Automatic Data Processing Inc.ADP Automatic Data Processing Inc. fair value $173–$305

ADP is a quintessential mature compounder dominating the global HCM and payroll processing markets. Its wide moatMoatA durable structural advantage that protects long-term returns on capital from competition. Sources include network effects, switching costs, intangible assets, cost advantages, and efficient scale., built on exceptionally high switching costs and network scale, generates highly predictable free cash flowFree cash flowOperating cash flow minus capital expenditures. The cash a business generates after maintaining and growing its asset base — the closest accounting proxy for owner-economics..

• Exceptionally high enterprise switching costs
  Exceptionally high enterprise switching costs for core payroll systems.
• Massive network scale across global
  Massive network scale across global HCM markets.
• Cycle upside
  Higher-for-longer interest rates act as a 100% margin tailwind on PEO funds. Accelerated enterprise adoption of Next Gen HCM drives top-line growth.