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 | 24.76 | 17.80 | 4.98 | 15.81% | $1.53 | $2.51 | 6.77% |
| Paychex Inc | 20.63 | 9.99 | 5.65 | 11.55% | $0.74 | $1.2 | 5.88% |
| Paycom Software Inc | 24.57 | 18.31 | 5.66 | 15.53% | $0.22 | $0.44 | 9.84% |
| Paylocity Holding Corp | 31.30 | 6.69 | 4.76 | 5.02% | $0.11 | $0.3 | 10.98% |
| Korn Ferry | 13.57 | 2.01 | 1.25 | 3.42% | $0.12 | $0.67 | 6.86% |
| Robert Half Inc | 29.50 | 2.88 | 0.64 | 2.16% | $-0.04 | $0.47 | -2.44% |
| First Advantage Corp | 126.93 | 2.53 | 1.99 | 1.31% | $0.12 | $0.2 | 14.88% |
| Trinet Group Inc | 17.36 | 24.04 | 0.64 | 50.96% | $0.11 | $0.25 | -4.85% |
| ManpowerGroup Inc | 23.77 | 1.17 | 0.13 | 2.57% | $0.14 | $0.78 | 7.54% |
| Upwork Inc | 11.03 | 1.76 | 1.49 | 4.3% | $0.04 | $0.15 | -1.68% |
| Kforce Inc | 24.19 | 7.43 | 0.66 | 10.23% | $0.02 | $0.1 | 4.49% |
| Barrett Business Services Inc | 23.65 | 3.77 | 0.63 | 6.29% | $0.02 | $0.06 | 3.77% |
| Fiverr International Ltd | 10.77 | 0.72 | 0.76 | 1.04% | $0.01 | $0.08 | -10.0% |
| Mastech Digital Inc | 39.59 | 0.88 | 0.46 | -0.11% | $0.0 | $0.01 | -15.58% |
| Average | 30.53 | 6.32 | 1.9 | 8.79% | $0.12 | $0.36 | 2.28% |
By closely examining Automatic Data Processing, we can identify the following trends:
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The Price to Earnings ratio of 24.76 is 0.81x lower than the industry average, indicating potential undervaluation for the stock.
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The elevated Price to Book ratio of 17.8 relative to the industry average by 2.82x suggests company might be overvalued based on its book value.
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With a relatively high Price to Sales ratio of 4.98, 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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Compared to its industry, the company has higher Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $1.53 Billion, which is 12.75x above the industry average, indicating stronger profitability and robust cash flow generation.
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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 is an important measure to assess the financial structure and risk profile of a company.
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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Automatic Data Processing is in a relatively stronger financial position compared to its top 4 peers, as evidenced by its lower debt-to-equity ratio of 0.87.
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This implies that the company relies less on debt financing and has a more favorable balance between debt and equity.
Key Takeaways
The PE, PB, and PS ratios for Automatic Data Processing indicate that it may be undervalued compared to its peers in the Professional Services industry. On the other hand, the high ROE, EBITDA, gross profit, and revenue growth suggest that the company is performing well and has strong financial health relative to its industry counterparts.
This article was generated by Benzinga's automated content engine and reviewed by an editor.
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