Automatic Data Processing, Inc. (ADP)
Quantitative Summary
DeterministicAt 20.7x earnings — a 68% discount to the sector average of 65.0x — ADP is in the lower valuation range. Strong operational fundamentals (Piotroski 8/9) with Altman Z of 2.4. DCF fair value of $216 suggests 11% upside based on model assumptions.
Generated deterministically from quant metrics and financial statements. Not a recommendation.
Algorithmic Teardown
AI-GeneratedAutomatic Data Processing, Inc. demonstrates robust fundamental economics characterized by a substantial ROIC-WACC spread of +27.8%, indicating highly efficient capital deployment relative to its cost of equity. The DuPont decomposition reveals that this 65.9% return on equity is primarily driven by an exceptional net margin of 19.8% rather than asset turnover or leverage, which stands at a conservative 0.39x despite an equity multiplier of 8.62x. This operational quality is corroborated by strong integrity metrics: a Piotroski F-Score of 8/9 signals robust financial health and scorecard stability, while a Beneish M-Score of -2.44 suggests minimal earnings manipulation risk. However, the Altman Z-Score of 2.5 places the firm in the "gray zone," warranting close monitoring of liquidity buffers against potential distress despite its otherwise pristine profitability profile.
Valuation analysis presents a distinct dichotomy between current market pricing and intrinsic value models. The stock trades at a P/E ratio of 19.6x, significantly discounting to the sector average of 42.2x, which implies the market is not fully compensating for its superior margin expansion relative to peers. A discounted cash flow analysis estimates a fair value of $215 with implied six-year free cash flow growth of 12.1%, suggesting limited upside potential given the current price levels and only 6% implied DCF premium. This valuation compression is further contextualized by negative momentum factors; specifically, the stock exhibits a Fama-French Alpha of -48.12% annually and carries a Value Factor (HML) tilt of 0.176, indicating it has underperformed relative to size and value benchmarks over recent periods.
Risk assessment is complicated by divergent signals regarding insider activity and factor exposures. While the Piotroski score suggests financial strength, there was $1,299,491 in net insider selling over the last 90 days, a potential contrarian signal or cautionary indicator depending on one's interpretation of management liquidity needs versus confidence. The profitability factor (RMW) registers at 0.092, marking it as neutral rather than outperforming within the multi-factor framework. Collectively, these data points paint a picture of a high-quality compounder trading below sector multiples but burdened by recent underperformance against style factors and modest insider confidence, leaving the risk-reward profile dependent on whether mean reversion in valuation or continued margin expansion outweighs the negative alpha trajectory.
Generated by LLM from quantitative data inputs. May contain inaccuracies. Not investment advice.
DCF Sandbox
Interactive5-year two-stage DCF. Terminal growth 3%. Default sliders match the pre-computed base case. Drag to explore scenarios. Not investment advice.
The growth rate the market implicitly expects over the next 10 years to justify today's price. Compare with historical growth of 7% YoY revenue.
Sensitivity Matrix
| TG ↓ / WACC → | 7.8% | 9.8% | 11.8% |
|---|---|---|---|
| 2% | $265 | $193 | $150 |
| 3% | $313 | $216 | $164 |
| 4% | $385 | $247 | $180 |
Center = base case. Green = >10% upside, Red = >10% downside vs $231.18.
Pre-computed DCF: WACC=9.8%, terminal growth 3%. Fair value $216 (+10.6%). Not investment advice.
Valuation Context
Currently trading 52% below its 5-year average P/E of 38.0x.
Price Chart with Moving Averages
Technical Setup
AI GeneratedThe current trading environment for Automatic Data Processing, Inc. presents a complex picture regarding institutional positioning, characterized by the stock hovering near its immediate support levels while maintaining stability above key moving averages. The proximity of price action to these technical thresholds suggests that larger market participants may be closely monitoring entry points without committing aggressively in either direction yet. Volume trends appear muted relative to recent volatility spikes, which often indicates a period of consolidation where institutional players are reassessing risk exposure rather than executing large-scale accumulation or distribution phases. This lack of decisive volume surges implies that the broader consensus among major holders remains cautious, waiting for clearer confirmation before altering their strategic allocations within this technology sector component. The interplay between price and moving averages reveals a delicate balance; while short-term fluctuations test lower boundaries, the absence of sustained breakdowns below critical support zones hints at underlying defensive positioning by significant shareholders. Such behavior typically reflects an expectation that fundamental valuations remain intact despite external market noise, leading institutions to hold rather than liquidate. However, the lack of upward momentum breaking through resistance levels also suggests that aggressive buying pressure has not yet materialized among these larger entities. Consequently, the technical setup indicates a state of equilibrium where institutional sentiment is neither overwhelmingly bullish nor bearish, but instead focused on preserving capital while observing how market dynamics evolve relative to established trend lines and support structures.
