# Automatic Data Processing (ADP.US)

Canonical: https://gigainvestors.com/s/ADP

Analysis as of: 2026-10-16T07:26:13.728Z. Financial observations: FY1997–FY2026.

Listing currency: USD. Reporting currency: USD.

## Verdict

A wonderful business at too high a price

Quality tests for Buy: pass (profit record: pass; earnings resilience is evidence only). Published buy qualification: no.

Share price: $285.65 per share; close as of 2026-10-15.

Estimated value: low $166.71 per share, central $238.81 per share, high $279.02 per share. Buy at or below the central value $238.81 per share. Valuation as of 2026-10-16T07:26:13.728Z; scenarios are not confidence intervals.

Expected annual return: 8.9% at the stated quote. About 8.9% a year at today's price (required return 10.0%). required return 10.0% a year (10% floor; US 10-year bond 5.1% + 4 points).

## Checklist

### understandable: pass

- 0 revenue declines in the last 10 years (informational)

- Financial history: 10 years

- Years with declining revenue: 0

- Years with a net loss: 0

- Operating margin variation: 0.12×

Chart: Operating margin; fiscal year observations.

- FY2017: 0.20×

- FY2018: 0.19×

- FY2019: 0.21×

- FY2020: 0.22×

- FY2021: 0.22×

- FY2022: 0.23×

- FY2023: 0.25×

- FY2024: 0.26×

- FY2025: 0.26×

- FY2026: 0.19×

### moat: pass

- ROIC, median of available years: 82.1%

- ROIC, second-lowest year: 62.6%

- Typical minus recent gross margin: -1.4 pp

- Typical gross margin (annual median): 46.8%

- Recent gross margin (lower of latest and 3-year median): 48.2%

- Years with nonpositive capital: 0

- Capital spending / revenue: 3.4%

- ROIC including acquisitions, ten-year median: 41.0%

Chart: ROIC excluding acquisitions; fiscal year observations.

- FY2017: 90.0%

- FY2018: 81.2%

- FY2019: 67.6%

- FY2020: 62.7%

- FY2021: 62.6%

- FY2022: >100%

- FY2023: 58.6%

- FY2024: >100%

- FY2025: >100%

- FY2026: 82.9%

### economics: pass

- Owner earnings / net income, 5-yr: 1.04×

- Cash conversion uses consolidated totals: No

- Owner earnings, five-year total: $19B

- Net income, five-year total: $19B

- Return on incremental invested capital: 98.7%

- Working capital / revenue, annual change: -28.8 pp

- Working capital / revenue, change between three-year averages: -203.8 pp

- Working capital / revenue, final three-year average: 16.4%

Chart: Annual owner cash / profit; fiscal year observations.

- FY2022: 1.00×

- FY2023: 1.00×

- FY2024: 1.00×

- FY2025: 1.08×

- FY2026: 1.09×

### management: pass

- Historical market-dollar context (not the management verdict): 2017 to 2026 (9 years)

- potential debt-funded buybacks (informational)

- buybacks leaned toward cheaper years (informational)

- ROIC first 3 years vs last 3 years: 81.2% vs 100.6%

- Per-share earnings: 3.66 to 9.98 (three-year endpoint medians)

- Management verdict uses per-share economic progress: Yes

- Ordinary dilution, 10-year annual growth: -1.3%

- Ordinary dilution, 5-year annual growth: -1.2%

- Market cap gain: $43B

- Cumulative retained earnings: $12B

- Diluted shares, 10-year annual growth: -1.3%

- Diluted shares, 5-year annual growth: -1.2%

- $1 test, starting fiscal year: FY2017

- $1 test, ending fiscal year: FY2026

- Per-share value growth: 13.4%

- Per-share value change: $6.33

- Per-share value, starting three-year median: $3.66

- Per-share value, ending three-year median: $9.98

- Buybacks concentrated in cheaper years (correlation): 0.16

- Average buyback yield: 1.7%

- Buyback history: 10 years

- Debt-funded buybacks: Yes

- Acquisition spending: $2.7B

- Cumulative net income, 10 years: $29B

- ROIC, first three-year median: 81.2%

- ROIC, last three-year median: >100%

Chart: Earnings per share; fiscal year observations.

- FY2017: $3.85

- FY2018: $3.66

- FY2019: $5.24

- FY2020: $5.70

- FY2021: $6.07

- FY2022: $7.00

- FY2023: $8.21

- FY2024: $9.10

- FY2025: $9.98

- FY2026: $10.94

### accounting: pass

- Sloan accruals: -1.6%

- Receivables to sales index (DSRI): 0.92×

- Restructuring years, last five: 0

- Stock compensation / operating cash flow: 4.5%

- Earnings backed by cash: Yes

- Operating cash / earnings: 1.23×

- Accounting red flags: 0

- Goodwill and intangibles / equity: 0.82×

Chart: Sloan accruals; fiscal year observations.

