Amidst the fast-paced and highly competitive business environment of today, conducting comprehensive company analysis is essential for investors and industry enthusiasts. In this article, we will delve into an extensive industry comparison, evaluating Automatic Data Processing (NASDAQ:ADP) in comparison to its major competitors within the Professional Services industry. By analyzing critical financial metrics, market position, and growth potential, our objective is to provide valuable insights for investors and offer a deeper understanding of 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 | 23.98 | 17.24 | 4.82 | 15.81% | $1.53 | $2.51 | 6.77% |
| Paychex Inc | 20.04 | 9.70 | 5.49 | 11.55% | $0.74 | $1.2 | 5.88% |
| Paycom Software Inc | 23.54 | 17.54 | 5.42 | 15.53% | $0.22 | $0.44 | 9.84% |
| Paylocity Holding Corp | 29.70 | 6.35 | 4.52 | 5.02% | $0.11 | $0.3 | 10.98% |
| Korn Ferry | 13.46 | 1.99 | 1.24 | 3.42% | $0.12 | $0.67 | 6.86% |
| Robert Half Inc | 29.28 | 2.85 | 0.64 | 2.16% | $-0.04 | $0.47 | -2.44% |
| First Advantage Corp | 123.23 | 2.45 | 1.93 | 1.31% | $0.12 | $0.2 | 14.88% |
| Trinet Group Inc | 16.65 | 23.06 | 0.62 | 50.96% | $0.11 | $0.25 | -4.85% |
| ManpowerGroup Inc | 23.36 | 1.15 | 0.13 | 2.57% | $0.14 | $0.78 | 7.54% |
| Upwork Inc | 10.71 | 1.71 | 1.44 | 4.3% | $0.04 | $0.15 | -1.68% |
| Kforce Inc | 23.91 | 7.34 | 0.65 | 10.23% | $0.02 | $0.1 | 4.49% |
| Barrett Business Services Inc | 23.32 | 3.72 | 0.63 | 6.29% | $0.02 | $0.06 | 3.77% |
| Fiverr International Ltd | 10.46 | 0.70 | 0.74 | 1.04% | $0.01 | $0.08 | -10.0% |
| Mastech Digital Inc | 40.35 | 0.90 | 0.47 | -0.11% | $0.0 | $0.01 | -15.58% |
| Average | 29.85 | 6.11 | 1.84 | 8.79% | $0.12 | $0.36 | 2.28% |
When conducting a detailed analysis of Automatic Data Processing, the following trends become clear:
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At 23.98, the stock's Price to Earnings ratio is 0.8x less than the industry average, suggesting favorable growth potential.
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With a Price to Book ratio of 17.24, which is 2.82x the industry average, Automatic Data Processing might be considered overvalued in terms of its book value, as it is trading at a higher multiple compared to its industry peers.
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With a relatively high Price to Sales ratio of 4.82, which is 2.62x the industry average, the stock might be considered overvalued based on sales performance.
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The company has a higher Return on Equity (ROE) of 15.81%, which is 7.02% above the industry average. This suggests efficient use of equity to generate profits and demonstrates profitability and growth potential.
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With higher Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $1.53 Billion, which is 12.75x above the industry average, the company demonstrates stronger profitability and robust cash flow generation.
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With higher gross profit of $2.51 Billion, which indicates 6.97x above the industry average, the company demonstrates stronger profitability and higher earnings from its core operations.
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The company is experiencing remarkable revenue growth, with a rate of 6.77%, outperforming the industry average of 2.28%.
Debt To Equity Ratio
The debt-to-equity (D/E) ratio provides insights into the proportion of debt a company has in relation to its equity and asset value.
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.
When evaluating Automatic Data Processing alongside its top 4 peers in terms of the Debt-to-Equity ratio, the following insights arise:
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When comparing the debt-to-equity ratio, Automatic Data Processing is in a stronger financial position compared to its top 4 peers.
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The company has a lower level of debt relative to its equity, indicating a more favorable balance between the two with a lower debt-to-equity ratio of 0.87.
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 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 performance.
This article was generated by Benzinga's automated content engine and reviewed by an editor.
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