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Richard Sloan from the University of Michigan was first to document what is referred to as the "accrual anomaly". His 1996 paper found that shares of companies with small or negative accruals vastly outperform (+10%) those of companies with large ones.
As of Mar. 2026, Automatic Data Processing has a Sloan Ratio of 3.44%, indicating the company is in the safe zone and there is no funny business with accruals.
Automatic Data Processing (MEX:ADAP) Sloan Ratio % Explanation
A former University of Michigan researcher, Richard Sloan's 1996 paper found that shares of companies with small or negative accruals vastly outperform (+10%) those of companies with large ones. In fact, for the 40-year period between 1962 and 2001, buying the lowest accrual companies and shorting the highest accrual companies resulted in an average annual compounded return of 18%, more than double the S&P 500's 7.4% annual return over the same period.
If the Sloan Ratio is between -10% and 10%, the company is in the safe zone and there is no funny business with accruals.
If the Sloan Ratio is less than between -25% and -10% on the negative side, and between 10% and 25% on the positive side, this is a warning stage of accrual build up.
If the Sloan Ratio is less than -25% or greater than 25%, and this ratio is consistent over several quarters or even years, be careful. Earnings are highly likely to be made up of accruals.
As of Mar. 2026, Automatic Data Processing has a Sloan Ratio of 3.44%, indicating the company is in the safe zone and there is no funny business with accruals.
Automatic Data Processing Sloan Ratio % Related Terms
Automatic Data Processing Sloan Ratio % 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.
MEX:ADAP vs SNOW, DDOG, ADBE: Sloan Ratio % Comparison
For the Software - Application subindustry, Automatic Data Processing's Sloan Ratio %, along with its competitors' market caps and Sloan Ratio % 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 Sloan Ratio % vs Software Industry
For the Software industry and Technology sector, Automatic Data Processing's Sloan Ratio % distribution charts can be found below:
* The bar in red indicates where Automatic Data Processing's Sloan Ratio % falls into.
Automatic Data Processing Sloan Ratio % Calculation
Earnings contain a lot of non cash earnings which is called accruals. The Sloan ratio is a way to identify firms with low non-cash or accrual-derived earnings relative to their cash flow.
Automatic Data Processing's Sloan Ratio for the fiscal year that ended in Jun. 2025 is calculated as
Automatic Data Processing's Net Income for the trailing twelve months (TTM) ended in Mar. 2026 was 17147.752 (Jun. 2025 ) + 18582.675 (Sep. 2025 ) + 19122.053 (Dec. 2025 ) + 24520.865 (Mar. 2026 ) = MXN79,373 Mil.
Automatic Data Processing's Cash Flow from Operations for the trailing twelve months (TTM) ended in Mar. 2026 was 27098.985 (Jun. 2025 ) + 11782.48 (Sep. 2025 ) + 20398.658 (Dec. 2025 ) + 40357.183 (Mar. 2026 ) = MXN99,637 Mil.
Automatic Data Processing's Cash Flow from Investing for the trailing twelve months (TTM) ended in Mar. 2026 was 7968.517 (Jun. 2025 ) + -34167.907 (Sep. 2025 ) + -12188.058 (Dec. 2025 ) + -21933.173 (Mar. 2026 ) = MXN-60,321 Mil.
* 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.
Automatic Data Processing (MEX:ADAP) has a Sloan Ratio % of 3.44% as of Mar. 2026. Sloan ratio measures earnings quality based on the amount of accruals. View historical data on Automatic Data Processing and its competitors.
Is Automatic Data Processing's Sloan Ratio % too high?
Automatic Data Processing's current Sloan Ratio % is 3.44%. Overall, Automatic Data Processing has a GF Score™ of 90/100 and is considered Modestly Undervalued, reflecting its overall financial health beyond just this single metric.
How does Automatic Data Processing's Sloan Ratio % compare to SNOW and DDOG?
Automatic Data Processing's Sloan Ratio % of 3.44% can be compared against companies in the Software industry. See the competitive comparison table and distribution chart on this page for a detailed peer-by-peer breakdown.
What is a good Sloan Ratio % for a Software company?
A good Sloan Ratio % depends on the Software industry context. However, Sloan Ratio % should not be evaluated in isolation — investors should consider it alongside profitability, growth, and financial strength metrics. Use the industry distribution chart on this page to see where any company falls relative to its peers.
What does a high Sloan Ratio % mean?
A high Sloan Ratio % can signal that a stock is expensive relative to its fundamentals. Sloan ratio measures earnings quality based on the amount of accruals. View historical data on Automatic Data Processing and its competitors. Automatic Data Processing's current Sloan Ratio % is 3.44%. 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 (MEX:ADAP) is currently considered Modestly Undervalued. The stock's GF Value™ is MXN5,278.57, compared to a current price of MXN4,310.00 — trading 18.3% below its estimated fair value. The current Sloan Ratio % is 3.44%. Automatic Data Processing's overall GF Score™ is 90/100 with 2 warning signs to review. Investors should evaluate multiple metrics — including profitability, growth, and financial strength — before making a decision.
How is Sloan Ratio % calculated?
Sloan Ratio % is calculated from a company's financial statements. For Automatic Data Processing (MEX:ADAP), the current Sloan Ratio % is 3.44% 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 (MEX:ADAP) Overvalued in 2026?
Based on GuruFocus' analysis, Automatic Data Processing stock appears to be undervalued.
The current stock price of MXN4,310.00 is trading 18.3% below its estimated GF Value™ of MXN5,278.57.
GuruFocus considers Automatic Data Processing to be Modestly Undervalued.
Key valuation signals for MEX:ADAP:
Sloan Ratio %: 3.44%
GF Value™: MXN5,278.57 vs. price of MXN4,310.00 (18.3% below fair value)
No single metric tells the full story. See the MEX:ADAP 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.
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