- FY2017: -1.1%

- FY2018: -2.4%

- FY2019: -0.9%

- FY2020: -1.4%

- FY2021: -1.0%

- FY2022: -0.2%

- FY2023: -1.6%

- FY2024: -0.7%

- FY2025: -1.6%

- FY2026: -1.6%

## Holders

- [Matthew McLennan](https://gigainvestors.com/FE): tracked 13F investor; follow the investor page for holding quarter and amounts.

- [Terry Smith](https://gigainvestors.com/FS): tracked 13F investor; follow the investor page for holding quarter and amounts.

- [Francois Rochon](https://gigainvestors.com/GC): tracked 13F investor; follow the investor page for holding quarter and amounts.

- [Allen Bond](https://gigainvestors.com/JIM): tracked 13F investor; follow the investor page for holding quarter and amounts.

- [David Katz](https://gigainvestors.com/MAVFX): tracked 13F investor; follow the investor page for holding quarter and amounts.

- [Andrew Adams](https://gigainvestors.com/MPF): tracked 13F investor; follow the investor page for holding quarter and amounts.

## Price story

Price needs cash profits to grow 9.8% a year for ten years · "ADP Earnings Beat as Client Funds Income Powers Stronger FY27 Outlook" (finance.yahoo.com, Aug 2026) · sales +6.7%

Story as of 2026-10-16T09:58:14.402Z; price observation 2026-10-15.

Price needs cash profits to grow 9.8% a year for ten years

- 2026-07-29: ADP Q4 Earnings Beat Estimates on Revenue Growth, Margin Gains ([finance.yahoo.com](https://finance.yahoo.com/markets/stocks/articles/adp-q4-earnings-beat-estimates-135900893.html))

- 2026-08-03: ADP Earnings Beat as Client Funds Income Powers Stronger FY27 Outlook ([finance.yahoo.com](https://finance.yahoo.com/markets/stocks/articles/adp-earnings-beat-client-funds-151500673.html))

### Sales · FY2025–2026

sales +6.7%; source https://www.sec.gov/Archives/edgar/data/8670/000000867026000030/adp-20260630.htm; observed 2026-08-05.

- FY2017: $12B 

- FY2018: $13B 

- FY2019: $14B 

- FY2020: $15B 

- FY2021: $15B 

- FY2022: $16B 

- FY2023: $18B 

- FY2024: $19B 

- FY2025: $21B 

- FY2026: $22B 

### Gross margin · FY2026

gross margin 48.2%; source https://www.sec.gov/Archives/edgar/data/8670/000000867026000030/adp-20260630.htm; observed 2026-08-05.

- FY2017: 45.6% 

- FY2018: 45.4% 

- FY2019: 46.7% 

- FY2020: 46.0% 

- FY2021: 46.5% 

- FY2022: 46.9% 

- FY2023: 48.9% 

- FY2024: 49.9% 

- FY2025: 50.8% 

- FY2026: 48.2% 

## Owner memo

Memo as of 2026-10-16T08:06:05.509Z.

### How it makes money

Operates in software application; annual sales are USD 21.9 billion.

- Source: https://www.sec.gov/Archives/edgar/data/8670/000000867026000030/adp-20260630.htm (filed 2026-08-05); FY2026: revenue 21947500000; grossProfit 10575600000; margin = grossProfit / revenue.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-10-16); ADP.US: Automatic Data Processing, Inc. provides cloud-based human capital management (HCM) solutions worldwide. It operates in two segments, Employer Services and Professional Employer Organization (PEO). The Employer Services segment offers strategic, cloud-based platforms, and human resources (HR) outsourcing solutions. This segment's offerings include RUN Powered by ADP, a software platform for small business payroll, HR, and compliance; ADP Workforce Now, a HCM solution used across mid-sized and large businesses to manage employees; and ADP Lyric HCM, a solution for HR management, payroll, workforce management, talent, and data analytics. Its PEO Services segment provides HR outsourcing solutions under ADP TotalSource name to businesses through a co-employment model. This segment also provides guidance, user-friendly technology, comprehensive employee benefits, and a risk management, safety, and workers' compensation program. The company was founded in 1949 and is headquartered in Roseland, New Jersey.

### Why customers stay

Margins ranged from 48.2% to 50.8% during 2024–26; it earns 82.1% on its capital.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-08-05); FY2024: grossProfit / revenue = 49.9%.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-08-05); FY2025: grossProfit / revenue = 50.8%.

