Automatic Data Processing, Inc.
Orin's own judgment of how firmly the evidence points one way — not the chance the price goes up.
ADP remains a high-quality HCM compounder — FY2026 (ended 30 Jun) revenue of $21.95B grew 6.7%, EPS of $10.95 rose 9.7%, and FCF reached $5.24B at a 23.9% margin — but operating margin compressed sharply from 26.3% to 18.6% as operating income fell from $5.41B to $4.08B, partly driven by a Q1 operating loss of $122.5M, even as debt reduction to $5.27B from $9.07B supported bottom-line growth.
The stock has rallied to $288.90 with an RSI of 71.3, trading at a P/E of 26.3 versus a peer median of 22.1 (a 19% premium), while insiders are net sellers at $65.9M over 24 months and smart-money conviction is negligible at 0.0042. Overbought technicals, premium valuation, and margin compression offset an otherwise durable cash-generation story, arguing for patience until operating leverage returns.
What could go wrong
- Operating margin compression. Operating margin fell from 26.3% to 18.6% in FY2026 with operating income declining from $5.41B to $4.08B despite revenue growth; if this is structural rather than transitory, earnings quality is deteriorating.
- Overbought technicals at premium valuation. RSI of 71.3 and stock price of $288.90 well above the 50-day MA of $272.87 and 200-day MA of $238.64, combined with a P/E of 26.3 versus peer median of 22.1, leave limited upside and elevated pullback risk.
- Insider and institutional disinterest. Insiders net sold $65.9M over 24 months with 119 dispositions versus 1 acquisition, and smart-money score is negligible at 0.00 with fund count declining from 69 to 66 quarter-over-quarter as of 30 Jun.
- Macroeconomic sensitivity. ADP's chief economist described the economy as 'lopsided' with inflation running hot while paychecks lag, and the NER Pulse shows modest weekly job additions of approximately 24,750, which could pressure payroll revenue growth if employment trends weaken.
What would change my mind
Where this comes from: FY26 fundamentals · FY25 and FY26 fundamentals · Q1 FY26 results · technicals, 16 Oct. Orin's read on ADP; not advice.
How has the share price moved?
Up 4.5% over twelve months, from $280.53 on 27 Oct 2025 to $293.11 at the Tue 27 Oct 2026 close. Its highest close in that time was $307.94 on 22 Oct 2026; the last close is 4.8% below it.
- Green line: the closing price each trading day.
- Grey line: the average closing price over the last 50 trading days.
- Dashed amber line: the same over the last 200 trading days — a slower, smoother line.
- Bars along the bottom: shares traded each day — green when it closed higher than the day before, rose when lower (the most, 19.1M, on 20 Mar 2026).
- Flags: the company's filings, on the day they were made (a 10-Q is the quarterly report and a 10-K the annual report; an 8-K reports a major event).
- Rose flags: large share sales by the company's own officers and directors, from the Form 4 each one files after trading.
On file
All ADP filingsLargest holders · 13F Q2 2026
Money flow| Filer | Position | Of fund |
|---|---|---|
| BlackRock | $8.1B | 0.1% |
| Vanguard Capital Management | $5.8B | 0.1% |
| State Street | $4.6B | 0.1% |
| Invesco | $3.0B | 0.2% |
| Charles Schwab Investment Management | $2.9B | 0.4% |
| Geode Capital Management | $2.7B | 0.1% |
| Vanguard Portfolio Management | $2.4B | 0.1% |
| Wellington Management Group | $2.2B | 0.4% |
| Morgan Stanley | $1.9B | 0.1% |
| Capital Research Global Investors | $1.9B | 0.3% |
134 of the 815 filers we track · quarter ended Q2 2026 · positions, not flows
Insiders, last 24 months: 253 Form 4 filings; open-market trades net −$65.9M. Of the 50 on hand, 0 were open-market purchases and 24 sales — the rest are grants, option exercises and tax withholding.
Ask Orin about ADP
Orin answers questions about ADP from its filings, transcripts and numbers — with the source behind every claim. Your own desk starts with 3 free days, card required.
Start 3 free days →How is it priced, against its own past and its sector?
Priced at 26.7× its last 12 months of profit (Tue 27 Oct close) — higher than in 3 of its last 5 fiscal years (middle 26.6×); the typical Industrials company on the NASDAQ is at 18.4×.
| Measure | Now | Its usual | Sector |
|---|---|---|---|
| P/E | 26.7×near usual | 26.6× | 18.4× |
| P/S | 5.29×near usual | 5.05× | — |
| EV/EBITDA | 18.2×near usual | 17.6× | — |
| P/B | 19.4×below usual | 21.3× | — |
- "Its usual" is the middle of its own last 5 fiscal years.
