Now trading at a price of $216.06, Automatic Data Processing has moved 2.7% so far today.
Automatic Data Processing returned losses of -8.0% last year, with its stock price reaching a high of $274.92 and a low of $201.46. Over the same period, the stock underperformed the S&P 500 index by -24.0%. As of April 2023, the company's 50-day average price was $243.16. Automatic Data Processing, Inc. provides cloud-based human capital management solutions worldwide. Based in Roseland, NJ, the large-cap Technology company has 63,000 full time employees. Automatic Data Processing has offered a 2.4% dividend yield over the last 12 months.
Growing Revenues With a Flat Capital Expenditure Trend:
| 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | |
|---|---|---|---|---|---|---|
| Revenue (MM) | $13,274 | $14,110 | $14,590 | $15,005 | $16,498 | $18,012 |
| Gross Margins | 18% | 21% | 21% | 22% | 23% | 24% |
| Operating Margins | 16.0% | 21.0% | 22.0% | 22.0% | 23.0% | 25.0% |
| Net Margins | 14.0% | 16.0% | 17.0% | 17.0% | 18.0% | 19.0% |
| Net Income (MM) | $1,885 | $2,293 | $2,466 | $2,598 | $2,949 | $3,412 |
| Net Interest Expense (MM) | $103 | $130 | $148 | $96 | $83 | $253 |
| Depreciation & Amort. (MM) | $378 | $409 | $480 | $511 | $515 | $549 |
| Earnings Per Share | $4.25 | $5.24 | $5.7 | $6.07 | $7.0 | $8.21 |
| Diluted Shares (MM) | 443 | 438 | 433 | 428 | 421 | 416 |
| Free Cash Flow (MM) | $2,309 | $2,526 | $2,854 | $2,915 | $2,925 | $4,001 |
| Capital Expenditures (MM) | $206 | $162 | $173 | $179 | $174 | $206 |
| Net Current Assets (MM) | -$2,360 | -$2,330 | -$1,764 | -$2,946 | -$5,323 | -$5,291 |
| Long Term Debt (MM) | $2,002 | $1,003 | $1,994 | $2,986 | $2,988 | $2,989 |
| Net Debt / EBITDA | 9.38 | 7.42 | 6.04 | 7.35 | 7.66 | 6.65 |
Automatic Data Processing has growing revenues and a flat capital expenditure trend, a pattern of improving cash flows, and a strong EPS growth trend. However, the firm suffers from slimmer gross margins than its peers and a highly leveraged balance sheet. Finally, we note that Automatic Data Processing has average net margins with a positive growth rate.
Automatic Data Processing's Valuation Is in Line With Its Sector Averages:
Automatic Data Processing has a trailing twelve month P/E ratio of 28.9, compared to an average of 27.16 for the Technology sector. Based on its EPS guidance of $10.06, the company has a forward P/E ratio of 24.2. Automatic Data Processing's PEG ratio is 3.25 on the basis of the 8.9% weighted average of the company and the broader market's EPS compound average growth rates. This suggests that the company's shares are overvalued. Furthermore, Automatic Data Processing is likely overvalued compared to the book value of its equity, since its P/B ratio of 25.61 is higher than the sector average of 6.23. The company's shares are currently trading 445.9% above their Graham number.
There's an Analyst Consensus of Some Upside Potential for Automatic Data Processing:
The 15 analysts following Automatic Data Processing have set target prices ranging from $225.0 to $285.0 per share, for an average of $259.93 with a hold rating. As of April 2023, the company is trading -6.5% away from its average target price, indicating that there is an analyst consensus of some upside potential.
Automatic Data Processing has a very low short interest because 1.1% of the company's shares are sold short. Institutions own 83.0% of the company's shares, and the insider ownership rate stands at 0.11%, suggesting a small amount of insider investors. The largest shareholder is Vanguard Group Inc, whose 10% stake in the company is worth $8,463,407,806.
