ADP Intrinsic Stock Value – AUTOMATIC DATA PROCESSING Reports Record Q4 Revenue and Net Income for FY2023
August 16, 2023
🌥️Earnings Overview
On July 26 2023, AUTOMATIC DATA PROCESSING ($NASDAQ:ADP) reported a total revenue of USD 4242.1 million and a net income of USD 776.7 million for the fourth quarter of FY2023 ending June 30 2023. This is a 6.0% and 24.2% increase from the same period of the previous year, respectively.
Stock Price
In response to the announcement, its stock opened at $244.0 and closed at $253.4, a 5.4% increase from the previous day’s closing price of $240.5. This was its largest one-day jump since August of this year. This marks the company’s sixth consecutive quarter of increased profits. This represented record results for the company in both areas.
These impressive results were driven by strong growth in all areas of the business, with particular strength seen in its business solutions, global delivery, and North America enterprise sectors. Overall, these record results demonstrate AUTOMATIC DATA PROCESSING’s financial strength and resilience in a challenging economic landscape. Investors were certainly impressed by the news, with its stock rising 5.4% on Wednesday and reaching a new all-time high. Live Quote…
About the Company
Income Snapshot
Below shows the total revenue, net income and net margin for ADP. More…
| Total Revenues | Net Income | Net Margin |
| 17.2k | 3.41k | 19.9% |
Cash Flow Snapshot
Below shows the cash from operations, investing and financing for ADP. More…
| Operations | Investing | Financing |
| 4.21k | -2.52k | -15.68k |
Balance Sheet Snapshot
Below shows the total assets, liabilities and book value per share for ADP. More…
| Total Assets | Total Liabilities | Book Value Per Share |
| 50.97k | 47.46k | 8.49 |
Key Ratios Snapshot
Some of the financial key ratios for ADP are shown below. More…
| 3Y Rev Growth | 3Y Operating Profit Growth | Operating Margin |
| 7.0% | 12.5% | 27.3% |
| FCF Margin | ROE | ROA |
| 21.1% | 81.4% | 5.8% |
Analysis – ADP Intrinsic Stock Value
GoodWhale has examined the financials of AUTOMATIC DATA PROCESSING and calculated its intrinsic value to be around $233.7. This value was determined using our proprietary Valuation Line which takes into account key metrics such as earnings, cash flow, and other relevant financial information. We believe that the current price of the stock, at $253.4, is a fair price but slightly overvalued by 8.5%. More…
Peers
The competition in the payroll processing and human resources management industry is fierce. Automatic Data Processing Inc (ADP) is the largest player in the industry, with a market share of over 26%. Its closest competitors are Paychex Inc, Insperity Inc, and Trucept Inc, which have market shares of around 10%, 7%, and 6%, respectively. While all four companies offer similar services, ADP has a clear advantage in terms of size and scale.
– Paychex Inc ($NASDAQ:PAYX)
Paychex Inc is a human resource consulting and payroll processing company headquartered in Rochester, New York. As of May 2019, Paychex serves over 650,000 small and medium sized businesses. The company has a market cap of $40.17B as of 2022 and a Return on Equity of 38.35%. Paychex was founded in 1971 by B. Thomas Golisano and Robert C.risk.
– Insperity Inc ($NYSE:NSP)
Inspriety Inc is a business services provider located in the United States. The company offers a suite of human resources and business solutions designed to help businesses improve their productivity and bottom line. Inspriety’s services include payroll processing, benefits administration, and talent management. The company serves over 100,000 businesses of all sizes across the United States.
– Trucept Inc ($OTCPK:TREP)
Trucept Inc is a publicly traded company with a market capitalization of 221.15 thousand as of 2022. The company has a return on equity of 42.12%. Trucept Inc is a provider of cloud-based software solutions for small and medium-sized businesses. The company’s software solutions include accounting, human resources, customer relationship management, and e-commerce.
Summary
AUTOMATIC DATA PROCESSING reported strong financial results for the fourth quarter of FY2023, with total revenue of USD 4242.1 million and net income of USD 776.7 million, representing a 6.0% and 24.2% year-over-year increase, respectively. This news was well-received by investors and the company’s stock price moved up on the same day. As such, AUTOMATIC DATA PROCESSING presents a good opportunity for investment as the company demonstrates sound fiscal management and healthy growth potential.