P/E: the share price divided by one year of profit per share — roughly how many years of today's profit the price pays for. A company that loses money has no P/E.
P/S: the company's total market value divided by one year of revenue. Used when there is no profit to measure.
EV/EBITDA: the price of the whole company (its shares plus its debt, minus its cash) divided by one year of operating profit before interest, tax and write-downs.
P/B: the share price divided by the book value per share — what the company owns minus what it owes, as its accounts record it. When book value is tiny, P/B swings wildly and says little.
What do the analysts who cover it publish?
The analysts' average 12-month price target is $272 (from $225 to $340) — 7% below the Tue 27 Oct close price. That is their published opinion, not Orin's.
$272
$225 – $340 · −7% against the last close
- 4 buy or overweight
- 8 hold
- 2 underweight or sell
Price target: the share price an analyst publishes for about 12 months ahead. It is the opinion of the firm that wrote it; the average is across the firms that cover the company.
Overweight / underweight: analysts' rating words: overweight means the firm expects the stock to do better than the others it covers, underweight worse. Their words, not Orin's.
How is it priced next to the companies it is compared to?
Priced at 26.7× its last 12 months of profit; the middle P/E of the 4 companies it is compared to that made a profit is 22.7×.
| Company | Market value | P/E | EV/EBITDA | Gross margin | Net margin | ROE |
|---|---|---|---|---|---|---|
| ADPAutomatic Data Processing, Inc. | $116B | 26.7× | 18.2× | 48.2% | 20.1% | 70% |
| BBSIBarrett Business Services, Inc. | $737M | 23.7× | 10.9× | 19.3% | 2.4% | 15% |
| NSPInsperity, Inc. | $2B | lost money | 34.0× | 12.8% | −0.2% | −25% |
| PAYXPaychex, Inc. | $39B | 21.6× | 14.0× | 74.4% | 27.4% | 47% |
| TNETTriNet Group, Inc. | $3B | 19.2× | 10.2× | 19.1% | 3.6% | 188% |
| WDAYWorkday, Inc. | $50B | 41.5× | 31.5× | 75.8% | 12.3% | 17% |
- NSP: lost money over the last 12 months, so no P/E.
- The list of companies is the data vendor's choice, so it can include a company a person would not have picked.
Market value: the share price times the number of shares — what the whole company is priced at.
P/E: the share price divided by one year of profit per share — roughly how many years of today's profit the price pays for. A company that loses money has no P/E.
EV/EBITDA: the price of the whole company (its shares plus its debt, minus its cash) divided by one year of operating profit before interest, tax and write-downs.
Gross margin: the share of each $1 of sales left after the direct cost of making what was sold.
Net margin: the share of each $1 of sales kept as profit after every cost. Below zero, the company lost money.
ROE: return on equity: one year of profit as a share of the shareholders' money in the business (its book value).
Is it priced high or low compared with its own past?
Priced at 26.7× its last 12 months of profit (Tue 27 Oct close). It has no full fiscal year on file since its history starts, so there is nothing of its own to compare with.
- Now26.7×
P/E: the share price divided by one year of profit per share — roughly how many years of today's profit the price pays for. A company that loses money has no P/E.
Fiscal year (FY): the company's own 12-month accounting year, which need not match the calendar year.
How has its sector been priced?
Industrials companies on the NASDAQ were priced at a typical 18.4× their yearly profit (Tue 27 Oct close).
- Now18.4×
- Each year is the middle of that calendar year's daily sector P/E; "Now" is the Tue 27 Oct close figure, the same one in the table above.
Sector P/E: the middle P/E of the companies in the same sector on the same stock exchange, as the data vendor works it out each day.
What does a cash-flow model say a share is worth?
A standard cash-flow model puts it at $295 a share — 1% above the $292.27 price it was computed against (27 Oct).
| Model | Value a share | Against the price then |
|---|---|---|
| Standard | $295 | 1% above $292.27 |
| Levered | $356 | 22% above $292.27 |
Discounted cash flow: a model's estimate of what the company is worth today, from the cash it is forecast to make in future years. Small changes in the forecast move it a lot, and it says little about a company that loses money.
Standard / levered: two versions of the cash-flow model: the standard one counts the cash before the company pays its lenders, the levered one after.