Automatic Data Processing Inc (ADP, Financial) has recently captured the attention of investors and financial analysts alike, thanks to its strong financial performance. With a current share price of $253.65, ADP has shown a daily increase of 0.6% and a modest three-month growth of 0.16%. A detailed analysis, supported by the GF Score, positions Automatic Data Processing Inc as a promising candidate for significant future growth.
What Is the GF Score?
The GF Score is a proprietary stock performance ranking system developed by GuruFocus. It evaluates stocks based on five key aspects: financial strength, profitability, growth, GF Value, and momentum. These components are weighted differently and have been backtested from 2006 to 2021, showing a strong correlation with long-term stock performance. Stocks with higher GF Scores typically yield higher returns. For Automatic Data Processing Inc, the GF Score is an impressive 96 out of 100, indicating a high potential for outperformance.
Understanding Automatic Data Processing Inc's Business
Automatic Data Processing Inc, with a market cap of $103.82 billion and annual sales of $18.91 billion, operates with a robust operating margin of 25.65%. Founded in 1949, ADP serves over 1 million clients, ranging from micro to global enterprises, primarily in the United States. Its services include payroll, human capital management solutions, and HR outsourcing through its employer services and professional employer organization segments.
Financial Strength Breakdown
Automatic Data Processing Inc's Financial Strength is evident with a rank of 7/10. The company boasts an Interest Coverage ratio of 13.25, significantly above the benchmark of 5 set by investing legend Benjamin Graham. Additionally, its strategic debt management is reflected in a Debt-to-Revenue ratio of 0.17, underscoring a prudent approach to leveraging.
Profitability and Growth Metrics
ADP's Profitability Rank stands at 9/10. The company has demonstrated consistent improvement in its Operating Margin over the past five years, reaching 25.02% in 2023 from 21.43% in 2019. Its Gross Margin also increased to 44.74% in 2023, up from 43.15% in 2019. The Piotroski F-Score and a 5-star Predictability Rank further validate ADP's financial health and operational efficiency.
Conclusion
Considering Automatic Data Processing Inc's robust financial strength, impressive profitability, and consistent growth metrics, the GF Score highlights the company's strong position for potential market outperformance. Investors looking for similar opportunities can explore more companies with strong GF Scores through the GF Score Screen.
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
