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Also traded in: Argentina, Austria, Chile, Germany, Mexico

GuruFocus Financial Strength Rank measures how strong a company’s financial situation is. It is based on these factors

1. The debt burden that the company has as measured by its Interest coverage (current year).
2. Debt to revenue ratio. The lower, the better
3. Altman Z-score.

A company ranks high with financial strength is likely to withstand any business slowdowns and recessions.

Financial Strength : 6/10

vs
industry
vs
history
Cash-to-Debt 0.74
ADP's Cash-to-Debt is ranked higher than
52% of the 625 Companies
in the Global Business Services industry.

( Industry Median: 0.97 vs. ADP: 0.74 )
Ranked among companies with meaningful Cash-to-Debt only.
ADP' s Cash-to-Debt Range Over the Past 10 Years
Min: 0.07  Med: 5.56 Max: 407.09
Current: 0.74
0.07
407.09
Equity-to-Asset 0.13
ADP's Equity-to-Asset is ranked lower than
95% of the 605 Companies
in the Global Business Services industry.

( Industry Median: 0.52 vs. ADP: 0.13 )
Ranked among companies with meaningful Equity-to-Asset only.
ADP' s Equity-to-Asset Range Over the Past 10 Years
Min: 0.09  Med: 0.23 Max: 0.71
Current: 0.13
0.09
0.71
Debt-to-Equity 0.43
ADP's Debt-to-Equity is ranked lower than
56% of the 465 Companies
in the Global Business Services industry.

( Industry Median: 0.43 vs. ADP: 0.43 )
Ranked among companies with meaningful Debt-to-Equity only.
ADP' s Debt-to-Equity Range Over the Past 10 Years
Min: 0  Med: 0.05 Max: 3.73
Current: 0.43
0
3.73
Debt-to-EBITDA 0.72
ADP's Debt-to-EBITDA is ranked higher than
75% of the 454 Companies
in the Global Business Services industry.

( Industry Median: 2.25 vs. ADP: 0.72 )
Ranked among companies with meaningful Debt-to-EBITDA only.
ADP' s Debt-to-EBITDA Range Over the Past 10 Years
Min: 0  Med: 0.02 Max: 0.78
Current: 0.72
0
0.78
Interest Coverage 23.77
ADP's Interest Coverage is ranked higher than
54% of the 556 Companies
in the Global Business Services industry.

( Industry Median: 19.71 vs. ADP: 23.77 )
Ranked among companies with meaningful Interest Coverage only.
ADP' s Interest Coverage Range Over the Past 10 Years
Min: 23.77  Med: 208.18 Max: 364.38
Current: 23.77
23.77
364.38
Piotroski F-Score: 7
Altman Z-Score: 2.35
Beneish M-Score: -2.07
WACC vs ROIC
8.34%
50.01%
WACC
ROIC
GuruFocus Profitability Rank ranks how profitable a company is and how likely the company’s business will stay that way. It is based on these factors:

1. Operating Margin
2. Trend of the Operating Margin (5-year average). The company with an uptrend profit margin has a higher rank.
••3. Consistency of the profitability
4. Piotroski F-Score
5. Predictability Rank•

The maximum rank is 10. A rank of 7 or higher means a higher profitability and may stay that way. A rank of 3 or lower indicates that the company has had trouble to make a profit.

Profitability Rank is not directly related to the Financial Strength Rank. But if a company is consistently profitable, its financial strength will be stronger.

Profitability & Growth : 8/10

vs
industry
vs
history
Operating Margin % 19.37
ADP's Operating Margin % is ranked higher than
84% of the 617 Companies
in the Global Business Services industry.

( Industry Median: 6.41 vs. ADP: 19.37 )
Ranked among companies with meaningful Operating Margin % only.
ADP' s Operating Margin % Range Over the Past 10 Years
Min: 18.04  Med: 18.59 Max: 20.65
Current: 19.37
18.04
20.65
Net Margin % 12.71
ADP's Net Margin % is ranked higher than
82% of the 619 Companies
in the Global Business Services industry.

( Industry Median: 4.15 vs. ADP: 12.71 )
Ranked among companies with meaningful Net Margin % only.
ADP' s Net Margin % Range Over the Past 10 Years
Min: 12.16  Med: 12.91 Max: 15.08
Current: 12.71
12.16
15.08
ROE % 43.01
ADP's ROE % is ranked higher than
95% of the 597 Companies
in the Global Business Services industry.

( Industry Median: 8.83 vs. ADP: 43.01 )
Ranked among companies with meaningful ROE % only.
ADP' s ROE % Range Over the Past 10 Years
Min: 21.83  Med: 24.45 Max: 43.59
Current: 43.01
21.83
43.59
ROA % 4.34
ADP's ROA % is ranked higher than
53% of the 629 Companies
in the Global Business Services industry.

( Industry Median: 3.69 vs. ADP: 4.34 )
Ranked among companies with meaningful ROA % only.
ADP' s ROA % Range Over the Past 10 Years
Min: 3.89  Med: 4.41 Max: 5.43
Current: 4.34
3.89
5.43
ROC (Joel Greenblatt) % 255.70
ADP's ROC (Joel Greenblatt) % is ranked higher than
91% of the 620 Companies
in the Global Business Services industry.

( Industry Median: 22.23 vs. ADP: 255.70 )
Ranked among companies with meaningful ROC (Joel Greenblatt) % only.
ADP' s ROC (Joel Greenblatt) % Range Over the Past 10 Years
Min: 163.73  Med: 250.12 Max: 302.86
Current: 255.7
163.73
302.86
3-Year Revenue Growth Rate 9.30
ADP's 3-Year Revenue Growth Rate is ranked higher than
69% of the 549 Companies
in the Global Business Services industry.