- Source: https://www.sec.gov/Archives/edgar/data/8670/000000867026000030/adp-20260630.htm (filed 2026-08-05); FY2026: grossProfit / revenue = 48.2%.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-08-05); 10-year return on capital observations [[2017,0.8997881029127287],[2018,0.8124667696661786],[2019,0.6757384230980753],[2020,0.6269931997957716],[2021,0.6256280161787865],[2022,1.0041903092973221],[2023,0.5859142706378572],[2024,1.4629477589406374],[2025,1.005954560450097],[2026,0.8293597378166171]]; median 0.8209132537413979. ROIC follows the displayed moat series; financial companies use return on tangible equity.

### Where the cash goes

Paid dividends in 10 of 10 years; bought back USD 2.1 billion of shares.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-08-05); FY2017: growth capex 43027471.48244619; upkeep 427572528.5175538; owner earnings 1621927471.4824462. Growth capex / owner earnings = 0.026528603922787598.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-08-05); FY2018: growth capex 56370593.79402673; upkeep 414429406.20597327; owner earnings 1583970593.7940269. Growth capex / owner earnings = 0.035588156759276894.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-08-05); FY2019: growth capex 50274457.56024122; upkeep 516225542.4397588; owner earnings 2185574457.560241. Growth capex / owner earnings = 0.023002857388973445.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-08-05); FY2020: growth capex 26306770.534790874; upkeep 590093229.4652091; owner earnings 2356406770.534791. Growth capex / owner earnings = 0.011163934369794948.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-08-05); FY2021: growth capex 0; upkeep 505900000; owner earnings 2603300000. Growth capex / owner earnings = 0.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-08-05); FY2022: growth capex 38300000; upkeep 515100000; owner earnings 2948900000. Growth capex / owner earnings = 0.012987893790905083.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-08-05); FY2023: growth capex 22300000; upkeep 549300000; owner earnings 3412000000. Growth capex / owner earnings = 0.006535756154747948.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-08-05); FY2024: growth capex 1500000; upkeep 561900000; owner earnings 3752000000. Growth capex / owner earnings = 0.0003997867803837953.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-08-05); FY2025: growth capex 0; upkeep 168700000; owner earnings 4397000000. Growth capex / owner earnings = 0.

- Source: https://www.sec.gov/Archives/edgar/data/8670/000000867026000030/adp-20260630.htm (filed 2026-08-05); FY2026: growth capex 0; upkeep 196600000; owner earnings 4802800000. Growth capex / owner earnings = 0.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-08-05); Dividend observations: [[2017,995200000],[2018,1063700000],[2019,1293000000],[2020,1470500000],[2021,1575500000],[2022,1659000000],[2023,1903600000],[2024,2183100000],[2025,2398900000],[2026,2626300000]]. Zero only counted when supported by a complete cash-flow statement.

- Source: https://www.sec.gov/Archives/edgar/data/8670/000000867026000030/adp-20260630.htm (filed 2026-08-05); FY2026: cash repurchases 2083300000 USD.

### Are managers owners

Insiders own 0.1% of the company.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-10-16); ADP.US SharesStats.PercentInsiders = 0.14200000000000002 percentage points; cache date 2026-10-16.

### What the price says

The price assumes cash profits grow 9.8% yearly over ten years; actual growth was 14.3%.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-08-05); Ten-year compound average after fade. Initial solved rate 0.16712963529745956. Price 285.65; FX 1; discount 0.1; same compounder ten-year fade to terminal 0.03. FY2016 owner earnings/share 3.1357863680036413 → FY2026 11.908752789486735. Closing-price date 2026-10-15.

