How much a stock's price changes over time is a significant driver for most investors. Not only can price performance impact your portfolio, but it can help you compare investment results across sectors and industries as well.
Another thing that can drive investing is the fear of missing out, or FOMO. This particularly applies to tech giants and popular consumer-facing stocks.
What if you'd invested in Automatic Data Processing (ADP) ten years ago? It may not have been easy to hold on to ADP for all that time, but if you did, how much would your investment be worth today?
Automatic Data Processing's Business In-Depth
With that in mind, let's take a look at Automatic Data Processing's main business drivers.
Automatic Data Processing, Inc. is one of the leading providers of cloud-based Human Capital Management (HCM) technology solutions - including payroll, talent management, Human Resources and benefits administration, and time and attendance management - to employers around the world. The company delivers it’s global HCM strategy and make investments in highly strategic areas and technology in order to strengthen its underlying business model and prospects for continued growth.
The company was founded in 1949, incorporated in the State of Delaware in June 1961 and completed its initial public offering in September 1961. The company serves more than 1 million clients across 140 countries and territories.
ADP has two reportable business segments – Employer Services and Professional Employer Organization (PEO) Services.
Employer Services: The Employer Services segment offers a comprehensive suite of HRO and technology-based HCM solutions which includes payroll services, benefits administration, talent management, HR management, time and attendance management, insurance services, retirement services and compliance services. The company mainly serves clients ranging from single-employee small businesses to large enterprises with tens of thousands of employees around the world. In fiscal 2024, revenues from this segment increased 6.6% year over year.
Professional Employer Organization (PEO) Services: The Professional Employer Organization (PEO) Services segment provides small and medium-sized businesses with employment administration outsourcing solutions, including payroll, payroll tax filing, HR guidance, 401(k) plan administration, benefits administration, compliance services, health and workers' compensation coverage, and other supplemental benefits for the employees. Revenues from this segment increased 4.1% on a year over year basis in fiscal 2024.
ADP’s PEO business, named ADP TotalSource is the largest PEO in the United States based on the number of worksite employees. It serves approximately 17,000 clients and more than 750,000 worksite employees across 50 states and operates as a certified PEO under the United States Internal Reven.
Bottom Line
Anyone can invest, but building a successful investment portfolio requires research, patience, and a little bit of risk. So, if you had invested in Automatic Data Processing ten years ago, you're likely feeling pretty good about your investment today.
A $1000 investment made in May 2015 would be worth $3,696.92, or a gain of 269.69%, as of May 22, 2025, according to our calculations. This return excludes dividends but includes price appreciation.
In comparison, the S&P 500 gained 174.29% and the price of gold went up 164.34% over the same time frame.
Analysts are anticipating more upside for ADP.
ADP aspires to grow on the back of its three-tier business strategy and use its transformation initiatives to innovate and expand margins. Acquisitions have been pivotal in ADP’s ability to operate across borders. The company pursues buyouts that complement the overall business mix. This stock is an eye candy for dividend-seeking investors. The recent rise in the current ratio suggests a robust liquidity position for the company. Meanwhile, rising expenses due to acquisitions and investments are worrisome and can affect profitability. Automatic Data Processing faces high competition, which shoots talent costs sky-high and can affect the company’s growth. The stock increased 29.8% in a year and we have a Neutral recommendation on it in anticipation of a correction.
Over the past four weeks, shares have rallied 9.91%, and there have been 8 higher earnings estimate revisions in the past two months for fiscal 2025 compared to none lower. The consensus estimate has moved up as well.
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Automatic Data Processing, Inc. (ADP): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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