( Industry Median: 4.10 vs. ADP: 9.30 )
Ranked among companies with meaningful 3-Year Revenue Growth Rate only.
ADP' s 3-Year Revenue Growth Rate Range Over the Past 10 Years
Min: -2.2  Med: 8.7 Max: 17
Current: 9.3
-2.2
17
3-Year EBITDA Growth Rate 6.50
ADP's 3-Year EBITDA Growth Rate is ranked higher than
54% of the 496 Companies
in the Global Business Services industry.

( Industry Median: 5.30 vs. ADP: 6.50 )
Ranked among companies with meaningful 3-Year EBITDA Growth Rate only.
ADP' s 3-Year EBITDA Growth Rate Range Over the Past 10 Years
Min: -3.7  Med: 7.2 Max: 17.5
Current: 6.5
-3.7
17.5
3-Year EPS without NRI Growth Rate 8.20
ADP's 3-Year EPS without NRI Growth Rate is ranked lower than
54% of the 434 Companies
in the Global Business Services industry.

( Industry Median: 9.50 vs. ADP: 8.20 )
Ranked among companies with meaningful 3-Year EPS without NRI Growth Rate only.
ADP' s 3-Year EPS without NRI Growth Rate Range Over the Past 10 Years
Min: -9  Med: 12.6 Max: 21.8
Current: 8.2
-9
21.8
GuruFocus has detected 3 Warning Signs with Automatic Data Processing Inc ADP.
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» ADP's 30-Y Financials

Financials (Next Earnings Date: 2019-02-01 Est.)


Revenue & Net Income
Cash & Debt
Operating Cash Flow & Free Cash Flow
Operating Cash Flow & Net Income

» Details

Guru Trades

Q4 2017

ADP Guru Trades in Q4 2017

Steven Cohen 86,600 sh (New)
Pioneer Investments 418,615 sh (New)
Bill Nygren 3,320,000 sh (+6.41%)
First Eagle Investment 1,607,959 sh (+0.43%)
MS Global Franchise Fund 209,014 sh (+0.28%)
Dodge & Cox 1,950 sh (unchged)
Bill Ackman 8,798,442 sh (unchged)
Tom Gayner 530,700 sh (unchged)
Jeremy Grantham 132,000 sh (unchged)
Jeff Auxier 10,252 sh (unchged)
Mairs and Power 6,767 sh (unchged)
George Soros Sold Out
Joel Greenblatt Sold Out
Caxton Associates Sold Out
Ken Fisher 2,585 sh (-53.01%)
Jeremy Grantham 842 sh (-99.75%)
Paul Tudor Jones 3,043 sh (-69.28%)
Jim Simons 701,100 sh (-67.81%)
» More
Q1 2018

ADP Guru Trades in Q1 2018

Ray Dalio 48,862 sh (New)
Jeremy Grantham 59,127 sh (+6922.21%)
Steven Cohen 203,859 sh (+135.40%)
Pioneer Investments 504,477 sh (+20.51%)
MS Global Franchise Fund 233,954 sh (+11.93%)
Bill Nygren 3,320,000 sh (unchged)
Tom Gayner 530,700 sh (unchged)
Jeremy Grantham 120,000 sh (unchged)
Jeff Auxier 10,252 sh (unchged)
Steven Cohen 1,900,000 sh (unchged)
Paul Tudor Jones Sold Out
Jim Simons Sold Out
Ken Fisher 2,208 sh (-14.58%)
First Eagle Investment 1,599,999 sh (-0.50%)
Dodge & Cox 1,800 sh (-7.69%)
Bill Ackman 7,941,957 sh (-9.73%)
Mairs and Power 5,052 sh (-25.34%)
» More
Q2 2018

ADP Guru Trades in Q2 2018

Joel Greenblatt 324,877 sh (New)
Paul Tudor Jones 35,006 sh (New)
Jana Partners 42,800 sh (New)
Ken Fisher 2,569 sh (+16.35%)
MS Global Franchise Fund 283,223 sh (+21.06%)
Dodge & Cox 1,800 sh (unchged)
Tom Gayner 530,700 sh (unchged)
Jeremy Grantham 120,000 sh (unchged)
Steven Cohen 295,000 sh (unchged)
Mairs and Power 5,052 sh (unchged)
Bill Nygren 3,320,000 sh (unchged)
Steven Cohen Sold Out
First Eagle Investment 979,190 sh (-38.80%)
Bill Ackman 4,225,365 sh (-46.80%)
Jeremy Grantham 10,990 sh (-81.41%)
Pioneer Investments 492,742 sh (-2.33%)
Ray Dalio 32,793 sh (-32.89%)
Jeff Auxier 10,122 sh (-1.27%)
» More
Q3 2018

ADP Guru Trades in Q3 2018

Jim Simons 1,041,937 sh (New)
Caxton Associates 3,925 sh (New)
Pioneer Investments 496,371 sh (+0.74%)
MS Global Franchise Fund 300,553 sh (+6.12%)
Tom Gayner 530,700 sh (unchged)
Mairs and Power 5,052 sh (unchged)
Steven Cohen 310,000 sh (unchged)
Steven Cohen 150,000 sh (unchged)
Dodge & Cox 1,800 sh (unchged)
Bill Nygren 3,320,000 sh (unchged)
First Eagle Investment Sold Out
Ray Dalio Sold Out
Jana Partners Sold Out
Paul Tudor Jones Sold Out
Ken Fisher 2,385 sh (-7.16%)
Jeremy Grantham 2,600 sh (-76.34%)
Bill Ackman 4,029,427 sh (-4.64%)
Joel Greenblatt 310,599 sh (-4.39%)
Jeff Auxier 9,922 sh (-1.98%)
» More
» Details

