In today's rapidly changing and fiercely competitive business landscape, it is essential for investors and industry enthusiasts to thoroughly analyze companies. In this article, we will conduct a comprehensive industry comparison, evaluating Automatic Data Processing (NASDAQ:ADP) against its key competitors in the Professional Services industry. By examining key financial metrics, market position, and growth prospects, we aim to provide valuable insights for investors and shed light on company's performance within 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 | 23.59 | 16.95 | 4.74 | 15.81% | $1.53 | $2.51 | 6.77% |
| Paychex Inc | 19.54 | 9.46 | 5.35 | 11.55% | $0.74 | $1.2 | 5.88% |
| Paycom Software Inc | 23.03 | 17.17 | 5.31 | 15.53% | $0.22 | $0.44 | 9.84% |
| Paylocity Holding Corp | 28.98 | 6.19 | 4.41 | 5.02% | $0.11 | $0.3 | 10.98% |
| Korn Ferry | 13.56 | 2.01 | 1.25 | 3.42% | $0.12 | $0.67 | 6.86% |
| Robert Half Inc | 31.96 | 3.11 | 0.69 | 2.16% | $-0.04 | $0.47 | -2.44% |
| First Advantage Corp | 118.57 | 2.36 | 1.86 | 1.31% | $0.12 | $0.2 | 14.88% |
| Trinet Group Inc | 16.59 | 22.97 | 0.61 | 50.96% | $0.11 | $0.25 | -4.85% |
| ManpowerGroup Inc | 25.04 | 1.23 | 0.14 | 2.57% | $0.14 | $0.78 | 7.54% |
| Upwork Inc | 10.47 | 1.67 | 1.41 | 4.3% | $0.04 | $0.15 | -1.68% |
| Kforce Inc | 24.75 | 7.60 | 0.68 | 10.23% | $0.02 | $0.1 | 4.49% |
| Barrett Business Services Inc | 22.59 | 3.60 | 0.61 | 6.29% | $0.02 | $0.06 | 3.77% |
| Fiverr International Ltd | 10.64 | 0.71 | 0.75 | 1.04% | $0.01 | $0.08 | -10.0% |
| Mastech Digital Inc | 41.18 | 0.92 | 0.48 | -0.11% | $0.0 | $0.01 | -15.58% |
| Average | 29.76 | 6.08 | 1.81 | 8.79% | $0.12 | $0.36 | 2.28% |
When analyzing Automatic Data Processing, the following trends become evident:
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The stock's Price to Earnings ratio of 23.59 is lower than the industry average by 0.79x, suggesting potential value in the eyes of market participants.
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With a Price to Book ratio of 16.95, which is 2.79x 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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The stock's relatively high Price to Sales ratio of 4.74, surpassing the industry average by 2.62x, 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 7.02% 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'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 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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Automatic Data Processing demonstrates a stronger financial position compared to its top 4 peers in the sector.
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With a lower debt-to-equity ratio of 0.87, the company relies less on debt financing and maintains a healthier balance between debt and equity, which can be viewed positively 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 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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