Quant Health Deep Dive
Profitability & Value Creation
✅ Conservative payout — room for dividend increases.
DuPont Analysis — ROE Decomposition
Breaking down Return on Equity to see how the company generates its ROE — efficiency, margins, or leverage.
Balance Sheet Health
Insider Activity (Last 90 Days)
Open-market buys vs sells by company insiders. Source: yfinance.
Earnings Surprise History
EPS estimates vs actuals for the most recent reported quarters. Source: yfinance.
Dividend History
| Date | Amount | Change |
|---|---|---|
| 2026-03-13 | $1.7000 | 0.0% |
| 2025-12-12 | $1.7000 | +10.4% |
| 2025-09-12 | $1.5400 | 0.0% |
| 2025-06-13 | $1.5400 | 0.0% |
| 2025-03-14 | $1.5400 | 0.0% |
| 2024-12-13 | $1.5400 | +10.0% |
| 2024-09-13 | $1.4000 | 0.0% |
| 2024-06-14 | $1.4000 | 0.0% |
| 2024-03-07 | $1.4000 | 0.0% |
| 2023-12-07 | $1.4000 | +12.0% |
| 2023-09-07 | $1.2500 | 0.0% |
| 2023-06-08 | $1.2500 | 0.0% |
Dividend and split data from SEC filings and market data. Amounts are per share, not adjusted for splits. Source: yfinance.
Risk Profile
Sharpe = risk-adjusted return (higher is better). Max drawdown = largest peak-to-trough decline. 1,200+ trading days.
Underwater (Drawdown from Peak)
How far below the all-time high the price has been over time. Deeper = more pain for holders.
Rolling 60-Day Beta vs S&P 500 (VOO)
How the stock's sensitivity to market moves changes over time. β > 1 = more volatile than the market.
Fama-French 5-Factor Exposure
Academic factor model decomposition — what's really driving this stock's returns.
Fama-French 5-Factor Model. Data: Kenneth French Data Library. Regression over 3 years of daily returns.
Fundamentals
Passive Flow Attribution
ETF Draft EffectWhen investors buy or sell ETFs like XLI or SDY, the fund manager is mechanically forced to buy or sell ADP shares regardless of Automatic Data Processing, Inc.'s individual fundamentals. We estimate $13.3B of passive capital is structurally linked to ADP through 8 tracked ETFs. This substantial passive exposure means that ETF inflows and outflows — not company fundamentals — can dominate daily volume on this stock.
Passive exposure = Σ (ETF AUM × stock weight in ETF) across 8 tracked ETFs. Actual passive ownership is larger (includes mutual funds). Not investment advice.
ETF Contagion Visualizer
Simulate a price drop in Automatic Data Processing, Inc. to visualize passive redemption contagion across ETFs and collateral stocks.
If Automatic Data Processing, Inc. (ADP) experiences a significant drawdown, ETF redemptions can create collateral selling pressure on co-held stocks. Our model identifies CATERPILLAR INC (CAT) as the most exposed collateral stock, sharing 2 ETFs with ADP. This is the "Passive Contagion" effect described in the Inelastic Market Hypothesis.
Contagion model based on shared ETF exposure and constituent weights across 35 tracked ETFs. Estimated selling pressure is a simplified model — actual impact depends on market liquidity, ETF redemption mechanics, and market-maker activity.
ADP Ownership Dynamics
Passive funds hold 1 in every 6 ADP shares, reducing daily market volatility.
Automatic Data Processing, Inc. (ADP) exerts notable gravity on the passive index market, currently representing 1.7% of the State Street Industrial Select Sector SPDR ETF (XLI) and 1.5% of the SDY (SDY). Across 36 tracked ETFs, approximately 64M shares (16.1% of float) are held by passive funds and rarely trade on the open market. This level of passive ownership means index rebalances can create outsized volume events.
ETFs with Highest ADP Exposure
Float lock-up computed from 36 ETFs tracked by SecuritiesDB. Actual passive ownership is higher (includes mutual funds, pension funds, etc.).
ADP Institutional Volume Profile
252-day volume distribution by price level. The Point of Control (POC) marks — the price where the most institutional volume transacted — an implicit support/resistance floor.
The highest-volume price zone for Automatic Data Processing, Inc. over the past year sits near $212.02 (17% of 252-day volume). The current price of $231.18 trades 9.0% above this institutional floor — a sign of upside momentum, though a pullback to the POC zone is a common reversion target. The highly concentrated volume profile (17% at POC) indicates strong consensus on fair value — institutional participants have repeatedly transacted near this price.
