Automatic Data Processing Inc (ADP, Financial) has recently captured the attention of investors and financial analysts alike, thanks to its strong financial performance and promising growth prospects. With a current share price of $284.73, ADP has experienced a slight daily decrease of 0.15%, yet it boasts a significant three-month gain of 21.36%. A detailed examination, anchored by the GF Score, positions Automatic Data Processing Inc as a prime candidate for substantial future growth.
What Is the GF Score?
The GF Score is a proprietary ranking system from GuruFocus, designed to predict stock performance by evaluating five key aspects of a company's financials. This system, which has been rigorously backtested from 2006 to 2021, suggests that stocks with higher GF Scores typically yield superior returns. The GF Score ranges from 0 to 100, with 100 indicating the highest potential for outperformance. Automatic Data Processing Inc boasts an impressive GF Score of 95, signaling strong future performance potential.
- Financial strength rank: 7/10
- Profitability rank: 9/10
- Growth rank: 10/10
- GF Value rank: 6/10
- Momentum rank: 8/10
Understanding Automatic Data Processing Inc's Business
Automatic Data Processing Inc, with a market cap of $116.12 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, ranging from micro to global enterprises, primarily in the United States. Its services include payroll, human capital management solutions, and HR outsourcing through its employer services and professional employer organization segments.
Financial Strength and Profitability
Automatic Data Processing Inc's financial robustness is reflected in its Financial Strength rating of 7/10. The company's Interest Coverage ratio stands at an impressive 13.74, indicating its strong ability to meet interest obligations. Additionally, its strategic debt management is evidenced by a Debt-to-Revenue ratio of 0.19.
Automatic Data Processing Inc's Profitability Rank is notably high at 9/10. The company has demonstrated consistent improvement in its Operating Margin over the past five years, reaching 25.94% in 2024. This trend highlights ADP's increasing efficiency in converting revenue into profit.
Growth Trajectory
Automatic Data Processing Inc is distinguished by its excellent Growth Rank of 10/10. The company's 3-Year Revenue Growth Rate of 9.9% surpasses over half of its peers in the software industry. Furthermore, its EBITDA has grown significantly, with a three-year growth rate of 15.3%, underscoring its ongoing expansion and operational success.
Conclusion
Considering Automatic Data Processing Inc's strong financial strength, impressive profitability, and consistent growth metrics, the GF Score highlights the company's exceptional position for potential market outperformance. Investors looking for similar opportunities can explore more companies with strong GF Scores through the GF Score Screen.
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.
