Fact based stock research
Automatic Data Processing (NasdaqGS:ADP)

US0530151036

How to read the ranks

For every stock, we judge its performance against its peers and rank it on a scale of 1 to 100. The higher the rank, the better the stock performs than its peers. And, we do this for six investment strategies:
Value - shows how good of a value the stock is. Green is "inexpensive"; red is "expensive".

Growth - shows a company's growth potential. Green is "high growth" expected; red is "tough times ahead".

Safety - relates to the amount of debt a company has. Green is low debt level; red is high debt level.

Combined Financial - this isn't an average of the first three ranks but rather a consolidated view across several financial indicators. Green = good; red = tread carefully.

(NEW) Sentiment - quantifies professional analyst ratings and holdings as well as market pulse. Green = positive sentiment; red = skepticism (Only available to Premium Subscribers).

(NEW) 360° View - the ultimate rating with all financial and non-financial indicators.

Automatic Data Processing stock research in summary

adp.com

ANALYSIS: With an Obermatt Combined Rank of 25 (worse than 75% compared with investment alternatives), Automatic Data Processing (Data Processing & Outsourcing, USA) shares have somewhat below-average financial characteristics compared with similar stocks. Shares of Automatic Data Processing are low in value (priced high) with a consolidated Value Rank of 21 (worse than 79% of alternatives), and are riskily financed (Safety Rank of 45, which means above-average debt burdens) but show above-average growth (Growth Rank of 65). ...read more

RECOMMENDATION: A Combined Rank of 25, is a hold recommendation based on Automatic Data Processing's financial characteristics. As the company Automatic Data Processing shows low value with an Obermatt Value Rank of 21 (79% of comparable investments are less expensive), investors should look at the other ranks. In this case, growth is expected to be above-average, better than 65% of comparable companies (Obermatt Growth Rank is 65). This is a typical case. Companies with above average growth tend to cost more than stocks with slower growth expectations. If this is a high-growth company, the low Obermatt Safety Rank of 45 is a good sign. The more debt a well-performing company has, the higher the returns to shareholders. However, if growth turns negative or interest rates increase, high debt may become a burden. If you believe the future is bright for Automatic Data Processing, even a low-value company (in terms of its key financial indicators) can be a good investment. Obermatt Premium subscribers can further check the stock’s Sentiment Ranks, which also flow into the Obermatt 360° View for investors. ...read more

Latest Obermatt Ranks


360° View^new
Sentiment Rank^new
Value Rank	21
Growth Rank	65
Safety Rank	45
Combined Rank	25

Country	USA
Industry	Data Processing & Outsourcing
Index	Dividends USA, Employee Focus US, Diversity USA, NASDAQ 100, NASDAQ, S&P 500
Size class	XX-Large

18-Apr-2024. Stock data may be delayed. Log in or sign up to get the most recent research.

Further information

Multiple opinions. One number.

Analysts rarely agree on a stock’s future. So, who do you believe? Obermatt translates those collective views into a single Sentiment Rank. That plus the financial ranks give you the ultimate 360° View. Sign up to access them.

Why popular stocks have low ratings

It’s easier said than done. When your stock drops, it’s easy to want to sell it and find a better performer. Think twice, or even three times, before trading. Those fees (especially the hidden ones) can eat up your gains.

Review the performance ranks of the individual metrics that form each investment strategy.

Research History: Automatic Data Processing

RESEARCH HISTORY	2021	2022	2023	2024
VALUE
VALUE	36	31	32	21
GROWTH
GROWTH	68	41	25	65
SAFETY
SAFETY	64	100	43	45
SENTIMENT
SENTIMENT	n/a	81	83	^new
360° VIEW
360° VIEW	n/a	81	25	^new

Most recent update of the stock research: 18-Apr-2024. Financial reporting date used for calculating ranks: 30-Sep-2023. Stock research history is based on the Obermatt Method. The higher the rank, the better Automatic Data Processing is in the corresponding investment strategy.
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Combined financial peformance in Detail

RESEARCH HISTORY	2021	2022	2023	2024
VALUE
VALUE	36	31	32	21
GROWTH
GROWTH	68	41	25	65
SAFETY
SAFETY	64	100	43	45
COMBINED
COMBINED	60	67	12	25

Last update of combined financial performance: 18-Apr-2024. Stock analysis on combined financial performance: The higher the rank of Automatic Data Processing the better the performance.

