Automatic Data Processing, Inc. (ADP) Stock Analysis
Score A+Compounder · Grade A · Bearish
$222.51
$359.78
+61.7%
10/10
A
Compounder
Investment Thesis
High quantitative score: Solid company with strong risk/reward at 7.4:1.
For New Investors
Quantitative score: high
For Current Holders
Quantitative score: neutral
Buy if
- Price drops 15-20% (improves asymmetry)
- Bull scenario catalysts materialize
- Market-wide correction creates opportunity
Sell if
- Bear scenario triggers occur
- Quality metrics deteriorate (ROIC declining)
- Better alternatives emerge
Valuation
Fair Value estimate: $359.78 (+61.7%). Significantly undervalued.
PEG-Based EPS
$400.52
FCF DCF Model
$400.52
EV/EBITDA
$320.97
Blended Fair Value
$359.78
Confidence
High
Methods
PEG-Based EPS, FCF 2-Stage DCF, EV/EBITDA
Quality Analysis
106/120 points
Investable
ROE (3Y Avg)
81.9%
ROIC-WACC Spread
19.4%
D/E Ratio
1.5x
Current Ratio
1.1x
Interest Coverage
12x
FCF Positive Years
3/3
Quality Flags
- Leverage: D/E 1.5x (6/15 pts)
Market Sentiment
Wall Street Consensus
$242.00
+8.8% Upside
15 analysts
Range: $190.00 — $281.00
Rating: Hold
Our model is significantly more bullish than Wall Street.
Trend & Technical
Price ($222.43) is 10.5% below SMA 200 ($248.55). Bearish trend. Caution on entry.
Tech Score 51/100 — Neutral technical picture. Mixed signals across indicators.
Risk & Reward
Asymmetry Ratio
7.39:1
Expected Return
+47.3%
Bull Upside
+73.9%
Bear Downside
-10.0%
Excellent asymmetry: 7.39:1 ratio. Upside significantly outweighs downside.
Verdict: Very Favorable
Scenario Analysis
Bear
Base
Bull
Buy Zone & Action Plan
See exact entry zones, stop-loss levels, and a personalized action plan.
AI Executive Summary
Get a detailed AI-written breakdown of the investment thesis, risks, and catalysts.
Technical Analysis
RSI, MACD, moving averages, trend signals, and momentum indicators.
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Frequently Asked Questions
What is the fair value of ADP?
Based on our multi-method conviction analysis, the estimated fair value of Automatic Data Processing, Inc. (ADP) is $359.78. This is calculated by blending PEG-Based EPS, FCF 2-Stage DCF, EV/EBITDA and applying a quality premium of 0% based on the company's fundamentals. The confidence level of this estimate is high.
Is ADP a buy, sell, or hold?
ADP currently has a STRONG_BUY rating with a conviction score of 10/10. High quantitative score: Solid company with strong risk/reward at 7.4:1. Quantitative score: high.
Is ADP a high-quality stock?
Automatic Data Processing, Inc. has a quality grade of A (106/120 points), rated as Investable. Key metrics include ROE of 81.9%, ROIC-WACC spread of 19.4%, and D/E ratio of 1.5x.
What type of stock is ADP?
ADP is classified as a "compounder" in our framework. Mature growth: 8.6%, Cyclical sector: Industrials, Moderate growth: 8.6%, Dividend paying: 2.9%, Market-like beta: 0.84
What do Wall Street analysts say about ADP?
15 Wall Street analysts have a consensus price target of $242.00 for ADP, representing +8.8% upside. Targets range from $190.00 to $281.00. The consensus recommendation is "Hold". Our model is significantly more bullish than Wall Street.
What are the risks of investing in ADP?
The risk/reward asymmetry ratio for ADP is 7.39:1, rated as Very Favorable. Excellent asymmetry: 7.39:1 ratio. Upside significantly outweighs downside. The expected return is +47.3%, with bull case upside of +73.9% and bear case downside of -10.0%.
What is the current trend for ADP?
ADP is in a bearish trend. Price ($222.43) is 10.5% below SMA 200 ($248.55). Bearish trend. Caution on entry. The technical score is 51/100.
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Last updated: May 19, 2026 · Framework version 3.7
This analysis is for informational purposes only and should not be considered financial advice. Always do your own research before making investment decisions.