MM)$83.8B
Shares Outstanding403.80M
Total Debt (MM)$4.37B
Cash & Equivalents (MM)$2.42B
LTM Net Debt (MM)$1.95B
LTM Net Debt/EBITDA0.3x
Growth
TTM Rev. Growth6.6%
Last 3-Yr Rev. CAGR7.1%
Last 3-Yr EBITDA CAGR11.3%
Last 3-Yr EPS CAGR11.3%
Valuation
Street Target Price$270.50
LTM EV/Revenue3.9x
LTM EV/Gross Profit8.6x
LTM EV/EBIT14.1x
LTM EV/EBITDA12.8x
LTM P/E19.3x
LTM EV/FCF20.0x
LTM P/FCF19.5x
LTM P/TB1.0x
LTM P/B12.8x
Dividend Yield3.1%
Payout Ratio60.5%
Executive SummarySituation: Current price is $214.97 versus fair value $225.43 (4.9% expected return), and valuation confidence is stable. Debate: Bull case depends on Lyric HCM Momentum: Continued success of the Lyric platform, which currently sees 70% of its pipeline from new logos, would validate ADP's ability to win enterprise market share from SaaS disruptors. Bear case centers on SaaS Commoditization: Mid-market competitors like Paycom and Paylocity could permanently impair ADP's pricing power through superior user interfaces and lower all-in pricing. Conclusion: Recommendation is Unclear; maintain no position until reliability and catalyst evidence improve.
Bull Case
ADP's AI-driven data moat and the high-margin PEO engine will drive superior long-term compounding; the company's 121% FCF-to-net-income conversion ratio demonstrates elite earnings quality.
Bear Case
SaaS commoditization and slowing U.S. employment growth will erode mid-market share; aggressive debt-funded buybacks at high multiples create long-term sustainability risks.
Key Catalysts
Mid-Term (6-18 months)Impact: High
Lyric HCM Momentum: Continued success of the Lyric platform, which currently sees 70% of its pipeline from new logos, would validate ADP's a...
Near-Term (0-6 months)Impact: Moderate
AI-Driven Margin Expansion: The rollout of ADP Assist and other GenAI tools for service associates is expected to drive productivity gains a...
Long-Term (18+ months)Impact: Moderate
ADP is currently relevant due to its recent raise in FY2026 revenue and EPS guidance, contrasted against a stock price that has underperform...
Primary Risks
Concern: High
SaaS Commoditization: Mid-market competitors like Paycom and Paylocity could permanently impair ADP's pricing power through superior user in...
Concern: Medium
Macro Employment Slowdown: A significant decline in U.S. hiring would directly reduce 'pays per period' revenue and client-fund interest bal...
Concern: Medium
Stewardship is strong but tempered by weak incentive alignment. While the board is highly independent and includes elite operational talent...
Recent Activity
2025-10-29SEC Filing (8-K)
-6.58%ADP reported first quarter fiscal 2026 results with 7% revenue growth and maintained fiscal 2026 outlook.
2023-10-25SEC Filing (8-K)
-9.20%ADP reported first quarter fiscal 2024 results with 7% revenue growth and maintained fiscal 2024 outlook.
2023-07-26SEC Filing (8-K)
+5.39%ADP reports Q4 and FY2023 results with 9% revenue growth and provides FY2024 outlook.
2022-07-27SEC Filing (8-K)
+7.40%ADP reports Q4 and FY2022 results with 10% revenue growth and provides FY2023 outlook.
2022-01-26SEC Filing (8-K)
-8.95%ADP reported second quarter fiscal 2022 results with 9% revenue growth and raised fiscal 2022 guidance.
Valuation Table
9.8/10Decision Grade
Scenario Range
$182
Bear
$271
Bull
$215