Insider Trades

Latest Guru Trades with NAS:ADP

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Business Description

Industry: Business Services » Business Services    NAICS: 561499    SIC: 7389
Compare:NYSE:FIS, NAS:FISV, NYSE:WP, NAS:PAYX, LSE:EXPN, NAS:INFO, XSWX:SGSN, NYSE:FLT, NAS:CTAS, NYSE:GPN, NAS:VRSK, TSE:4901, XPAR:SW, NYSE:FDC, NYSE:EFX, NYSE:BR, ASX:BXB, NYSE:TRU, NYSE:ZTO, XPAR:BVI » details
Traded in other countries:ADP.Argentina, ADP.Austria, ADP.Chile, ADP.Germany, ADAP.Mexico,
Headquarter Location:USA
Automatic Data Processing Inc is a provider of miscellaneous business solutions. Its business includes provision of technology-based outsourcing solutions to employers, vehicle retailers and manufacturers.

ADP competes in the human resources administration services industry. It provides services that satisfy companies' human resources needs, such as payroll processing and benefits administration. ADP was founded in 1949 and has its headquarters in Roseland, New Jersey. It serves more than 650,000 clients and has 57,000 employees worldwide.

Guru Investment Theses on Automatic Data Processing Inc

Bill Ackman Comments on ADP - Nov 15, 2018

ADP (NASDAQ:ADP)’s total return was 13% during the third quarter, including dividends, as the market positively responded to ADP’s June analyst day and fiscal 2019 guidance. We concluded our ADP proxy campaign just over a year ago and believe that the company’s progress following the campaign indicates that ADP is in the early innings of a long-term transformation. At the end of October, ADP reported fiscal first quarter 2019 results and positively updated its FY 2019 guidance. Fiscal first quarter results provided an early validation of the transformation underway at ADP as organic revenue growth accelerated and margins increased at Employer Services following actions taken by management earlier this calendar year. We are also encouraged that management noted on its first quarter earnings call that it is embracing ADP’s “transformation from a service company supported by technology to a technology company that offers great service” [Emphasis added].4

In response to the better-than-anticipated first quarter performance, ADP updated FY 2019 Adjusted EPS to $5.20 to $5.30 per share. At present, ADP trades at ~25 times our estimate of ADP’s next- twelve-month of earnings, which continue to significantly understate the company’s earnings power if operated optimally. As discussed previously in our June 20th investor letter, we believe there is clear line of sight for ADP to achieve more than $7 of EPS by FY 2021 (which begins less than 20 months from now on July 1, 2020) and for future accelerated progress thereafter. We anticipate further share price appreciation from current levels as ADP’s business transformation takes hold. Furthermore, we believe ADP’s US-centric business model (~85% of profits are generated in the United States) – which benefits from rising interest rates due to the large amount of float it receives from its clients and unleveraged balance sheet – should enable the company to perform well in the current market environment.

Despite some recent volatility which saw ADP shares modestly retreat in the month of October amidst the broader market decline, ADP shares have appreciated 25% year- to-date. We believe there continue to be a number of catalysts for short and long-term value creation at the company. Notably, investors continue to await further clarity on who will become ADP’s new CFO. We believe that the hiring of a new CFO with technology experience and operational expertise in executing business transformations would be well received by shareholders.

From Bill Ackman (Trades, Portfolio)'s third-quarter 2018 Pershing Square shareholder letter.

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Bill Ackman Comments on Automatic Data Processing - Aug 10, 2018

Automatic Data Processing, Inc. (NASDAQ:ADP)

ADP hosted its first Analyst Day since 2015 this past quarter. At the Analyst Day, the company committed to achieving 7% to 9% revenue growth and pre-tax operating margins of 23% to 25% by FY 2021. These projections represent substantial increases to management’s prior guidance. The new margin targets imply annual earnings-per-share growth of 16% to 19% over the next three fiscal years, with a FY 2021 earnings target of approximately $7 per share. We believe there continues to be a significant opportunity for ADP to exceed the new FY 2021 ~$7 guidance, and for future accelerated progress thereafter, which we discussed in detail in a letter we published following the Analyst Day, available here: https://www.businesswire.com/news/home/20180619006504/en/Pershing-Square-Sends-Communication-Investors-ADP

Earlier this month, ADP reported fiscal Q4 results and introduced FY 2019 guidance. Fiscal Q4 results were strong, evidenced by accelerating year-over-year bookings growth (+18%), robust top-line growth (+8% as reported, +6% organic growth) and significant margin expansion. EPS was up 39% year-over-year, helped by ~400 basis points of net-economic margin expansion (excluding pass-throughs and float income growth) and the benefits of corporate tax reform.

More significantly, the company introduced FY 2019 guidance. ADP projected “economic” revenue growth of 5% to 7% (excluding non-economic Professional Employer Organization (“PEO”) pass-throughs), continued operational margin expansion, and increased float income, with EPS projected to grow 13% to 15% over FY 2018 (pro forma for a recently adopted accounting change, ASC 606). Based on current guidance, ADP should realize $5.12 to $5.21 of Adjusted EPS for FY 2019. While we believe current guidance is a positive step towards ADP’s long-term FY 2021 targets, there continues to be a significant opportunity for additional operational margin expansion in the coming years as ADP closes the gap in Employer Service relative to its structural potential.

