Automatic Data Processing Inc (ADP, Financial) has recently captured the attention of investors and financial analysts with its strong financial performance and promising growth prospects. Despite a slight daily loss of 0.72%, the company's stock price has increased by 9.05% over the past three months, currently standing at $261.64. A detailed analysis using the GF Score indicates that Automatic Data Processing Inc is poised for significant future growth.
What Is the GF Score?
The GF Score is a proprietary ranking system developed by GuruFocus, assessing stocks based on five key valuation aspects from 2006 to 2021. Stocks with higher GF Scores typically yield better returns. The GF Score ranges from 0 to 100, with 100 indicating the highest potential for outperformance. Automatic Data Processing Inc boasts a GF Score of 94, reflecting its strong potential in the market.
- Financial strength rank: 6/10
- Profitability rank: 9/10
- Growth rank: 10/10
- GF Value rank: 6/10
- Momentum rank: 7/10
Understanding Automatic Data Processing Inc's Business
Automatic Data Processing Inc, with a market cap of $106.77 billion and annual sales of $19.20 billion, operates with a robust operating margin of 25.85%. Founded in 1949, ADP serves over 1 million clients, offering a range of payroll and human capital management solutions. Its services cater to businesses from micro to global enterprises, emphasizing its role in the professional employer organization segment through HR outsourcing solutions.
Financial Strength and Profitability
Automatic Data Processing Inc's financial resilience is evident with an Interest Coverage ratio of 13.74, significantly above the benchmark of 5 set by Benjamin Graham. The company's strategic debt management is reflected in its Debt-to-Revenue ratio of 0.19. These metrics underscore ADP's prudent financial management and its ability to withstand economic fluctuations.
The company's profitability is also impressive, with a consistent increase in Operating Margin over the past five years, reaching 25.94% in 2024. This growth trajectory is supported by a strong Gross Margin increase, highlighting ADP's efficiency in converting revenue into profit.
Growth Trajectory
Automatic Data Processing Inc's commitment to growth is evident from its Growth rank of 10/10. The company has demonstrated a solid 9.9% 3-Year Revenue Growth Rate, outperforming 54.02% of its peers in the Business Services industry. Furthermore, its EBITDA growth rates over the past three and five years highlight its ongoing expansion and operational efficiency.
Conclusion
Considering Automatic Data Processing Inc's robust financial strength, impressive profitability, and consistent growth metrics, the GF Score highlights the company's exceptional position for potential market outperformance. Investors looking for strong, stable investments may find ADP an attractive option.
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This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