## Monthly share-price history (USD per share)

- 2016-10: $87.06 per share

- 2016-11: $96.02 per share

- 2016-12: $102.78 per share

- 2017-01: $100.99 per share

- 2017-02: $102.62 per share

- 2017-03: $102.39 per share

- 2017-04: $104.49 per share

- 2017-05: $102.37 per share

- 2017-06: $102.46 per share

- 2017-07: $118.91 per share

- 2017-08: $106.47 per share

- 2017-09: $109.32 per share

- 2017-10: $116.26 per share

- 2017-11: $114.46 per share

- 2017-12: $117.19 per share

- 2018-01: $123.63 per share

- 2018-02: $115.32 per share

- 2018-03: $113.48 per share

- 2018-04: $118.08 per share

- 2018-05: $130.02 per share

- 2018-06: $134.14 per share

- 2018-07: $134.99 per share

- 2018-08: $146.75 per share

- 2018-09: $150.66 per share

- 2018-10: $144.08 per share

- 2018-11: $147.42 per share

- 2018-12: $131.12 per share

- 2019-01: $139.84 per share

- 2019-02: $153.03 per share

- 2019-03: $159.74 per share

- 2019-04: $164.39 per share

- 2019-05: $160.12 per share

- 2019-06: $165.33 per share

- 2019-07: $166.52 per share

- 2019-08: $169.84 per share

- 2019-09: $161.42 per share

- 2019-10: $162.23 per share

- 2019-11: $170.78 per share

- 2019-12: $170.50 per share

- 2020-01: $171.39 per share

- 2020-02: $154.74 per share

- 2020-03: $136.68 per share

- 2020-04: $146.69 per share

- 2020-05: $146.49 per share

- 2020-06: $148.89 per share

- 2020-07: $132.91 per share

- 2020-08: $139.09 per share

- 2020-09: $139.49 per share

- 2020-10: $157.96 per share

- 2020-11: $173.88 per share

- 2020-12: $176.20 per share

- 2021-01: $165.12 per share

- 2021-02: $174.02 per share

- 2021-03: $188.47 per share

- 2021-04: $186.99 per share

- 2021-05: $196.02 per share

- 2021-06: $198.62 per share

- 2021-07: $209.63 per share

- 2021-08: $209.04 per share

- 2021-09: $199.92 per share

- 2021-10: $224.49 per share

- 2021-11: $230.89 per share

- 2021-12: $246.58 per share

- 2022-01: $206.17 per share

- 2022-02: $204.44 per share

- 2022-03: $227.54 per share

- 2022-04: $218.18 per share

- 2022-05: $222.94 per share

- 2022-06: $210.04 per share

- 2022-07: $241.12 per share

- 2022-08: $244.41 per share

- 2022-09: $226.19 per share

- 2022-10: $241.70 per share

- 2022-11: $264.14 per share

- 2022-12: $238.86 per share

- 2023-01: $225.81 per share

- 2023-02: $219.82 per share

- 2023-03: $222.63 per share

- 2023-04: $220.00 per share

- 2023-05: $208.99 per share

- 2023-06: $219.79 per share

- 2023-07: $247.26 per share

- 2023-08: $254.61 per share

- 2023-09: $240.58 per share

- 2023-10: $218.22 per share

- 2023-11: $229.92 per share

- 2023-12: $232.97 per share

- 2024-01: $245.78 per share

- 2024-02: $251.13 per share

- 2024-03: $249.74 per share

- 2024-04: $241.89 per share

- 2024-05: $244.92 per share

- 2024-06: $238.69 per share

- 2024-07: $262.62 per share

- 2024-08: $275.91 per share

- 2024-09: $276.73 per share

- 2024-10: $289.24 per share

- 2024-11: $306.93 per share

- 2024-12: $292.73 per share

- 2025-01: $303.01 per share

- 2025-02: $315.18 per share

- 2025-03: $305.53 per share

- 2025-04: $300.60 per share

- 2025-05: $325.53 per share

- 2025-06: $308.40 per share

- 2025-07: $309.50 per share

- 2025-08: $304.05 per share

- 2025-09: $293.50 per share

- 2025-10: $260.30 per share

- 2025-11: $255.30 per share

- 2025-12: $257.23 per share

- 2026-01: $246.82 per share

- 2026-02: $214.36 per share

- 2026-03: $203.18 per share

- 2026-04: $211.94 per share

- 2026-05: $221.84 per share

- 2026-06: $223.95 per share

- 2026-07: $266.46 per share

- 2026-08: $286.16 per share

- 2026-09: $258.06 per share

- 2026-10: $275.90 per share

## Annual estimated value (USD per share)

- FY2017: low $49.58 per share, central $63.46 per share, high $73.31 per share

- FY2018: low $51.49 per share, central $66.83 per share, high $77.49 per share

- FY2019: low $58.03 per share, central $78.52 per share, high $91.43 per share

- FY2020: low $62.76 per share, central $86.57 per share, high $100.96 per share

- FY2021: low $76.60 per share, central $104.02 per share, high $121.10 per share

- FY2022: low $87.00 per share, central $120.57 per share, high $141.01 per share

- FY2023: low $101.47 per share, central $136.34 per share, high $159.06 per share

- FY2024: low $114.56 per share, central $152.63 per share, high $177.63 per share

- FY2025: low $156.57 per share, central $220.05 per share, high $255.46 per share

- FY2026: low $163.80 per share, central $234.63 per share, high $274.14 per share

Historical values use today's bond yield for every fiscal year

Historical values use today's FX rate into trading currency for every fiscal year

Historical values use current restated fundamentals and current commodity classification; they are not point-in-time estimates

## Sources

[Original 10-K filing](https://www.sec.gov/Archives/edgar/data/8670/000000867026000030/adp-20260630.htm); period 2026-06-30, filed 2026-08-05.

Estimates depend on assumptions and are not guarantees or investment advice. Underlying data remains subject to its source licenses; public reading does not grant bulk redistribution rights.