At the June Analyst Day, CFO Jan Siegmund, who is held in high regard by shareholders, announced that he would be leaving the company when a replacement is identified. We believe the hiring of a new CFO with operational expertise in executing business transformations would be well received by shareholders.

From Bill Ackman (Trades, Portfolio)'s second quarter 2018 Pershing Square shareholder letter.

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Bill Ackman Comments on Automatic Data Processing - May 17, 2018

Automatic Data Processing, Inc. (NASDAQ:ADP)

ADP reported a strong quarter driven by accelerated bookings growth and positive improvement in revenue retention. EPS increased 16% year-over-year, aided by 8% revenue growth (6% organic) and the reduction of its corporate tax rate. The company announced updated fiscal year 2018 guidance, and now forecasts a faster than expected improvement in margins for Employer Services. We believe the revised forecast is an early indication of potential larger improvements to come.

During our proxy contest with ADP last fall, the company committed to achieving approximately $5.05 of EPS by fiscal year June 2020. Since then, the Company has benefited from a number of extrinsic factors, not due to management actions, which should collectively boost FY 2020 EPS by 20%, or about $1 per share. These positive developments include corporate tax reform, the impact of rising interest rates on ADP’s float income, and the upcoming adoption of a required accounting change (ASC606), which should cause ADP’s earnings to more accurately reflect economic reality. In March, ADP announced an Early Retirement Program which should increase recurring earnings by an additional ~$0.25 or more.

Considered together, these factors should enable ADP to achieve a minimum of ~$6.25+ in EPS by FY 2020, nearly 25% more than the guidance provided by management last September, not including any other initiatives ADP undertakes to improve profitability. As consensus estimates for 2020 are only $5.63 per share, 10% below our minimum base estimate, we do not believe that ADP analysts and investors have fully considered the impact of these factors, which we outline in the table below:

We continue to believe that ADP’s potential is substantially greater than is reflected by its current guidance even when updated for the factors outlined above. Commentary by management on the recent earnings call suggests that management shares this view. On the call, management qualitatively elaborated on a large number of initiatives to improve growth and profitability in addition to its Early Retirement Program including its Service Alignment Initiative, the completion of mid-market migrations onto a single product platform, the roll-out of ADP’s new payroll and tax computation back-end engines, and other undisclosed initiatives. Furthermore, ADP recently promoted an internal executive to the new role of Chief Transformation Officer, and announced its intention to expand its transformation goals to include “additional operational improvement initiatives.”

Pro forma for the completion of mid-market migrations, we estimate that more than 60% of Employer Services revenue is now being generated by its small- and mid-market businesses which run on two next-generation platforms, Run and Workforce Now, which should eventually achieve SaaS (software-as-a-service) margins of more than 40%. ADP’s legacy Enterprise business, which will require product migrations to achieve its potential, generates less than 10% of Employer Services’ revenues according to ADP. We believe that ADP is at an opportune moment in its history to more holistically assess its long-term structural potential, and articulate a plan to realize it.

At ADP’s June 12th Analyst Day, investors are expecting the company to discuss the ongoing business transformation, and to provide investors with an updated outlook for the company which better reflects its potential.

From Bill Ackman (Trades, Portfolio)'s first-quarter 2018 shareholder letter.



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Bill Ackman Comments on ADP - Nov 16, 2017

ADP (NASDAQ:ADP) is a classic Pershing Square investment. It is a simple, predictable, free-cash-flow generative business that has significantly underperformed its potential. As a conservatively financed, high-quality business in a sector with substantial positive growth, we believe it has modest downside. If it is able to achieve its potential, we believe it offers substantial upside.

ADP’s significant underperformance is largely in its Employer Services segment (~2/3 of profit). Employer Services’ underperformance is best demonstrated by its (1) poor operating efficiency and subpar margins of 19%, and (2) declining organic growth of 2%-3% for FY 2018, with much of the revenue weakness due to the company’s lack of a competitive offering in the enterprise segment which serves large companies. Our detailed due diligence revealed the company’s underperformance and outlined a path to drive meaningfully improved performance. With a transformation focused on operational efficiency and technology leadership, we believe that ADP can accelerate growth to 7% or more, in-line with, or better, than industry growth rates, while increasing margins from 19% to 35%.

We have taken an active approach to our investment in the company to highlight the opportunity to drive significant value for all stakeholders. While we strongly preferred to work collaboratively with ADP’s board and management to unlock the company’s potential, as we have successfully done in nearly all of our prior active investments, they were unwilling to do so. Consequently, we were forced to run a proxy contest to highlight ADP’s underperformance and potential for improvement to help effectuate the necessary change.

Proxy contests are tools that activist investors use to effect change at public companies. While we were not successful in gaining seats on ADP’s board this election cycle, our campaign over the past few months has informed ADP shareholders, the board, and management about the potential opportunities that exist to create significant shareholder value.

Our efforts to inform the shareholder base about the company’s underperformance relative to its potential were embraced broadly and garnered substantial minority support for our candidacy on the board. Compared with the ADP incumbent director with the fewest votes, Mr. Eric Fast, we received 31% of the FOR votes – thus nearly a third of shareholders supported us. This 31% does not include shareholders who withheld against Mr. Fast on the recommendation of ISS as its suggested mechanism for facilitating my election to the board. Including these votes, 45% of shareholders either directly supported my candidacy to the board or withheld against Mr. Fast to facilitate my election to the Board. Just 55% of shares voted supported the entire incumbent board slate. Had ADP been willing to use a universal proxy card for this election, we would have likely received one or more seats on the board.

