Automatic Data Processing offers a range of business outsourcing and HCM solutions, including: Payroll Services, Benefits Administration, Talent Management, Human Resources Management, Time and Attendance Management, Insurance Services, Retirement Services and Tax, Compliance and Payment Solutions. The company was founded in 1949 and is based in Roseland, New Jersey.
ADP Price Forecast Based on DCF Valuation
DCF Fair Value Target:
We started the process of determining a valid price forecast for Automatic Data Processing Inc with a discounted cash flow analysis -- the results of which can be found in the table below. To summarize, we found that Automatic Data Processing Inc ranked in the 25th percentile in terms of potential gain offered. We should note, though, that all scenearios modelled for this stock suggest it is overvalued. The most interesting components of our discounted cash flow analysis for Automatic Data Processing Inc ended up being:
As a business, ADP is generating more cash flow than 93.14% of positive cash flow stocks in the Industrials.
The business' balance sheet suggests that 4% of the company's capital is sourced from debt; this is greater than merely 11.51% of the free cash flow producing stocks we're observing.
ADP's estimated cost of debt, based largely on its market capitalization and its interest coverage ratio, is 2%; for context, that number is higher than 55.78% of tickers in our DCF set.
Terminal Growth Rate in Free Cash Flow
Return Relative to Current Share Price
HQI, IEX, MSA, HII, and LMB can be thought of as valuation peers to ADP, in the sense that they are in the Industrials sector and have a similar price forecast based on DCF valuation.