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Automatic Data Processing ROE %

: 29.29% (As of Jun. 2020)
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ROE % is calculated as Net Income attributable to Common Stockholders (Net Income minus the preferred dividends paid) divided by its average Total Stockholders Equity over a certain period of time. Automatic Data Processing's annualized net income attributable to common stockholders for the quarter that ended in Jun. 2020 was $1,646 Mil. Automatic Data Processing's average Total Stockholders Equity over the quarter that ended in Jun. 2020 was $5,621 Mil. Therefore, Automatic Data Processing's annualized ROE % for the quarter that ended in Jun. 2020 was 29.29%.

NAS:ADP' s ROE % Range Over the Past 10 Years
Min: 21.83   Med: 28.72   Max: 45.24
Current: 45.06

21.83
45.24

During the past 13 years, Automatic Data Processing's highest ROE % was 45.24%. The lowest was 21.83%. And the median was 28.72%.

NAS:ADP's ROE % is ranked higher than
97% of the 966 Companies
in the Business Services industry.

( Industry Median: 5.33 vs. NAS:ADP: 45.06 )

Automatic Data Processing ROE % Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

* Premium members only.

Automatic Data Processing Annual Data
Jun11 Jun12 Jun13 Jun14 Jun15 Jun16 Jun17 Jun18 Jun19 Jun20
ROE % Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only 32.13 42.27 43.27 45.24 44.23

Automatic Data Processing Quarterly Data
Sep15 Dec15 Mar16 Jun16 Sep16 Dec16 Mar17 Jun17 Sep17 Dec17 Mar18 Jun18 Sep18 Dec18 Mar19 Jun19 Sep19 Dec19 Mar20 Jun20
ROE % Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only 35.72 43.30 48.60 60.50 29.29

Competitive Comparison
* Competitive companies are chosen from companies within the same industry, with headquarter located in same country, with closest market capitalization; x-axis shows the market cap, and y-axis shows the term value; the bigger the dot, the larger the market cap.


Automatic Data Processing ROE % Distribution

* The bar in red indicates where Automatic Data Processing's ROE % falls into.



Automatic Data Processing ROE % Calculation

Automatic Data Processing's annualized ROE % for the fiscal year that ended in Jun. 2020 is calculated as

ROE %=Net Income attributable to Common Stockholders (A: Jun. 2020 )/( (Total Stockholders Equity (A: Jun. 2019 )+Total Stockholders Equity (A: Jun. 2020 ))/ count )
=2466.5/( (5399.9+5752.2)/ 2 )
=2466.5/5576.05
=44.23 %

Automatic Data Processing's annualized ROE % for the quarter that ended in Jun. 2020 is calculated as

ROE %=Net Income attributable to Common Stockholders (Q: Jun. 2020 )/( (Total Stockholders Equity (Q: Mar. 2020 )+Total Stockholders Equity (Q: Jun. 2020 ))/ count )
=1646.4/( (5490.7+5752.2)/ 2 )
=1646.4/5621.45
=29.29 %

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

In the calculation of annual ROE %, the net income attributable to common stockholders of the last fiscal year and the average total shareholder equity over the fiscal year are used. In calculating the quarterly data, the net income attributable to common stockholders data used here is four times the quarterly (Jun. 2020) net income attributable to common stockholders data. ROE % is displayed in the 30-year financial page.


Automatic Data Processing  (NAS:ADP) ROE % Explanation

ROE % measures the rate of return on the ownership interest (shareholder's equity) of the common stock owners. It measures a firm's efficiency at generating profits from every unit of shareholders' equity (also known as net assets or assets minus liabilities). ROE % shows how well a company uses investment funds to generate earnings growth. ROE %s between 15% and 20% are considered desirable.

The factors that affect a company's ROE % can be illustrated with the three-step DuPont Analysis:

ROE %**(Q: Jun. 2020 )
=Net Income/Total Stockholders Equity
=1646.4/5621.45
=(Net Income / Revenue )*(Revenue / Total Assets)*(Total Assets / Total Stockholders Equity)
=(1646.4 / 13507.2)*(13507.2 / 41274.45)*(41274.45 / 5621.45)
=Net Margin %*Asset Turnover*Equity Multiplier
=12.19 %*0.3273*7.3423
=ROA %*Equity Multiplier
=3.99 %*7.3423
=29.29 %

With this breakdown, it is clear that if a company grows its Net Profit Margin, its Asset Turnover, or its Leverage, it can grow its ROE %.

The factors that affect a company's ROE % can also be illustrated with the five-step DuPont Analysis:

ROE %**(Q: Jun. 2020 )
=Net Income/Total Stockholders Equity
=1646.4/5621.45
=(Net Income /Pre-Tax Income) * (Pre-Tax Income/Operating Income) * (Operating Income/Revenue) * (Revenue/Total Assets) * (Total Assets/Total Stockholders Equity)
= (1646.4 / 2125.2) * (2125.2 / 2176.4) * (2176.4 / 13507.2) * (13507.2 / 41274.45) * (41274.45 / 5621.45)
= Tax Burden * Interest Burden * Operating Margin % * Asset Turnover * Equity Multiplier
= 0.7747 * 0.9765 * 16.11 % * 0.3273 * 7.3423
=29.29 %

Note: The net income attributable to common stockholders data used here is four times the quarterly (Jun. 2020) net income attributable to common stockholders data. The Revenue data used here is four times the quarterly (Jun. 2020) revenue data. The same rule applies to Pre-Tax Income and Operating Income.

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

** The ROE % used above is for Du Pont Analysis only. It is different from the defined ROE % page on our website, as here it uses Net Income instead of Net Income attributable to Common Stockholders in the calculation.


Be Aware

Net income attributable to common stockholders is used.

Because a company can increase its ROE % by having more financial leverage, it is important to watch the equity multiplier when investing in high ROE % companies. Like ROA %, ROE % is calculated with only 12 months data. Fluctuations in company's earnings or business cycles can affect the ratio drastically. It is important to look at the ratio from a long term perspective.

Asset light businesses require very few assets to generate very high earnings. Their ROE %s can be extremely high.


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