We received substantial minority support no matter how the votes are counted. Putting aside the percentage outcome, we believe that the substantial majority of shareholders who did not support us were convinced that the message we delivered was heard “loud and clear” by the company. These shareholders were willing to give the board and management another year to demonstrate progress on the opportunities that we had identified.

In order to win the contest, ADP’s management and board pivoted their message over the last few weeks from “just say no” to “we agree and we are already doing it,” and made important commitments to shareholders and influential proxy advisory firms. The three most significant commitments were:

(1)Accelerated Revenue Growth: after Employer Services’ organic revenue growth decelerates to 2%-3% this fiscal year, growth will reaccelerate to approximately 7%-9% in the fiscal year beginning July 1, 2018, and will continue into 2019 in order to achieve the company’s guidance of 6%-7% organic growth over the next three fiscal years;

(2)Margin Improvement: ADP will increase operational profit margins by 500-600 basis points over the next three fiscal years despite a projected decline in operational profit in the first fiscal year; and

(3)Enterprise Product Launch: ADP has an “upcoming” release of an Enterprise HCM product which will enable ADP to offer better service and recover Enterprise market share losses.

We and other shareholders will be focused on ensuring that ADP achieves its substantial potential, and will hold the board and management accountable for its commitments to investors. While these undertakings represent just a fraction of ADP’s full potential, they are now the floor for prospective performance. ADP’s performance will have to improve significantly to meet these commitments.

ADP’s shareholders are now fully informed about the opportunity for improvement, and the current board and management will need to announce a credible plan to improve performance. If they do so, we and other shareholders will be happy. If management fails to deliver, we will be focused on next year’s annual meeting. The dynamic we have created by the proxy contest sets up a favorable risk-reward ratio for ADP shareholders. It is a quintessential example of how shareholder activism is supposed to work.

ADP currently trades at an approximately 12% to 15% premium to its unaffected price prior to our rapid accumulation of ADP shares and market rumors of our investment. While the current stock price likely reflects some value for potential corporate tax reform, the market is also anticipating that ADP will make some progress improving its performance. We believe the dynamic created by the proxy contest will lead to substantially improved performance at the company, and, as a result we believe the stock remains undervalued. ADP is also potentially a large beneficiary of corporate tax reform as a reduction in US tax rates will boost ADP’s earnings and its market value by as much as 20%.

From Bill Ackman (Trades, Portfolio)'s third quarter 2017 shareholder letter.

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Bill Ackman Comments on Automatic Data Procession - Aug 18, 2017

Automatic Data Processing, Inc. (NASDAQ:ADP)

ADP is a classic Pershing Square investment. It is a simple, predictable, free-cash-flow generative business that has underperformed its potential. As a conservatively financed, capital-light business with long-term customer relationships in a sector with substantial positive growth, we believe it has modest downside. If it is able to achieve its potential, we believe it offers substantial upside. We acquired ADP for the funds along with a co-investment vehicle (PSVI) which we recently raised to increase our ownership of the company.

We believe that ADP is one of the highest quality businesses we have owned, and one which offers an enormous opportunity for operational improvement. Earlier today, we shared our research and its conclusions on ADP with the investing public on a webcast. We highlighted the sources of underperformance of the company and the opportunities for operational enhancement. You can view the webcast at www.ADPascending.com.

It has been five years since the inception of our investment in Canadian Pacific (NYSE:CP), where we had to wage a proxy contest to obtain board seats in a long-term activist portfolio holding. (While we did run a slate in the Allergan situation in 2014, it was in the context of a hostile takeover which we consider to be a fundamentally different type of situation.) As in CP, we approached ADP and offered to share privately our due diligence and analysis with the board to see if we could work together to unlock value for all shareholders. We requested a one-week extension of the nominating deadline in order to accommodate such a meeting. The board was unwilling to grant an extension, and therefore, we announced our slate on Monday, August 7, 2017 in advance of the deadline. We were disappointed by the company’s response, but it is by no means unprecedented. We have learned from experience that often the greatest opportunities for profit exist at companies that are the most resistant to and threatened by change.

Our experience in this situation has been analogous to the inception of our investment in CP. As in CP, we were offered the opportunity to meet with the CEO and Chairman. As in CP, we believe the company in its public statements and filings mischaracterized our meetings and conversations with the CEO and Chairman. For a detailed summary of our interactions with the company, please read the “Background to This Solicitation” section of our recent proxy filing which you can find here. Fortunately, it now appears that the board is willing to engage. The ADP board has recently asked to interview our board candidates and offered to meet with us on September 5, 2017. We look forward to the opportunity to share our due diligence and analysis with the full board.

From Bill Ackman (Trades, Portfolio)'s second quarter 2017 shareholder letter.