Volume Profile computed from 252 trading days of OHLCV data. Volume allocated to price bins proportionally based on daily high-low range. Not investment advice.
ADP Capital Efficiency
How efficiently does Automatic Data Processing, Inc. convert operating profits into free cash? The FCF Conversion ratio measures the gap between accounting earnings and real cash generation.
Automatic Data Processing, Inc. converts 69% of its EBITDA into free cash flow, an exceptional conversion rate indicating an asset-light business model with minimal capital reinvestment drag. The positive ROIC-WACC spread of 27.8% confirms that reinvested capital creates shareholder value.
Capital efficiency = Free Cash Flow ÷ EBITDA. Reinvestment = (EBITDA − FCF) ÷ EBITDA. Metrics from latest annual filings. Not investment advice.
Fails-to-Deliver (FTD) History
SEC-reported settlement failures. Elevated FTDs can indicate high short-selling pressure, operational settlement issues, or naked shorting activity.
| Date | Failed Shares | Close Price | Notional Value |
|---|---|---|---|
| 2026-05-14 | 1,298 | $208.63 | $270,801.74 |
| 2026-05-11 | 9,627 | $213.00 | $2.1M |
| 2026-05-08 | 11 | $214.09 | $2,354.99 |
| 2026-05-07 | 222 | $207.20 | $45,998.4 |
| 2026-05-06 | 222 | $210.60 | $46,753.2 |
| 2026-05-05 | 389,945 | $211.32 | $82.4M |
| 2026-05-04 | 480 | $214.21 | $102,820.8 |
| 2026-04-29 | 18,397 | $199.17 | $3.7M |
| 2026-04-28 | 20 | $197.23 | $3,944.6 |
| 2026-04-21 | 8,926 | $202.39 | $1.8M |
| 2026-04-17 | 3 | $200.39 | $601.17 |
| 2026-04-15 | 18 | $195.08 | $3,511.44 |
| 2026-04-14 | 50 | $195.38 | $9,769 |
| 2026-04-10 | 48 | $196.02 | $9,408.96 |
| 2026-04-08 | 7 | $203.61 | $1,425.27 |
| 2026-04-02 | 3,869 | $201.28 | $778,752.32 |
| 2026-04-01 | 5,353 | $203.18 | $1.1M |
| 2026-03-31 | 37,926 | $205.47 | $7.8M |
| 2026-03-27 | 32,463 | $204.51 | $6.6M |
| 2026-03-25 | 41 | $204.89 | $8,400.49 |
| 2026-03-23 | 340,922 | $208.69 | $71.1M |
| 2026-03-19 | 8 | $208.28 | $1,666.24 |
| 2026-03-17 | 4 | $209.11 | $836.44 |
| 2026-03-06 | 13 | $222.70 | $2,895.1 |
| 2026-03-05 | 46 | $217.16 | $9,989.36 |
| 2026-03-03 | 10 | $214.97 | $2,149.7 |
| 2026-02-20 | 1 | $215.97 | $215.97 |
| 2026-02-17 | 1 | $212.11 | $212.11 |
| 2026-02-11 | 18 | $225.53 | $4,059.54 |
| 2026-01-30 | 13,380 | $245.97 | $3.3M |
Source: SEC Regulation SHO FTD data. Data is reported with a ~30 day delay. High FTD quantities relative to average daily volume may indicate settlement stress.
Price Correlations
Statistical correlation of daily returns with other stocks. High correlations indicate stocks that move together; negative correlations can offer diversification.
| Peer | 252-Day (1Y) | 126-Day (6M) | Direction |
|---|---|---|---|
| WTGXX | NaN | NaN | |
| PAYX | 0.836 | 0.847 | High co-movement |
| MCO | 0.610 | 0.617 | Moderate |
| ACN | 0.609 | 0.674 | Moderate |
| PAYC | 0.601 | 0.604 | Moderate |
| FIS | 0.575 | 0.696 | Moderate |
| ROP | 0.572 | 0.559 | Moderate |
| ICE | 0.556 | 0.577 | Moderate |
| SPGI | 0.549 | 0.587 | Moderate |
| MMC | 0.541 | 0.379 | Moderate |
Pearson correlation of daily log returns. 252d ≈ 1 trading year. Computed from price history. Not investment advice.
Compare ADP to Peers
Quant metrics computed deterministically from financial statements and price data. Updated: 2026-06-02.
SecuritiesDB provides programmatic data aggregation for informational purposes only. None of the metrics, summaries, or algorithmic flags constitute a recommendation to buy or sell any security.