Automatic Data Processing AI Stock Analysis
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Automatic Data Processing (ADP) AI Stock Analysis
Automatic Data Processing
(NASDAQ:ADP)
ADP scores highly on financial quality (steady growth, resilient margins, and strong free-cash-flow conversion) and is reinforced by a positive earnings update with raised revenue/EPS and client-funds interest outlooks. Technicals also support the score with a clear uptrend. The main offset is valuation at a premium multiple and execution risks around modest margin/retention pressure and PEO-related uncertainty.
Automatic Data Processing Key Performance Indicators (KPIs)
Revenue by SegmentBreaks down revenue across ADP’s business lines (for example payroll processing, HR outsourcing/PEO, benefits administration and related services), showing which units drive growth and profitability. Investors can use this to spot where growth is coming from, which segments carry higher margins, and whether the company’s strategy is shifting toward more valuable services.
Employer Services is clearly the growth engine — steady, seasonal expansion underpinned by record bookings, Lyric enterprise wins and rapid AI adoption that should sustain cross‑sell and margin upside; management’s FY27 5–6% ES guidance assumes only modest retention slip and flat pays‑per‑control, so growth is durable but not accelerating. PEO revenue is rising too, yet an increasing mix of zero‑margin pass‑throughs masks weaker underlying growth and will continue to pressure PEO margins. 'Other' remains a tiny, stable drag. Key watch: pass‑through mix, ES retention and client‑fund yield.
The FlyAutomatic Data Processing (ADP) vs. SPDR S&P 500 ETF (SPY)
- Market Cap
- $120.94B
- Dividend Yield
- 2.22%
- Average Volume (3M)
- 2.16M
- Price to Earnings (P/E)
- 27.1
- Beta (1Y)
- 0.43
- Revenue Growth
- 6.50%
- EPS Growth
- 11.10%
- Country
- US
- Employees
- 67,000
- Sector
- Technology
- Sector Strength
- 61
- Industry
- Software - Application
Automatic Data Processing Business Overview & Revenue Model
Company Description
Automatic Data Processing, Inc. (ADP) is a global provider of cloud-based solutions designed for human capital management (HCM). The company organizes its operations into two primary segments: Employer Services and Professional Employer Organization...
How the Company Makes Money
ADP primarily makes money by charging employers recurring fees to run payroll and access HCM software and managed HR services. A major revenue stream comes from its Employer Services segment, which includes payroll processing (calculating pay, produc...
Automatic Data Processing Earnings Call Summary
The call was strongly positive. ADP delivered better-than-expected first-quarter revenue, margin, and EPS growth; raised consolidated revenue, client funds interest, pays per control, and adjusted EPS outlooks; and reported continued momentum in AI adoption, productivity, bookings, Lyric, embedded payroll, and PEO worksite employee growth. The main challenges were a softer start in global offerings, foreign-exchange headwinds, expected Employer Services retention pressure, flat PEO margins, and continued uncertainty around PEO SUI-related items, but these did not outweigh the broad operating and financial progress.
Q1-2027 Updates
Positive Updates
Negative Updates
Company Guidance
For fiscal 27, ADP maintained Employer Services revenue growth guidance of 4% to 7% for new business bookings, a 10 to 30 basis point decline in full year retention, and forecast pays per control growth of around 1%; it raised average client funds balances growth to a range of 4% to 5%, forecast a fiscal 27 average yield on its client funds portfolio of about 3.8%, and increased client funds interest revenue by $50 million to a range of $1.59 billion to $1.61 billion, while raising the net impact from its extended investment strategy by $45 million to the same range. ADP now expects fiscal 27 Employer Services revenue growth of about 6%, including close to half a point of FX headwind FY 27, total PEO revenues to grow by 5% to 7%, PEO revenue excluding zero margin pass throughs to grow by 3% to 5%, and average worksite employee growth of about 2%. Consolidated revenue guidance was increased to about 6% growth, while adjusted EBIT margin expansion remained at 70 to 90 basis points, the effective tax rate remained around 23%, and adjusted EPS growth was forecast at 10% to 12%.
Automatic Data Processing Financial Statement Overview
Summary
Strong, consistent fundamentals: revenue growth to ~$22.3B TTM, durable profitability (TTM gross margin ~48%, net margin ~20%), and robust cash generation (TTM FCF ~$5.0B; ~94% of net income). Balance sheet is manageable with improved leverage (~0.87 debt-to-equity), though returns are partly amplified by a relatively thin equity base and there is modest margin/FCF growth normalization.
