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Automatic Data Processing Inc
🇺🇸 ADP · NYSE/NASDAQ · US0530151036
Technology
USD 239.00 price at analysis
Scores
Key Metrics
Powered by EODHDP/E (TTM)
22.3
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: 239.00 ÷ 10.73 = 22.3
TTM period through: 2026-03-31
Forward P/E (estimated): 19.4
Based on analyst estimates
Reference: Provider P/E (Trailing): 22.6
Net Debt/EBITDA (TTM)
0.2x
Latest quarter: 0.6x
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: 2026-03-31
Latest quarter (2026-03-31): 0.6x
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
71.2%
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
14.2x
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)
2.85%
TTM: 2.75%
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): 2.85%
Trailing Yield (TTM, last 12 months): 2.75%
Payout Ratio (Fwd)
63.4%
TTM: 59.1%
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): 63.4%
Payout (TTM): 59.1%
Cash Flow Payout (TTM): 47.1%
FCF Coverage (TTM): 2.01x
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 | — | 12 Jun 2027 | — | USD | 1.7 |
| Forecast* | Quarterly | — | 13 Mar 2027 | — | USD | 1.7 |
| Forecast* | Quarterly | — | 12 Dec 2026 | — | USD | 1.7 |
| Forecast* | Quarterly | — | 12 Sep 2026 | — | USD | 1.54 |
| 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 |
| Paid | Quarterly | 06 Aug 2025 | 12 Sep 2025 | 01 Oct 2025 | USD | 1.54 |
* 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 high-quality B2B software leader with an exceptional balance sheet, wide economic moat, and pristine dividend history. While the underlying business remains incredibly resilient and shareholder-friendly with strong cash flow coverage, current valuation multiples (P/E 22.3) and a 2.75% yield offer limited upside. Existing shareholders should maintain positions given the outstanding fundamentals, but new investors may want to wait for a better entry point closer to its historic fair value.
Sector Context
Automatic Data Processing is a global provider of cloud-based human capital management (HCM) solutions, specializing in payroll, talent management, and HR services. Within a dividend value strategy, ADP functions as a highly defensive, essential B2B service where shifting labor laws and regulatory complexity create high barriers to entry and reliable recurring revenue.
📊 Strategy Analysis
- • Operates a mission-critical B2B software platform with high switching costs, heavily benefiting from a regulatory complexity moat that stifles smaller competitors.
- • Pristine balance sheet with a Net Debt/EBITDA of just 0.16x and excellent free cash flow dividend coverage of 2.01x.
- • Exceptional track record of shareholder returns, featuring a 10.5% 5-year EPS CAGR and a recent 10.1% dividend raise for 2025.
- • Highly profitable business model boasting a 71.2% ROE and strong margin stability over the last decade.
⚠ What to Watch
- • Valuation is stretched with a TTM P/E of 22.28, which sits above the strategy's optimal 8-15x target range.
- • The current market price of $239.00 significantly exceeds the calculated monopoly fair value upper bound of $193.10.
- • The TTM dividend yield of 2.75% falls short of the strategy's >3% minimum threshold.
- • Long-term structural risk exists regarding potential float income compression if future tax regulations shorten the mandatory holding periods for payroll fund remittances.
📊 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: 2026-07-04
Disclaimer: This information is for educational purposes only. Not financial advice.