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Automatic Data Processing Inc
🇺🇸 ADP · NYSE/NASDAQ
Technology
Price at analysis: USD 287.27 Current price: USD 282.99 * updated every night
Scores
Key Metrics
Powered by EODHDP/E (TTM)
26.0
P/E (Price-to-Earnings)Shows how much investors pay for each $1 of profit. We display the TTM P/E (Trailing Twelve Months) which uses actual earnings from the last 4 quarters. This is more reliable than Forward P/E which uses analyst estimates.
Calculation: 287.27 ÷ 11.05 = 26.0
TTM period through: 2026-06-30
Forward P/E (estimated): 22.0
Based on analyst estimates
Reference: Provider P/E (Trailing): 25.2
Net Debt/EBITDA (TTM)
0.2x
Latest quarter: 0.8x
Net Debt / EBITDAA leverage ratio showing how many years of EBITDA (earnings before interest, taxes, depreciation, and amortization) it would take to repay net debt. EBITDA approximates operating cash generation. Lower ratios (e.g., <3x) are generally safer; higher (e.g., >5x) may indicate more financial risk.
TTM through: 2026-06-30
Latest quarter (2026-06-30): 0.8x
The quarterly value can spike when quarterly EBITDA is very low (e.g., one-time charges).
Quick guide: <2x manageable, >4x can be risky (sector-dependent).
ROE
72.2%
ROE (Return on Equity)A profitability measure: how much profit is generated from shareholders’ equity. Higher isn’t always better if it comes from high debt.
EV/EBITDA
16.0x
EV/EBITDAA valuation ratio that compares total business value (including debt) to EBITDA. Lower can mean cheaper, but context matters.
Dividend Summary
Powered by EODHDDividend Yield (Fwd)
3.04%
TTM: 2.37%
Dividend YieldThe Forward yield (Fwd) shows the next announced annual dividend / current price — what you'd earn going forward. The Trailing yield (TTM) in the tooltip shows dividends actually paid in the last 12 months. Forward is shown as primary because it reflects the company's current commitment to shareholders.
Forward Yield (estimated): 3.04%
Trailing Yield (TTM, last 12 months): 2.37%
Payout Ratio (Fwd)
61.5%
TTM: 59.5%
Payout RatioDividends as a percentage of earnings. The Forward payout (Fwd) uses the announced dividend divided by actual past earnings (TTM) — it tells you if the company can afford what it promised. Very high payouts can be risky, especially if profits fall.
Announced dividend / actual earnings (TTM)
Payout (Fwd): 61.5%
Payout (TTM): 59.5%
Cash Flow Payout (TTM): 48.3%
FCF Coverage (TTM): 2.00x
Growth Streak
8 yrs
Consec. increases
Div. Growth (5Y)
11.5%
Dividend History
EODHD Dividends API| Status | Type | Decl. Date | Ex-Div Date | Pay Date | Currency | Amount |
|---|---|---|---|---|---|---|
| Forecast* | Quarterly | — | 11 Sep 2027 | — | USD | 1.7 |
| Forecast* | Quarterly | — | 12 Jun 2027 | — | USD | 1.7 |
| Forecast* | Quarterly | — | 13 Mar 2027 | — | USD | 1.7 |
| Forecast* | Quarterly | — | 12 Dec 2026 | — | USD | 1.7 |
| Paid | Quarterly | 05 Aug 2026 | 11 Sep 2026 | 01 Oct 2026 | USD | 1.7 |
| Paid | Quarterly | 08 Apr 2026 | 12 Jun 2026 | 01 Jul 2026 | USD | 1.7 |
| Paid | Quarterly | 14 Jan 2026 | 13 Mar 2026 | 01 Apr 2026 | USD | 1.7 |
| Paid | Quarterly | 12 Nov 2025 | 12 Dec 2025 | 01 Jan 2026 | USD | 1.7 |
* Extrapolated from past dividend history. Not an official announcement — treat as an estimate, not a confirmed date or amount.
Summary
Automatic Data Processing is a dominant, wide-moat B2B service leader with an exceptional balance sheet and highly resilient cash flows. While recent legal resolutions have successfully cleared past overhangs, the premium TTM P/E of 26.00x at current 52-week highs provides zero margin of safety. Existing holders should maintain given the strong dividend safety, but new capital should wait for a substantial valuation reset.
Sector Context
Automatic Data Processing operates in the Technology sector (Software - Application) but functions practically as an essential B2B financial utility. Its highly recurring revenue from payroll processing, human capital management (HCM), and float income generated on client funds makes it an incredibly resilient cash compounder deeply aligned with DGI principles.
📊 Strategy Analysis
- • Elite balance sheet with exceptionally low Net Debt/EBITDA of 0.16x and a massive 72.24% ROE.
- • Outstanding dividend safety with 2.0x FCF coverage, a secure 48.27% cash flow payout ratio, and a 5Y growth CAGR of 11.5%.
- • Wide economic moat driven by high switching costs, vast compliance complexities, and irreplaceable global payroll infrastructure.
- • Recent resolution of the $48M ERISA class-action settlement successfully caps prior legal overhangs without material financial damage.
⚠ What to Watch
- • Valuation remains heavily stretched with a TTM P/E of 26.00x, substantially above the strategy's optimal 8-15x entry target.
- • The stock is trading near a 52-week high ($288.25), eliminating any margin of safety or temporary problem discount.
- • Long-term structural risk of float income compression exists if future tax regulations mandate real-time or significantly shorter holding periods for payroll tax remittance.
📊 Historical Trends (10 Years)
Powered by EODHDThese charts show how key metrics have evolved over the past decade, helping you identify if the company is improving or deteriorating.
Debt Evolution (Net Debt / EBITDA)
Lower values are better. A declining trend indicates the company is reducing its debt (deleveraging).
Revenue & Earnings Growth
Consistent growth in revenueRevenue
The money a company brings in from selling its products or services. It’s the top line before costs. (blue) and earningsEarnings (Profit)
What’s left after expenses. Positive earnings mean the business made a profit; negative means a loss. (green) indicates a healthy business. Look for upward trends and recoveries after temporary dips.
Dividend Sustainability (FCF vs Dividends Paid)
Free cash flowFree Cash Flow
Cash left after the company pays for running the business and maintaining it. Often used to fund dividends, pay debt, or buy back shares. (FCFFCF (Free Cash Flow)
Short for Free Cash Flow: cash left after operating needs and maintenance spending., blue) should cover dividends paidDividends Paid
Cash the company paid out to shareholders. It’s not guaranteed and can change over time. (green). If dividends consistently exceed FCFFCF (Free Cash Flow)
Short for Free Cash Flow: cash left after operating needs and maintenance spending., the dividend may be at risk.
Analysis date: 2026-10-17
Disclaimer: This information is for educational purposes only. Not financial advice.