ADP Stock Analysis — Automatic Data Processing
Sector: Business Services
AI Verdict
ADP trades at 18.1x next year's earnings while expected to grow EPS by 27%, which is cheap for the growth you're getting if its sticky payroll platform keeps competitors at bay.
Competitive Moat
ADP operates one of the largest payroll and human capital management platforms, benefiting from high client switching costs due to deep integration with enterprise workflows and compliance requirements. Its proprietary data and compliance expertise create barriers for smaller rivals and new entrants.
Summary
ADP's forward P/E of 18.1x with 27% expected EPS growth makes it a rare large-cap business services stock trading below sector multiples.
Where It Stands
ADP is up against a 72.7 RSI (pullback risk), a -18.57% one-year return, and trades at 18.1x forward earnings versus a sector median of ~20x.
Key Metrics
- RSI: 72.7 — Overbought
- Trailing P/E: 23.0x
- Forward P/E: 18.1x
- PEG Ratio: 0.93
- Earnings Growth: +0.3%
- Revenue Growth: +0.1%
- Market Cap: $98.7B
- Dividend Yield: 0.03%
- 1-Year Return: -18.57%
- 52-Week High: $315.98
- 52-Week Low: $188.16
Analyst Consensus
8 Buy · 13 Hold · 2 Sell (23 analysts)
Bull Case
With analysts projecting 27% EPS growth and a forward P/E of just 18.1x, you're paying less than the sector median for above-average earnings momentum.
Bear Case
An RSI of 72.7 signals overbought territory, so a typical pullback to neutral RSI could mean a 5–10% drop even if fundamentals hold.
Catalyst to Watch
Watch for quarterly client retention and new business wins—if retention dips or client growth stalls, the moat's defensibility comes into question.