In the fast-paced and highly competitive business world of today, conducting thorough company analysis is essential for investors and industry observers. In this article, we will conduct an extensive industry comparison, evaluating Automatic Data Processing (NASDAQ:ADP) in relation to its major competitors in the Professional Services industry. Through a detailed examination of key financial metrics, market standing, and growth prospects, our objective is to provide valuable insights and illuminate company's performance in the industry.
Automatic Data Processing Background
ADP is a global, cloud-based human capital management provider offering payroll, compliance, talent management, benefits administration, and retirement services. The firm also provides human resources 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 shares in its core markets. As of fiscal 2026, ADP counts over 1.1 million clients and manages payroll for more than 42 million workers across 140 countries.
| Company | P/E | P/B | P/S | ROE | EBITDA (in billions) | Gross Profit (in billions) | Revenue Growth |
|---|---|---|---|---|---|---|---|
| Automatic Data Processing Inc | 24.10 | 17.32 | 4.85 | 15.81% | $1.53 | $2.51 | 6.77% |
| Paychex Inc | 20.11 | 9.74 | 5.51 | 11.55% | $0.74 | $1.2 | 5.88% |
| Paycom Software Inc | 23.33 | 17.39 | 5.37 | 15.53% | $0.22 | $0.44 | 9.84% |
| Paylocity Holding Corp | 29.14 | 6.23 | 4.43 | 5.02% | $0.11 | $0.3 | 10.98% |
| Korn Ferry | 13.59 | 1.96 | 1.25 | 3.42% | $0.12 | $0.67 | 6.86% |
| Robert Half Inc | 32.08 | 3.13 | 0.70 | 2.16% | $-0.04 | $0.47 | -2.44% |
| First Advantage Corp | 130.67 | 2.60 | 2.05 | 1.31% | $0.12 | $0.2 | 14.88% |
| Trinet Group Inc | 17.27 | 23.91 | 0.64 | 50.96% | $0.11 | $0.25 | -4.85% |
| ManpowerGroup Inc | 25.86 | 1.27 | 0.14 | 2.57% | $0.14 | $0.78 | 7.54% |
| Upwork Inc | 10.45 | 1.67 | 1.41 | 4.3% | $0.04 | $0.15 | -1.68% |
| Kforce Inc | 24.32 | 7.47 | 0.66 | 10.23% | $0.02 | $0.1 | 4.49% |
| Barrett Business Services Inc | 23.24 | 3.70 | 0.62 | 6.29% | $0.02 | $0.06 | 3.77% |
| Fiverr International Ltd | 10.56 | 0.70 | 0.75 | 1.04% | $0.01 | $0.08 | -10.0% |
| Mastech Digital Inc | 43.24 | 0.96 | 0.50 | -0.11% | $0.0 | $0.01 | -15.58% |
| Average | 31.07 | 6.21 | 1.85 | 8.79% | $0.12 | $0.36 | 2.28% |
Upon analyzing Automatic Data Processing, the following trends can be observed:
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The stock's Price to Earnings ratio of 24.1 is lower than the industry average by 0.78x, suggesting potential value in the eyes of market participants.
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It could be trading at a premium in relation to its book value, as indicated by its Price to Book ratio of 17.32 which exceeds the industry average by 2.79x.
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With a relatively high Price to Sales ratio of 4.85, which is 2.62x the industry average, the stock might be considered overvalued based on sales performance.
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With a Return on Equity (ROE) of 15.81% that is 7.02% above the industry average, it appears that the company exhibits efficient use of equity to generate profits.
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The Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $1.53 Billion is 12.75x above the industry average, highlighting stronger profitability and robust cash flow generation.
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Compared to its industry, the company has higher gross profit of $2.51 Billion, which indicates 6.97x above the industry average, indicating stronger profitability and higher earnings from its core operations.
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The company's revenue growth of 6.77% exceeds the industry average of 2.28%, indicating strong sales performance and market outperformance.
Debt To Equity Ratio
The debt-to-equity (D/E) ratio assesses the extent to which a company relies on borrowed funds compared to its equity.
Considering the debt-to-equity ratio in industry comparisons allows for a concise evaluation of a company's financial health and risk profile, aiding in informed decision-making.
In terms of the Debt-to-Equity ratio, Automatic Data Processing can be assessed by comparing it to its top 4 peers, resulting in the following observations:
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When considering the debt-to-equity ratio, Automatic Data Processing exhibits a stronger financial position compared to its top 4 peers.
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This indicates that the company has a favorable balance between debt and equity, with a lower debt-to-equity ratio of 0.87, which can be perceived as a positive aspect by investors.
Key Takeaways
For Automatic Data Processing in the Professional Services industry, the PE ratio is low compared to peers, indicating potential undervaluation. The PB ratio is high, suggesting the market values the company's assets more than its earnings. The PS ratio is also high, reflecting strong sales performance relative to market value. In terms of ROE, EBITDA, gross profit, and revenue growth, Automatic Data Processing outperforms its industry peers, showcasing efficient operations and robust financial health.
This article was generated by Benzinga's automated content engine and reviewed by an editor.
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