In the ever-evolving and intensely competitive business landscape, conducting a thorough company analysis is of utmost importance for investors and industry followers. In this article, we will carry out an in-depth industry comparison, assessing Automatic Data Processing (NASDAQ:ADP) alongside its primary competitors in the Professional Services industry. By meticulously examining key financial metrics, market positioning, and growth prospects, we aim to offer valuable insights to 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 | 28.15 | 20.23 | 5.66 | 15.81% | $1.53 | $2.51 | 6.77% |
| Paychex Inc | 23.58 | 11.41 | 6.45 | 11.55% | $0.74 | $1.2 | 5.88% |
| Paycom Software Inc | 28.85 | 21.50 | 6.65 | 15.53% | $0.22 | $0.44 | 9.84% |
| Paylocity Holding Corp | 36.12 | 7.59 | 5.49 | 5.02% | $0.11 | $0.3 | 10.98% |
| Korn Ferry | 14.46 | 2.14 | 1.34 | 3.42% | $0.12 | $0.67 | 6.86% |
| Robert Half Inc | 32.77 | 3.19 | 0.71 | 2.16% | $-0.04 | $0.47 | -2.44% |
| First Advantage Corp | 141.47 | 2.82 | 2.22 | 1.31% | $0.12 | $0.2 | 14.88% |
| Trinet Group Inc | 19.79 | 27.40 | 0.73 | 50.96% | $0.11 | $0.25 | -4.85% |
| ManpowerGroup Inc | 18.42 | 1.01 | 0.12 | 1.61% | $0.14 | $0.78 | -0.42% |
| Upwork Inc | 12.05 | 1.92 | 1.63 | 4.3% | $0.04 | $0.15 | -1.68% |
| Kforce Inc | 25.31 | 7.77 | 0.69 | 10.23% | $0.02 | $0.1 | 4.49% |
| Barrett Business Services Inc | 24.47 | 3.90 | 0.66 | 6.29% | $0.02 | $0.06 | 3.77% |
| Fiverr International Ltd | 10.48 | 0.70 | 0.74 | 1.04% | $0.01 | $0.08 | -10.0% |
| Mastech Digital Inc | 37.06 | 0.82 | 0.43 | -0.11% | $0.0 | $0.01 | -15.58% |
| Average | 32.68 | 7.09 | 2.14 | 8.72% | $0.12 | $0.36 | 1.67% |
When closely examining Automatic Data Processing, the following trends emerge:
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At 28.15, the stock’s Price to Earnings ratio is 0.86x less than the industry average, suggesting favorable growth potential.
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The elevated Price to Book ratio of 20.23 relative to the industry average by 2.85x suggests company might be overvalued based on its book value.
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The Price to Sales ratio of 5.66, which is 2.64x the industry average, suggests the stock could potentially be overvalued in relation to its sales performance compared to its peers.
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The company has a higher Return on Equity (ROE) of 15.81%, which is 7.09% above the industry average. This suggests efficient use of equity to generate profits and demonstrates profitability and growth potential.
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The company exhibits higher Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $1.53 Billion, which is 12.75x above the industry average, implying stronger profitability and robust cash flow generation.
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The company has higher gross profit of $2.51 Billion, which indicates 6.97x above the industry average, indicating stronger profitability and higher earnings from its core operations.
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With a revenue growth of 6.77%, which surpasses the industry average of 1.67%, the company is demonstrating robust sales expansion and gaining market share.
Debt To Equity Ratio
The debt-to-equity (D/E) ratio gauges the extent to which a company has financed its operations through debt relative to equity.
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.
In light of the Debt-to-Equity ratio, a comparison between Automatic Data Processing and its top 4 peers reveals the following information:
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When comparing the debt-to-equity ratio, Automatic Data Processing is in a stronger financial position compared to its top 4 peers.
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The company has a lower level of debt relative to its equity, indicating a more favorable balance between the two with a lower debt-to-equity ratio of 0.87.
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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