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Fundamental analysis: Automatic Data Processing, Inc. (ADP)

Awarener score: 6.2

Conclusion

Note: All scores range from 1 (worst) to 10 (best). Conclusions are updated daily with closing stock prices and new reported quarterly financial statements.

Revenue score: 7.0

• Business has been slightly shrinking. It's been below average when measured against peer companies.
• Automatic Data Processing, Inc. business trend is extremely stable, which is best. It looks top-notch against rivals.

Margins score: 8.2

• ADP profit margins -on goods and services sold- are usually sufficient. They stand slightly better than rival companies.
• Business profit on sales tends to be excellent. It's great when measured against competitors.
• Profits on sales made -available to repay debt and purchase properties- are usually very good. They remain excellent in relation to peers.
• Earnings -before income taxes and interests on loans taken- tend to be very good in relation to total revenues. They're still better than most similar companies.
• Profits -before income taxes- are usually excellent considering total sales, and remain great when measured against rivals.
• Total net profit tends to be excellent when confronted to sales. Company stands great when measured against comparable firms.

Growth score: 4.9

• Automatic Data Processing, Inc. profit -on goods and services sold- has been growing at a very low pace. It's been lacking compared to competitors.
• In recent years, earnings -on operations- have been growing at a low step, which has been slightly better than comparable firms.
• Profits -available to repay debt and purchase properties- have been growing at a low pace, which compares similar to peer enterprises.
• Earnings -before income taxes and interests on loans taken- have been growing at a slow tempo. It turns to be close to average when compared to similar stocks.
• In past years, profits -before income taxes- grew at a low speed. It was slightly worse than rivals.
• In the previous years, growth on total net profit has been low, and below average when measured against peer companies.
• Earnings per share have grown at a low rhythm in past years. It's been close to average when compared to industry peers.

Miscellaneous score: 5.0

• ADP had to pay some income taxes in relation to profits made in the past years. It's been somewhat better than peers.
• The company does not report R&D expenses. It's meaningless to measure in relation to competitors.
• We have insufficient data to estimate how effective is research and development effort. It stands unknown against rival companies.

Profitability score: 8.8

• Automatic Data Processing, Inc. usually gets very good returns on the resources it controls. It proves below average when measured against peer firms.
• The company normally gets huge proceeds -on the resources directly invested in the business-. They remain impressive in relation to similar companies.
• Profitability -in relation to owned resources- is usually paramount. It ranks top tier when measured against competitors.
• In the past, got good returns -on the tangible resources it controls-. This metric is usually related to the industry in which operates and combines profitability versus reinvestment needs. It's below average when measured against comparable enterprises.

Usage of Funds score: 5.8

• ADP usually uses a modest portion of genuine funds generated to buy or replace property, plant, or equipment. The need for reinvestments isn't too high. It stands below average when measured against rival firms.
• The company is usually somewhat investing in new property, plant, and equipment, to improve its operating capabilities, which is more than average in relation to industry peers.
• In the past twelve months it paid run-of-the-mill dividends, considering the current stock price. It came slightly worse than competitors.
• Has somewhat increased dividend payments in the past years. Business prospects may have improved. The company has behaved in a weak position compared to similar firms.
• The company usually uses a large portion of genuine funds generated to pay dividends. There could be some concerns on sustainability if business takes a dive. Sustainability looks worse than most comparable companies.
• The company usually neither enlarges nor reduces the pool of investors, resulting in approximately the same mouths feeding on the pie of profits. It remains rather normal in relation to peer enterprises.
• Repurchase effectiveness metric is very complex. Run again in analytical mode if you're interested in a technical explanation. It stands a slight improvement compared to rivals.
• The company uses somewhat more funds to reward investors than it can genuinely generate, so some part of them is paid out of existing cash or by borrowing money, both of which will eventually reach a limit. Either business somewhat improves, or rewards will probably not be sustained at this pace. It still looks substantially worse when measured against competitors.