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Top Ranked Articles about Automatic Data Processing Inc

ADP National Employment Report: Private Sector Employment Increased by 179,000 Jobs in November
November 2018 ADP National Employment Report®, ADP Small Business Report® and ADP National Franchise Report® Postponed to Thursday, December 6, 2018 in Honor of a National Day of Mourning for U.S. President George H. W. Bush
ADP Announces Top Workplace Trends for 2019 and Provides a Look-Back at the U.S. Labor Market in 2018
November 2018 ADP National Employment Report®, ADP Small Business Report® and ADP National Franchise Report® to be Released on Wednesday, December 5, 2018
Bill Ackman Comments on ADP Guru stock highlight
ADP (NASDAQ:ADP)’s total return was 13% during the third quarter, including dividends, as the market positively responded to ADP’s June analyst day and fiscal 2019 guidance. We concluded our ADP proxy campaign just over a year ago and believe that the company’s progress following the campaign indicates that ADP is in the early innings of a long-term transformation. At the end of October, ADP reported fiscal first quarter 2019 results and positively updated its FY 2019 guidance. Fiscal first quarter results provided an early validation of the transformation underway at ADP as organic revenue growth accelerated and margins increased at Employer Services following actions taken by management earlier this calendar year. We are also encouraged that management noted on its first quarter earnings call that it is embracing ADP’s “transformation from a service company supported by technology to a technology company that offers great service” [Emphasis added].4 Read more...
Recent Analysis Shows Automatic Data Processing, GTx, Ionis Pharmaceuticals, TriNet Group, Ternium S.A, and UNIVERSAL INSURANCE HOLDINGS INC Market Influences — Renewed Outlook, Key Drivers of Growth
ADP Increases Cash Dividend; Marks 44th Consecutive Year of Dividend Increases
ADP and Intuit Expand Relationship to Improve Integration Across Platforms
ADP National Employment Report: Private Sector Employment Increased by 227,000 Jobs in October
ADP Reports First-Quarter Fiscal 2019 Results

Ratios

vs
industry
vs
history
PE Ratio 35.35
ADP's PE Ratio is ranked lower than
75% of the 499 Companies
in the Global Business Services industry.

( Industry Median: 22.72 vs. ADP: 35.35 )
Ranked among companies with meaningful PE Ratio only.
ADP' s PE Ratio Range Over the Past 10 Years
Min: 11.25  Med: 20.91 Max: 39.77
Current: 35.35
11.25
39.77
Forward PE Ratio 26.32
ADP's Forward PE Ratio is ranked lower than
83% of the 127 Companies
in the Global Business Services industry.

( Industry Median: 19.16 vs. ADP: 26.32 )
Ranked among companies with meaningful Forward PE Ratio only.
N/A
PE Ratio without NRI 35.35
ADP's PE Ratio without NRI is ranked lower than
75% of the 500 Companies
in the Global Business Services industry.

( Industry Median: 22.11 vs. ADP: 35.35 )
Ranked among companies with meaningful PE Ratio without NRI only.
ADP' s PE Ratio without NRI Range Over the Past 10 Years
Min: 11.29  Med: 25.48 Max: 39.77
Current: 35.35
11.29
39.77
Price-to-Owner-Earnings 42.84
ADP's Price-to-Owner-Earnings is ranked lower than
75% of the 306 Companies
in the Global Business Services industry.

( Industry Median: 22.95 vs. ADP: 42.84 )
Ranked among companies with meaningful Price-to-Owner-Earnings only.
ADP' s Price-to-Owner-Earnings Range Over the Past 10 Years
Min: 11.12  Med: 24.09 Max: 55.76
Current: 42.84
11.12
55.76
PB Ratio 12.94
ADP's PB Ratio is ranked lower than
97% of the 597 Companies
in the Global Business Services industry.

( Industry Median: 2.31 vs. ADP: 12.94 )
Ranked among companies with meaningful PB Ratio only.
ADP' s PB Ratio Range Over the Past 10 Years
Min: 2.79  Med: 4.7 Max: 18.61
Current: 12.94
2.79
18.61
PS Ratio 4.50
ADP's PS Ratio is ranked lower than
83% of the 600 Companies
in the Global Business Services industry.

( Industry Median: 1.24 vs. ADP: 4.50 )
Ranked among companies with meaningful PS Ratio only.
ADP' s PS Ratio Range Over the Past 10 Years
Min: 1.66  Med: 3.11 Max: 4.92
Current: 4.5
1.66
4.92
Price-to-Free-Cash-Flow 30.98
ADP's Price-to-Free-Cash-Flow is ranked lower than
66% of the 273 Companies
in the Global Business Services industry.

( Industry Median: 21.44 vs. ADP: 30.98 )
Ranked among companies with meaningful Price-to-Free-Cash-Flow only.
ADP' s Price-to-Free-Cash-Flow Range Over the Past 10 Years
Min: 9.24  Med: 21.26 Max: 37.34
Current: 30.98
9.24
37.34
Price-to-Operating-Cash-Flow 25.27
ADP's Price-to-Operating-Cash-Flow is ranked lower than
75% of the 340 Companies
in the Global Business Services industry.

( Industry Median: 14.75 vs. ADP: 25.27 )
Ranked among companies with meaningful Price-to-Operating-Cash-Flow only.
ADP' s Price-to-Operating-Cash-Flow Range Over the Past 10 Years
Min: 7.88  Med: 18.08 Max: 27.9
Current: 25.27
7.88
27.9
EV-to-EBIT 25.63
ADP's EV-to-EBIT is ranked lower than
72% of the 500 Companies
in the Global Business Services industry.

( Industry Median: 16.60 vs. ADP: 25.63 )
Ranked among companies with meaningful EV-to-EBIT only.
ADP' s EV-to-EBIT Range Over the Past 10 Years
Min: 6.9  Med: 15.8 Max: 28.2
Current: 25.63
6.9
28.2
EV-to-EBITDA 22.03
ADP's EV-to-EBITDA is ranked lower than
78% of the 526 Companies
in the Global Business Services industry.