Income Statement
86Very PositiveBalance Sheet
72PositiveCash Flow
83Very Positive| Breakdown | TTM | Jun 2026 | Jun 2025 | Jun 2024 | Jun 2023 | Jun 2022 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 22.26B | 21.95B | 20.56B | 19.20B | 18.01B | 16.50B |
| Gross Profit | 11.14B | 10.58B | 10.45B | 9.59B | 8.81B | 7.73B |
| EBITDA | 6.62B | 6.45B | 6.24B | 5.80B | 5.24B | 4.41B |
| Net Income | 4.53B | 4.41B | 4.08B | 3.75B | 3.41B | 2.95B |
Balance Sheet | ||||||
| Total Assets | 63.45B | 63.19B | 53.37B | 54.36B | 50.97B | 63.07B |
| Cash, Cash Equivalents and Short-Term Investments | 3.28B | 4.23B | 7.85B | 3.30B | 2.10B | 1.48B |
| Total Debt | 5.47B | 5.27B | 9.07B | 3.71B | 3.44B | 3.49B |
| Total Liabilities | 58.36B | 57.16B | 47.18B | 49.82B | 47.46B | 59.84B |
| Stockholders Equity | 5.09B | 6.03B | 6.19B | 4.55B | 3.51B | 3.23B |
Cash Flow | ||||||
| Free Cash Flow | 4.98B | 5.24B | 4.77B | 3.59B | 3.64B | 2.55B |
| Operating Cash Flow | 5.33B | 5.44B | 4.94B | 4.16B | 4.21B | 3.10B |
| Investing Cash Flow | -3.73B | -4.71B | -3.04B | -1.39B | -2.52B | -7.01B |
| Financing Cash Flow | 4.40B | 4.88B | -6.97B | -1.43B | -15.68B | 13.65B |
Automatic Data Processing Technical Analysis
Price Trends
Market Momentum
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For ADP, the sentiment is Positive. The current price of 306.36 is above the 20-day moving average (MA) of 297.16, above the 50-day MA of 280.10, and above the 200-day MA of 239.99, indicating a bullish trend. The MACD of 7.47 indicates Negative momentum. The RSI at 63.94 is Neutral, neither overbought nor oversold. The STOCH value of 74.62 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for ADP.
Automatic Data Processing Risk Analysis
Automatic Data Processing disclosed 1 risk factors in its most recent earnings report. Automatic Data Processing reported the most risks in the "Legal & Regulatory" category.
Latest Risks Added
1 New RiskAutomatic Data Processing Peers Comparison
Overall Rating
- ADP82.95Outperform
WDAY80Outperform
PCTY79Outperform
PAYC78Outperform
BILL73Outperform
INTU73Outperform
Financial Indicators
| Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
| ADP | 83Outperform | $120.58B | 27.09 | 75.85% | 2.22% | 6.50% | 11.10% |
| WDAY | 80Outperform | $45.52B | 38.62 | 16.78% | ― | 13.83% | 126.19% |
| PCTY | 79Outperform | $9.30B | 34.56 | 24.03% | ― | 10.63% | 28.37% |
| PAYC | 78Outperform | $10.72B | 23.18 | 53.39% | 0.62% | 9.49% | 29.42% |
| BILL | 73Outperform | $4.62B | 90.07 | 1.44% | ― | 7.42% | 430.42% |
| INTU | 73Outperform | $90.98B | 20.73 | 23.42% | 1.45% | 13.90% | 19.57% |
| Sector * | 61Neutral | $37.18B | 12.37 | -10.20% | 1.83% | 8.50% | -7.62% |
* Technology Sector Average
Performance Comparison
| Show on chart | Ticker | Company Name | Price | Change | % Change |
|---|---|---|---|---|---|
| ADP | Automatic Data Processing | 306.36 | 58.93 | 23.82% | |
| INTU | Intuit Inc. | 342.64 | -298.43 | -46.55% | |
| WDAY | Workday | 191.16 | -32.33 | -14.47% | |
| PAYC | Paycom Software | 242.66 | 79.54 | 48.76% | |
| PCTY | Paylocity Holding | 180.04 | 31.74 | 21.40% | |
| BILL | BILL Holdings, Inc. | 54.43 | 4.32 | 8.62% |
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.
Date of analysis: Oct 28, 2026