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 | 17.37 | 4.85 | 15.81% | $1.53 | $2.51 | 6.77% |
| Paychex Inc | 20.73 | 10.04 | 5.68 | 10.86% | $0.73 | $1.19 | 12.49% |
| Paycom Software Inc | 23.46 | 17.48 | 5.40 | 15.53% | $0.22 | $0.44 | 9.84% |
| Paylocity Holding Corp | 29.18 | 6.24 | 4.44 | 5.02% | $0.11 | $0.3 | 10.98% |
| Korn Ferry | 14.01 | 2.02 | 1.29 | 3.42% | $0.12 | $0.67 | 6.86% |
| Robert Half Inc | 32.49 | 3.17 | 0.71 | 2.16% | $-0.04 | $0.47 | -2.44% |
| First Advantage Corp | 133.33 | 2.65 | 2.09 | 1.31% | $0.12 | $0.2 | 14.88% |
| Trinet Group Inc | 17.31 | 23.96 | 0.64 | 50.96% | $0.11 | $0.25 | -4.85% |
| ManpowerGroup Inc | 25.84 | 1.27 | 0.14 | 2.57% | $0.14 | $0.78 | 7.54% |
| Upwork Inc | 10.49 | 1.67 | 1.41 | 4.3% | $0.04 | $0.15 | -1.68% |
| Kforce Inc | 24.56 | 7.54 | 0.67 | 10.23% | $0.02 | $0.1 | 4.49% |
| Barrett Business Services Inc | 24.37 | 3.88 | 0.65 | 6.29% | $0.02 | $0.06 | 3.77% |
| Fiverr International Ltd | 10.52 | 0.70 | 0.75 | 1.04% | $0.01 | $0.08 | -10.0% |
| Mastech Digital Inc | 42.94 | 0.96 | 0.50 | -0.11% | $0.0 | $0.01 | -15.58% |
| Average | 31.48 | 6.28 | 1.87 | 8.74% | $0.12 | $0.36 | 2.79% |
When analyzing Automatic Data Processing, the following trends become evident:
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The Price to Earnings ratio of 24.1 is 0.77x lower than the industry average, indicating potential undervaluation for the stock.
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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 17.37 which exceeds the industry average by 2.77x.
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The stock's relatively high Price to Sales ratio of 4.85, surpassing the industry average by 2.59x, may indicate an aspect of overvaluation in terms of sales performance.
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The company has a higher Return on Equity (ROE) of 15.81%, which is 7.07% above the industry average. This suggests efficient use of equity to generate profits and demonstrates profitability and growth potential.
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The company exhibits higher Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $1.53 Billion, which is 12.75x above the industry average, implying 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's revenue growth of 6.77% is notably higher compared to the industry average of 2.79%, showcasing exceptional sales performance and strong demand for its products or services.
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 comparing Automatic Data Processing with its top 4 peers based on the Debt-to-Equity ratio, the following insights can be observed:
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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 high PB and PS ratios suggest the market values the company's assets and sales highly relative to competitors. In terms of ROE, EBITDA, gross profit, and revenue growth, Automatic Data Processing outperforms its industry peers, reflecting strong financial performance and growth potential.
This article was generated by Benzinga's automated content engine and reviewed by an editor.
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