Automatic Data Processing, Inc. (ADP) Buy or Sell Stock Guide

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Are you looking for the analysis of Automatic Data Processing, Inc. (ADP) stock? Are you wondering what the bulls and the bears say about it?

If so, you came to the right place. In this stock guide, we will share with you 6 reasons to buy and 5 reasons to sell ADP stock. You’ll get a perspective on what the bulls and the bears say about it.

The analysis below may be also helpful to you if you have any of the following questions about ADP stock:

  • Is ADP a buy or a sell?
  • Should I sell or hold ADP stock today?
  • Is ADP a good buy / investment?
  • What are ADP analyst opinions, recommendations and ratings?

Let’s start with the bull case. Here are the reasons to buy ADP stock:

1. ADP is a steady dividend payer that has raised its dividend every year for the last 40 years.

2. ADP's business benefits significantly from increased employment. Every time an employer adds an employee to its payroll, ADP increases its revenue with minimal increased costs.

3. Average client retention is estimated to be longer than 10 years.

4. ADP quarterly revenue growth was 5.20%, higher than the industry and sector average revenue growth (2.35% and 3.07%, respectively). See ADP revenue growth chart.

5. ADP profitability is improving. The YoY profit margin change was 4.01 percentage points. See ADP profitability chart.

6. ADP forward dividend yield is 1.95%, higher than the industry (0.30%) and sector (0.36%) forward dividend yields. See ADP forward dividend chart.

Now that you understand the bull case, let’s look at the reasons to sell ADP stock (i.e., the bear case):

1. As technology advances, more small business owners may opt for a do-it-yourself SaaS solution.

2. Much of the benefit from the Affordable Care Act has been realized leaving the company without new revenue opportunities.

3. Interest income from client funds could remain depressed if rates don't increase.

4. ADP Price/Book ratio is 13.18, and it’s high compared to its industry peers’ P/B ratios. See ADP forward Price/Book ratio chart.

5. ADP Price/Sales ratio is 4.92, and it’s high compared to its industry peers’ P/S ratios. See ADP forward Price/Sales ratio chart.

Now let's look at the key statistics for ADP:

Metrics ADP
Price $170.60
Average Price Target / Upside $179.59 / 5.27%
Average Analyst Rating Buy
Industry Business Services
Sector Industrials
Number of Employees 57,000
Market Cap $74.78B
Forward P/E Ratio 24.55
Price/Book Ratio 5.21
PEG 1.84
Revenue (TTM) $14.36B
YoY Quarterly Revenue Growth 5.6%
Profit Margin 16.5%

What are your thoughts on ADP?

If you liked this analysis, check out Buy or Sell Stock Guides for other stocks.

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