Value Metrics in Detail

ANALYSIS: With an Obermatt Value Rank of 21 (worse than 79% compared with alternatives), Automatic Data Processing shares are significantly more expensive than comparable stocks. The Value Rank is based on consolidating four value indicators, with three out of four indicators below average for Automatic Data Processing. Only the metric dividend yield has an above-average rank, reflecting that dividend practices are expected to be higher than 87% of comparable companies, making the stock an attractive buy for dividend investors. However, dividend investors may get disappointed because all other critical financial indicators are below the market median: Price-to-Sales is 12 which means that the stock price compared with what market professionals expect for future profits is higher than 88% of comparable companies, indicating a low value concerning Automatic Data Processing's sales levels. The same is valid for Price-to-Profit (also referred to as price-earnings, P/E) with a rank of 17 which means that the stock price compared with what market professionals expect for future profit levels is higher than 83% of comparable companies. In addition, Price-to-Book (also referred to as market-to-book ratio) with a Price-to-Book Rank of 6 is also low. Compared with invested capital, the stock price is higher than for 94% of comparable investments. ...read more

RECOMMENDATION: The overall picture with a consolidated Value Rank of 21, is a sell recommendation based on Automatic Data Processing's stock price compared with the company's operational size and dividend yields. Should dividend investors pick Automatic Data Processing? The company-reported financials speak against it. The company is expensive compared with revenue and invested capital levels, two reliable company size indicators. In addition, it currently has a low level of profits. How can future dividends be paid in the case that profits remain low? Dividend investors should choose Automatic Data Processing only if they reasonably expect the low current profit levels to be transitory. We recommend further analyzing the stock with Obermatt’s Value, Safety, and Sentiment Ranks, including the 360° View, before making an investment decision, which is essential in this case, as the financial indicators are inconclusive. ...read more

VALUE METRICS	2021	2022	2023	2024
PRICE VS. REVENUES (P/S)
PRICE VS. REVENUES (P/S)	20	25	18	12
PRICE VS. PROFITS (P/E)
PRICE VS. PROFITS (P/E)	64	20	29	17
PRICE VS. CAPITAL (Market-to-Book)
PRICE VS. CAPITAL (Market-to-Book)	4	11	3	6
DIVIDEND YIELD
DIVIDEND YIELD	78	91	90	87
CONSOLIDATED RANK: VALUE
CONSOLIDATED RANK: VALUE	36	31	32	21

Last update of Value Rank: 18-Apr-2024. Stock analysis on value ratios: The higher the rank, the lower the value ratio of Automatic Data Processing; except for dividend yield where the rank is higher, the higher the yield.

Growth Metrics in Detail

ANALYSIS: With an Obermatt Growth Rank of 65 (better than 65% compared with alternatives), Automatic Data Processing shows an above-average growth dynamic in its industry. Investors also speak of positive momentum. The Growth Rank is based on consolidating four value indicators, with all but one indicator above average for Automatic Data Processing. Profit Growth has a rank of 53 which means that currently professionals expect the company to grow its profits more than 53% of its competitors. The same is valid for capital growth and stock returns. Capital Growth has a rank of 87, and Stock Returns has a rank of 63 which means that the stock returns have recently been above 63% of alternative investments. Only revenue growth is low with a Sales Growth has a rank of 22 (78% of its competitors are better). ...read more

