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Assessing ADP (ADP) Valuation As Shares Trade Near 52-Week Lows With AI And Dividend Strength

Simply Wall St · 4d ago

Interest in Automatic Data Processing (ADP) has picked up as the stock trades near 52-week lows, while the company maintains a long dividend growth record, rolls out AI-enabled HCM upgrades, and reiterates financial guidance.

See our latest analysis for Automatic Data Processing.

At a share price of $252.88, ADP’s recent 90-day share price return of a 13.68% decline contrasts with a 1-year total shareholder return of a 9.98% decline and a 5-year total shareholder return of 66.48%. This suggests that shorter term momentum has faded even as longer term holders remain in positive territory.

If ADP’s pullback has you reassessing your watchlist, this could be a good moment to broaden your search with fast growing stocks with high insider ownership.

With ADP trading below some analyst targets and showing an estimated intrinsic discount, the key question now is simple: are you looking at an underappreciated compounder, or a stock where future growth is already fully priced in?

Most Popular Narrative: 34.8% Undervalued

According to yiannisz, the narrative pegs Automatic Data Processing’s fair value well above the recent US$252.88 close, suggesting a value gap that depends on execution.

“Based on discounted cash flow modeling, ADP’s intrinsic value of $387.77 per share implies strong underlying fundamentals and durable cash generation. However, that valuation assumes successful execution of its AI integration plan and margin normalization over time.”

Read the complete narrative.

Curious what supports that higher fair value? The narrative emphasizes steady revenue progress, resilient margins and a future earnings multiple usually reserved for premium software names.

Result: Fair Value of $387.77 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, this underappreciated story could be challenged if AI investments weigh on margins longer than expected or if payroll clients slowly drift to lower cost competitors.

Find out about the key risks to this Automatic Data Processing narrative.

Build Your Own Automatic Data Processing Narrative

If you see the numbers differently or prefer to weigh the assumptions yourself, you can build a custom view in just a few minutes: Do it your way.

A good starting point is our analysis highlighting 4 key rewards investors are optimistic about regarding Automatic Data Processing.

Ready for more investment ideas?

If ADP has your attention, do not stop there. Broaden your opportunity set with focused stock ideas built from the same data driven approach.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.