Balance Sheet score: 5.1

• Automatic Data Processing, Inc. intangible assets (like brands and goodwill) represent a significant portion of resources controlled, according to accounting books. There could be significant difficulties in liquidating them if the company ever gets in financial distress. It happens to be substantially worse when measured against peer companies.
• The company has somewhat lower short-term resources than short-term obligations. Unless it's part of the business model, there might some liquidity concerns. It turns to be in a very weak position compared to similar firms.
• Very few resources controlled were provided for with financial debt. Financial strength is very solid. Company could increase debt if it wished so, to reinvest in business, to buy a smaller company or to reward stockholders. It remains well ranked against rival firms.
• Most controlled resources can be made into cash reasonably quick, which is good for liquidity and risk. It looks similar to rivals.
• For every dollar of short-term obligations, the company has few cents of cash and short-term receivables. It's a disappointment compared to peer firms.
• For every dollar of short-term obligations, the company has extremely few cents of cash and equivalents, which is bottom tier against similar enterprises.
• Usually, sales are on slightly higher than two months credit. It still ranks weak when measured against peers.
• Normally has no inventories. It comes up as impressive in relation to competitors.
• On average, it takes less than three months from the purchase to charging customers. It happens to be mediocre against peers.
• On average pays suppliers during the first couple of weeks from the purchase. It ranks substantially worse when measured against industry peers.
• The company pays its suppliers roughly two months before charging its customers, so there's some money invested in working capital. It's in a very weak position compared to similar companies.
• Company earns net interest income on its investments and therefore is in a quite comfortable financial position. It stands top-notch against rival firms.
• Business earnings have usually been excellent when measured against loans taken. It could take less than two years to repay the obligations with current profitability. It ranks similar to comparable enterprises.
• Revenues are excellent in relation to property, plant, and equipment required to operate. This metric is likely dependent on the industry the company operates in. Low property, plant, and equipment requirements, allows the company to keep more money to reward stockholders in the long run. It looks in a weak position compared to similar firms.
• Resource exploitation is low when yearly sales are considered, business volume must be significantly increased. This metric is normally tied to the industry where the firm belongs. It's still bottom tier against peer companies.

Valuation score: 4.7

• Automatic Data Processing, Inc. looks expensive in relation to profits and financial position. It happens to be substantially worse when measured against competitors.
• Price-to-Tangible-Book-Value is a fairly complex metric. Run again in analytical mode if you're interested in a technical explanation. It remains a disappointment compared to peers.
• In the past twelve months, the company generated some free funds in relation to the stock price, which stands mediocre against similar companies.
• The company usually generates somewhat more than enough genuine funds to cover up for its business needs. Surplus cash may be used to repay loans, to eventually buy new businesses, or to reward investors. Considering the financial position and stock price, the current valuation might be reasonable. It's still substantially worse when measured against industry firms.
• In the past twelve months, the company has barely rewarded investors, considering both dividends and share on the pie of earnings. It came up rather normal in relation to peer ventures.
• The company has neither net debt nor net cash. It may borrow extra money if it wishes so, or start cumulating cash for future uses. It looks somewhat worse than similar enterprises.
• Considering the past twelve months, traditional Price-to-Earnings relation is high. Substantial improvement expectations are already in the stock price, which is somewhat risky. It ranks substantially worse when measured against peer companies.
• Comparing the current stock price with the past twelve-months revenues gives a very high relationship. This is an important metric to check its evolution through time, and to compare to industry peers. It looks a disappointment compared to rival firms.
• The relation between the stock price and accounting book value is extremely high, which may be good or bad depending on context. Run again in analytic mode if you want to dig deeper. The company remains worse than most peer firms.
• In the past twelve months, the operating business earned little money when compared to the current stock price and financial position. It happens to be weak when measured against industry peers.
• In an alternate metric of bang for the buck, the company has usually shown a modest earnings power ability when measured against the current stock price and financial position. It's still in a weak position compared to peer companies.

Total score: 6.2

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Awarener score: 6.2

Conclusion

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