RECOMMENDATION: The overall picture with a consolidated Growth Rank of 65, is a buy recommendation for growth and momentum investors. The many positive growth indicators indicate a positive growth momentum with only low revenue growth. That can also be attributed to divestments or the sale of unprofitable businesses. If that is the reason, overall growth is well on track to making this stock attractive for growth investors. While momentum is a popular investment factor, the value aspect might be the more important one, in the longer term. We recommend analyzing the stock with Obermatt’s Value, Safety, and Sentiment Ranks to arrive at a 360° View of the stock purchase case. ...read more

GROWTH METRICS	2021	2022	2023	2024
REVENUE GROWTH
REVENUE GROWTH	40	26	26	22
PROFIT GROWTH
PROFIT GROWTH	41	22	57	53
CAPITAL GROWTH
CAPITAL GROWTH	n/a	36	18	87
STOCK RETURNS
STOCK RETURNS	86	93	31	63
CONSOLIDATED RANK: GROWTH
CONSOLIDATED RANK: GROWTH	68	41	25	65

Last update of Growth Rank: 18-Apr-2024. Stock analysis on growth metrics: The higher the rank, the higher the growth and returns of Automatic Data Processing.

Safety Metrics in Detail

ANALYSIS: With an Obermatt Safety Rank of 45 (better than 45% compared with alternatives), the company Automatic Data Processing has financing practices on the riskier side, which means that their overall debt burden is above the industry average. This doesn't mean that the business of Automatic Data Processing is also risky, it only means that the company is on the riskier side in respect to bankruptcy in case things turn sour, assuming that public reporting is correct. The Safety Rank is based on consolidating three financing indicators, with two out of three indicators above average for Automatic Data Processing. Leverage is at a rank of 52, meaning the company has a below-average debt-to-equity ratio. It has less debt than 52% of its competitors. Liquidity is also good at a rank of 89, meaning the company generates more profit to service its debt than 89% of its competitors. This indicates that the company is on the safer side when it comes to debt service. But Refinancing is lower at a rank of 8, which means that the portion of the debt that is about to be refinanced is above-average. It has more debt in the refinancing stage than 92% of its competitors. ...read more

RECOMMENDATION: With a consolidated Safety Rank of 45 (worse than 55% compared with alternatives), Automatic Data Processing has a financing structure that is riskier than that of its competitors. The refinancing issues could be a short-term problem, especially if the company has reputation issues. Banks and investors don't like to refinance debt if there are clouds on the horizon. For this reason, investors should look at the refinancing environment for Automatic Data Processing. Does it look safe that debt that is coming due can be covered with new debt? If that is the case, then the financing situation of the company is on the safer side. If not, it may be better to wait until refinancing has been completed and the Refinancing rank is good again. Investors may have a short-term debt challenge with Automatic Data Processing and should also compare Obermatt’s Value, Growth, and Sentiment Ranks before making a decision. ...read more

SAFETY METRICS	2021	2022	2023	2024
LEVERAGE
LEVERAGE	49	72	52	52
REFINANCING
REFINANCING	57	96	6	8
LIQUIDITY
LIQUIDITY	76	98	89	89
CONSOLIDATED RANK: SAFETY
CONSOLIDATED RANK: SAFETY	64	100	43	45

Last update of Safety Rank: 18-Apr-2024. Stock analysis on safety metrics: The higher the rank, the lower the leverage of Automatic Data Processing and the more cash is available to service its debt.

Sentiment Metrics in Detail

SENTIMENT	2021	2022	2023	2024
ANALYST OPINIONS
ANALYST OPINIONS	n/a	17	7	^new
OPINIONS CHANGE
OPINIONS CHANGE	n/a	35	55	^new
PRO HOLDINGS
PRO HOLDINGS	n/a	96	98	^new
MARKET PULSE
MARKET PULSE	n/a	86	93	^new
CONSOLIDATED RANK: SENTIMENT
CONSOLIDATED RANK: SENTIMENT	n/a	81	83	^new

Last update of Sentiment Rank: 18-Apr-2024. Stock analysis on sentiment metrics: The higher the rank, the more positive the sentiment for Automatic Data Processing.
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