Automatic Data ProcessingXTER:ADP -0.15%87 Gross Margin % is 48.28% as of Mar. 2026, which is 13% above its 10-year median of 42.54. GuruFocus rates XTER:ADP with a GF Score™ of 87/100 and a GF Value™ of €265.32 (Modestly Undervalued). The stock has 2 warning signs investors should review. Among 2,681 Software companies, Automatic Data Processing ranks better than 56.88% on this metric.
Automatic Data Processing (XTER:ADP) Gross Margin % Explanation
Warren Buffett believes that firms with excellent long term economics tend to have consistently higher margins.
Durable competitive advantage creates a high Gross Margin % because of the freedom to price in excess of cost. Companies can be categorized by their Gross Margin %
1. Greater than 40% = Durable competitive advantage
2. Less than 40% = Competition eroding margins
3. Less than 20% = no sustainable competitive advantage
Consistency of Gross Margin is key
Automatic Data Processing had a gross margin of 48.28% for the quarter that ended in Mar. 2026 => Durable competitive advantage
Be Aware
If a company loses its competitive advantages, usually its gross margin declines well before its sales declines. Watching Gross Margin % and Operating Margin % closely helps avoid value trap situations.
Automatic Data Processing Gross Margin % Related Terms
Automatic Data Processing Gross Margin % Historical Data
* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD. * For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.
XTER:ADP vs SNOW, DDOG, INTU: Gross Margin % Comparison
For the Software - Application subindustry, Automatic Data Processing's Gross Margin %, along with its competitors' market caps and Gross Margin % data, can be viewed below:
* 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. Note that "N/A" values will not show up in the chart.
Automatic Data Processing Gross Margin % vs Software Industry
For the Software industry and Technology sector, Automatic Data Processing's Gross Margin % distribution charts can be found below:
* The bar in red indicates where Automatic Data Processing's Gross Margin % falls into.
* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD. * For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.
A positive Gross Profit is only the first step for a company to make a net profit. The gross profit needs to be big enough to also cover related labor, equipment, rental, marketing/advertising, research and development and a lot of other costs in selling the products.
Automatic Data Processing (XTER:ADP) has a Gross Margin % of 48.28% as of Mar. 2026. Gross margin is the ratio of total gross profit to net sales. View historical data on Automatic Data Processing and its competitors. This is 13% above median its historical median of 42.54. Over the past decade, Automatic Data Processing's Gross Margin % has ranged from 41.37 to 46.23. According to the industry distribution chart, Automatic Data Processing ranks #1156 out of 2681 companies in the Software industry, placing it in the top 43.1%.
Is Automatic Data Processing's Gross Margin % too high?
Automatic Data Processing's current Gross Margin % of 48.28% is 13% above median its 10-year median of 42.54. Over the past 10 years, this metric has ranged from a low of 41.37 to a high of 46.23. The Software industry median Gross Margin % is 40.45. Automatic Data Processing's value of 48.28% is 19.4% above this industry median. Based on the distribution chart, Automatic Data Processing ranks #1156 out of 2681 companies in the Software industry, which is above the industry midpoint. Overall, Automatic Data Processing has a GF Score™ of 87/100 and is considered Modestly Undervalued, reflecting its overall financial health beyond just this single metric.
How does Automatic Data Processing's Gross Margin % compare to SNOW and DDOG?
According to the Software industry distribution chart, Automatic Data Processing ranks #1156 out of 2681 companies for Gross Margin %. This puts Automatic Data Processing in the upper half of its industry. The industry median Gross Margin % is 40.45. Automatic Data Processing's value of 48.28% is 19.4% above this benchmark. Historically, Automatic Data Processing's own Gross Margin % has ranged from 41.37 to 46.23 over the past decade. While the company's 10-year median is 42.54 vs. the industry median of 40.45, Automatic Data Processing has consistently been above the industry average. See the competitive comparison table and distribution chart on this page for a detailed peer-by-peer breakdown.
What is a good Gross Margin % for a Software company?
The median Gross Margin % among Software companies is 40.45, based on 2,681 companies in the industry. Companies in the top quartile (top 25%) have a Gross Margin % significantly above this median, while those in the bottom quartile fall well below. However, Gross Margin % should not be evaluated in isolation — investors should consider it alongside profitability, growth, and financial strength metrics. Automatic Data Processing's current Gross Margin % of 48.28% is 19.4% above the industry median. Use the industry distribution chart on this page to see where any company falls relative to its peers.
What does a high Gross Margin % mean?
A high Gross Margin % can signal that a stock is expensive relative to its fundamentals. Gross margin is the ratio of total gross profit to net sales. View historical data on Automatic Data Processing and its competitors. For the Software industry, the median Gross Margin % is 40.45 — values significantly above this may indicate overvaluation, while values below may suggest a bargain or underlying issues. Automatic Data Processing's current Gross Margin % is 48.28%, which is 13% above median its own 10-year median of 42.54. However, context matters — high-growth companies often justify higher valuations. Always evaluate alongside other metrics like GF Score™ and GF Value™.
Is Automatic Data Processing stock overvalued right now?
Based on GuruFocus' analysis, Automatic Data Processing (XTER:ADP) is currently considered Modestly Undervalued. The stock's GF Value™ is €265.32, compared to a current price of €195.08 — trading 26.5% below its estimated fair value. The current Gross Margin % is 48.28%, which is 13% above median its 10-year median of 42.54 and 19.4% above the Software industry median of 40.45. Automatic Data Processing's overall GF Score™ is 87/100 with 2 warning signs to review. Investors should evaluate multiple metrics — including profitability, growth, and financial strength — before making a decision.
How is Gross Margin % calculated?
Gross Margin % is calculated from a company's financial statements. For Automatic Data Processing (XTER:ADP), the current Gross Margin % is 48.28% as of Mar. 2026. GuruFocus calculates this using data sourced from SEC filings and annual reports. See the calculation section and 30-year financial data on this page for the full breakdown.
Is Automatic Data Processing (XTER:ADP) Overvalued in 2026?
Based on GuruFocus' analysis, Automatic Data Processing stock appears to be undervalued.
The current stock price of €195.08 is trading 26.5% below its estimated GF Value™ of €265.32.
GuruFocus considers Automatic Data Processing to be Modestly Undervalued.
Key valuation signals for XTER:ADP:
Gross Margin %: 48.28% (13% above median its 10-year median of 42.54)
GF Value™: €265.32 vs. price of €195.08 (26.5% below fair value)
Industry Position: 19.4% above the Software median (#1156 of 2681)
No single metric tells the full story. See the XTER:ADP stock analysis page for a complete view including 30-year financials, guru trades, and insider activity.
Automatic Data Processing, or ADP, is a global, cloud-based human capital management provider offering payroll, compliance, talent management, benefits administration, and retirement services. The firm also provides HR outsourcing services, including PEO offerings, enabling clients to reduce HR overhead. Its broad suite serves customers of all sizes across diverse sectors, and the firm holds large market shares in its core markets. As of fiscal 2025, ADP counts over 1.1 million clients and manages payroll for more than 42 million workers across 140 countries.
87GF Score
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