( Industry Median: 12.55 vs. ADP: 22.03 )
Ranked among companies with meaningful EV-to-EBITDA only.
ADP' s EV-to-EBITDA Range Over the Past 10 Years
Min: 5.9  Med: 13.85 Max: 24.2
Current: 22.03
5.9
24.2
EV-to-Revenue 4.50
ADP's EV-to-Revenue is ranked lower than
83% of the 604 Companies
in the Global Business Services industry.

( Industry Median: 1.47 vs. ADP: 4.50 )
Ranked among companies with meaningful EV-to-Revenue only.
ADP' s EV-to-Revenue Range Over the Past 10 Years
Min: 1.5  Med: 2.9 Max: 4.9
Current: 4.5
1.5
4.9
PEG Ratio 3.68
ADP's PEG Ratio is ranked lower than
68% of the 239 Companies
in the Global Business Services industry.

( Industry Median: 2.10 vs. ADP: 3.68 )
Ranked among companies with meaningful PEG Ratio only.
ADP' s PEG Ratio Range Over the Past 10 Years
Min: 0.81  Med: 5.22 Max: 18.27
Current: 3.68
0.81
18.27
Shiller PE Ratio 41.33
ADP's Shiller PE Ratio is ranked lower than
70% of the 183 Companies
in the Global Business Services industry.

( Industry Median: 29.53 vs. ADP: 41.33 )
Ranked among companies with meaningful Shiller PE Ratio only.
ADP' s Shiller PE Ratio Range Over the Past 10 Years
Min: 14.72  Med: 24.72 Max: 45.21
Current: 41.33
14.72
45.21
Current Ratio 1.03
ADP's Current Ratio is ranked lower than
80% of the 614 Companies
in the Global Business Services industry.

( Industry Median: 1.64 vs. ADP: 1.03 )
Ranked among companies with meaningful Current Ratio only.
ADP' s Current Ratio Range Over the Past 10 Years
Min: 0.25  Med: 1.69 Max: 2.64
Current: 1.03
0.25
2.64
Quick Ratio 1.03
ADP's Quick Ratio is ranked lower than
73% of the 614 Companies
in the Global Business Services industry.

( Industry Median: 1.49 vs. ADP: 1.03 )
Ranked among companies with meaningful Quick Ratio only.
ADP' s Quick Ratio Range Over the Past 10 Years
Min: 0.25  Med: 1.67 Max: 2.64
Current: 1.03
0.25
2.64
Days Sales Outstanding 59.61
ADP's Days Sales Outstanding is ranked higher than
61% of the 588 Companies
in the Global Business Services industry.

( Industry Median: 60.92 vs. ADP: 59.61 )
Ranked among companies with meaningful Days Sales Outstanding only.
ADP' s Days Sales Outstanding Range Over the Past 10 Years
Min: 42.38  Med: 50.36 Max: 59.61
Current: 59.61
42.38
59.61
Days Payable 6.08
ADP's Days Payable is ranked lower than
93% of the 525 Companies
in the Global Business Services industry.

( Industry Median: 46.52 vs. ADP: 6.08 )
Ranked among companies with meaningful Days Payable only.
ADP' s Days Payable Range Over the Past 10 Years
Min: 6.08  Med: 9.83 Max: 11.04
Current: 6.08
6.08
11.04

Dividend & Buy Back

vs
industry
vs
history
Dividend Yield % 2.03
ADP's Dividend Yield % is ranked lower than
61% of the 693 Companies
in the Global Business Services industry.

( Industry Median: 2.25 vs. ADP: 2.03 )
Ranked among companies with meaningful Dividend Yield % only.
ADP' s Dividend Yield % Range Over the Past 10 Years
Min: 1.72  Med: 2.72 Max: 4.33
Current: 2.03
1.72
4.33
Dividend Payout Ratio 0.68
ADP's Dividend Payout Ratio is ranked lower than
71% of the 401 Companies
in the Global Business Services industry.

( Industry Median: 0.42 vs. ADP: 0.68 )
Ranked among companies with meaningful Dividend Payout Ratio only.
ADP' s Dividend Payout Ratio Range Over the Past 10 Years
Min: 0.49  Med: 0.61 Max: 0.74
Current: 0.68
0.49
0.74
3-Year Dividend Growth Rate 8.90
ADP's 3-Year Dividend Growth Rate is ranked higher than
52% of the 269 Companies
in the Global Business Services industry.

( Industry Median: 7.70 vs. ADP: 8.90 )
Ranked among companies with meaningful 3-Year Dividend Growth Rate only.
ADP' s 3-Year Dividend Growth Rate Range Over the Past 10 Years
Min: 6.1  Med: 14.5 Max: 22.1
Current: 8.9
6.1
22.1
Forward Dividend Yield % 2.29
ADP's Forward Dividend Yield % is ranked lower than
61% of the 646 Companies
in the Global Business Services industry.

( Industry Median: 2.50 vs. ADP: 2.29 )
Ranked among companies with meaningful Forward Dividend Yield % only.
N/A
5-Year Yield-on-Cost % 2.74
ADP's 5-Year Yield-on-Cost % is ranked lower than
53% of the 676 Companies
in the Global Business Services industry.

( Industry Median: 2.72 vs. ADP: 2.74 )
Ranked among companies with meaningful 5-Year Yield-on-Cost % only.
ADP' s 5-Year Yield-on-Cost % Range Over the Past 10 Years
Min: 2.48  Med: 3.92 Max: 6.25
Current: 2.74
2.48
6.25
3-Year Average Share Buyback Ratio 2.00
ADP's 3-Year Average Share Buyback Ratio is ranked higher than
93% of the 405 Companies
in the Global Business Services industry.

