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ADP is a quintessential mature compounder dominating the global HCM and payroll processing markets. Its wide moat, built on exceptionally high switching costs and network scale, generates highly predictable free cash flow. Fair value range: low $173, high $305, with mid-point at $241.
Stock analysis

ADP fair value $173–$305

By StockMarketAgent.AI team· supervised by
विश्लेषित: 2026-05-20अगला अद्यतन: 2026-08-20Methodology v2.4Data cut-off: Quality gate: passSources: all material sources passed deterministic freshness/provenance gatesReview: automatedArchetype: Mature compounder
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मूल्य
$220.44
▲ +20.20 (+9.16%)
उचित मूल्य
$241
$173–$305
रेटिंग
होल्ड
confidence 90/100
ऊपरी अंतर
+9.2%
upside to fair value
सुरक्षा मार्जिन
$204.54
MoS level · 15%
बाज़ार पूंजीकरण
$88.1B
P/E fwd 18.1
अंग्रेज़ी फ़ॉलबैकHI
अनुवाद होने तक अंग्रेज़ी स्रोत दिखा रहा है
इस रिपोर्ट का अभी अनुवाद नहीं हुआ है। अनुवाद कतार पकड़ने पर कुछ मिनट में रिफ़्रेश करें।

§1 कार्यकारी सारांश

  • Wide moat fortified by entrenched enterprise payroll switching costs.
  • Aggressive share repurchases mask lower mid-single-digit revenue growth.
  • Target $240.64 implies ~9% upside, supporting a Hold/Accumulate rating.
  • High predictability of cash flows justifies a premium relative to peers.
  • Vulnerable to macroeconomic job contraction and falling interest rates compressing float yields.
Fair value
$241
Margin of safety
+8.4%
Confidence
90/100
Moat
9/10

Educational analysis only — not financial advice. Always do your own due diligence.

$220.44Price
Low $173.42
Mid $240.64
High $305.17

ADP is a quintessential mature compounder dominating the global HCM and payroll processing markets. Its wide moat, built on exceptionally high switching costs and network scale, generates highly predictable free cash flow.

  • 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.

§2 बेयर केस

Under a dual shock of employment contraction and falling interest rates, EPS growthEPS growthYear-over-year change in diluted earnings per share. The bottom-line growth rate that drives shareholder return when multiples are stable. could decelerate into the low single digits. Combined with multiple contraction to peer medians, intrinsic valuation faces extreme downside risk toward $173.

इस थीसिस के टूटने के तरीक़े

Severe Macroeconomic Recession

· Medium

Deep recession triggers heavy workforce reductions, directly compressing seat-based billing metrics and organic revenue growth.

FV impact
Downside toward $173.42 low-end valuation.

Zero-Interest Rate Environment Return

Low-to-Medium· Low

Rapid return to ZIRP structurally strips yield out of PEO client funds, removing a 100% margin tailwind.

FV impact
Significant EPS drag and structural downside to intrinsic valuation.

Cloud-Native Enterprise Disruption

· Low

Accelerated adoption of modern HCM platforms causes a material decline in net revenue retention.

FV impact
Multiple contraction and loss of terminal growth premium.
निगरानी हेतु शीघ्र चेतावनी संकेत
मेट्रिकवर्तमानट्रिगर सीमा
Year-over-year EPS growth dropping below 8% despite continued capital return.MonitorDeterioration versus the report thesis
Material structural decline in net revenue retention.MonitorDeterioration versus the report thesis
Acceleration of lost enterprise logos to cloud-native platforms.MonitorDeterioration versus the report thesis
Significant macro-driven reduction in total payslips processed.MonitorDeterioration versus the report thesis
Sustained sequential declines in client funds interest yield.MonitorDeterioration versus the report thesis

§3 वित्तीय इतिहास

आय विवरण — पिछले छह कालखंड
लाइन आइटमT−0T−1T−2T−3CAGR
अवधि2022-06-302023-06-302024-06-302025-06-30Trend
राजस्व$16.50B$18.01B$19.20B$20.56B+7.6%
सकल लाभ$7.04B$8.06B$8.73B$9.46B+10.4%
परिचालन आय$3.80B$4.51B$4.95B$5.41B+12.5%
शुद्ध आय$2.95B$3.41B$3.75B$4.08B+11.4%
EPS (डाइल्यूटेड)$7.00$8.21$9.10$9.98+12.5%
EBITDA$4.40B$5.24B$5.80B$6.35B+13.0%
R&D—————
SG&A$3.23B$3.55B$3.78B$4.05B+7.8%

गुणवत्ता स्कोर

Piotroski F-स्कोर
8 / 9
0–9 गुणवत्ता समग्र
Altman Z-स्कोर
2.57
दिवालियापन जोखिम (>3 सुरक्षित)
Beneish M-स्कोर
-2.44
आय में हेरफेर का जोखिम
OCF / शुद्ध आय
1.21×
>1 उच्च आय गुणवत्ता दर्शाता है
लेखा गुणवत्ता गेट
Pass
सेक्टर-समायोजित गेट
ROIC
29.9%
निवेशित पूँजी पर प्रतिफल
खंड 3

Numbers analysis

नकद प्रवाह

Cash-flow quality is reflected in the OCFOperating cash flowCash generated from the company's core operations after working-capital changes but before capital expenditures. The first line of the cash-flow statement. / net incomeNet IncomeNet Income is an income-statement line item used to reconcile revenue to operating profit, pre-tax income, net income, or per-share earnings. It should be compared across periods and against peer disclosure conventions., accounting-quality, and ROICROICReturn on invested capital. Operating profit (after tax) divided by invested capital. The single best gauge of capital-efficiency. Spread over WACC = economic value created. rows above.

पूँजी आवंटन

Capital allocation should be evaluated against reinvestment needs, balance-sheet strength, and shareholder returns.

व्यक्तिगत सब्सक्राइबर — §4 आगे11 और खंड

पूरा विश्लेषण पढ़ें — 11 और खंड.

Competitive moat, industry cycle, peer comparison, intrinsic valuation, sensitivity, scenarios, earnings decision tree, position management, investor perspectives, scorecard, and final recommendation.

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FAQ

ADP — frequently asked questions

  1. Based on our latest analysis, ADP looks modestly undervalued. The current price is $220 versus a composite fair-value midpoint of $241 (range $173–$305), which implies roughly 9.2% upside to the midpoint.

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