( Industry Median: -1.80 vs. ADP: 2.00 )
Ranked among companies with meaningful 3-Year Average Share Buyback Ratio only.
ADP' s 3-Year Average Share Buyback Ratio Range Over the Past 10 Years
Min: -2.7  Med: 1.2 Max: 4.2
Current: 2
-2.7
4.2

Valuation & Return

vs
industry
vs
history
Price-to-Tangible-Book 42.16
ADP's Price-to-Tangible-Book is ranked lower than
99% of the 470 Companies
in the Global Business Services industry.

( Industry Median: 2.90 vs. ADP: 42.16 )
Ranked among companies with meaningful Price-to-Tangible-Book only.
ADP' s Price-to-Tangible-Book Range Over the Past 10 Years
Min: 3.13  Med: 8.2 Max: 178.62
Current: 42.16
3.13
178.62
Price-to-Intrinsic-Value-Projected-FCF 3.04
ADP's Price-to-Intrinsic-Value-Projected-FCF is ranked lower than
69% of the 319 Companies
in the Global Business Services industry.

( Industry Median: 1.54 vs. ADP: 3.04 )
Ranked among companies with meaningful Price-to-Intrinsic-Value-Projected-FCF only.
ADP' s Price-to-Intrinsic-Value-Projected-FCF Range Over the Past 10 Years
Min: 0.89  Med: 1.41 Max: 3.49
Current: 3.04
0.89
3.49
Price-to-Intrinsic-Value-DCF (Earnings Based) 3.30
ADP's Price-to-Intrinsic-Value-DCF (Earnings Based) is ranked lower than
88% of the 66 Companies
in the Global Business Services industry.

( Industry Median: 1.53 vs. ADP: 3.30 )
Ranked among companies with meaningful Price-to-Intrinsic-Value-DCF (Earnings Based) only.
ADP' s Price-to-Intrinsic-Value-DCF (Earnings Based) Range Over the Past 10 Years
Min: 0.72  Med: 1.92 Max: 3.6
Current: 3.3
0.72
3.6
Price-to-Median-PS-Value 1.72
ADP's Price-to-Median-PS-Value is ranked lower than
79% of the 510 Companies
in the Global Business Services industry.

( Industry Median: 1.08 vs. ADP: 1.72 )
Ranked among companies with meaningful Price-to-Median-PS-Value only.
ADP' s Price-to-Median-PS-Value Range Over the Past 10 Years
Min: 0.48  Med: 1.01 Max: 2.14
Current: 1.72
0.48
2.14
Price-to-Peter-Lynch-Fair-Value 6.24
ADP's Price-to-Peter-Lynch-Fair-Value is ranked lower than
81% of the 139 Companies
in the Global Business Services industry.

( Industry Median: 1.61 vs. ADP: 6.24 )
Ranked among companies with meaningful Price-to-Peter-Lynch-Fair-Value only.
ADP' s Price-to-Peter-Lynch-Fair-Value Range Over the Past 10 Years
Min: 0.83  Med: 2.32 Max: 6.8
Current: 6.24
0.83
6.8
Price-to-Graham-Number 8.14
ADP's Price-to-Graham-Number is ranked lower than
99% of the 347 Companies
in the Global Business Services industry.

( Industry Median: 1.75 vs. ADP: 8.14 )
Ranked among companies with meaningful Price-to-Graham-Number only.
ADP' s Price-to-Graham-Number Range Over the Past 10 Years
Min: 1.28  Med: 2.79 Max: 16.98
Current: 8.14
1.28
16.98
Earnings Yield (Greenblatt) % 3.90
ADP's Earnings Yield (Greenblatt) % is ranked lower than
58% of the 624 Companies
in the Global Business Services industry.

( Industry Median: 4.76 vs. ADP: 3.90 )
Ranked among companies with meaningful Earnings Yield (Greenblatt) % only.
ADP' s Earnings Yield (Greenblatt) % Range Over the Past 10 Years
Min: 3.5  Med: 6.3 Max: 14.6
Current: 3.9
3.5
14.6
Forward Rate of Return (Yacktman) % 14.70
ADP's Forward Rate of Return (Yacktman) % is ranked higher than
70% of the 365 Companies
in the Global Business Services industry.

( Industry Median: 8.60 vs. ADP: 14.70 )
Ranked among companies with meaningful Forward Rate of Return (Yacktman) % only.
ADP' s Forward Rate of Return (Yacktman) % Range Over the Past 10 Years
Min: 6.2  Med: 8.7 Max: 24.9
Current: 14.7
6.2
24.9

More Statistics

Revenue (TTM) (Mil) $13,570.20
EPS (TTM) $ 3.91
Beta0.94
Volatility16.78%
52-Week Range $107.61 - 153.51
Shares Outstanding (Mil)437.73

Analyst Estimate

Jun19 Jun20 Jun21
Revenue (Mil $) 14,218 15,220 16,325
EBIT (Mil $) 3,100 3,550
EBITDA (Mil $) 3,385 3,798 4,276
EPS ($) 5.10 6.02 6.96
EPS without NRI ($) 5.10 6.02 6.96
EPS Growth Rate
(Future 3Y To 5Y Estimate)
N/A
Dividends per Share ($) 2.52 2.62 2.28

Piotroski F-Score Details

Piotroski F-Score: 77
Positive ROAY
Positive CFROAY
Higher ROA yoyN
CFROA > ROAY
Lower Leverage yoyY
Higher Current Ratio yoyN
Less Shares Outstanding yoyY
Higher Gross Margin yoyY
Higher Asset Turnover yoyY

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