_edited.png)
RISK CONCERN
Investment Strategy, Risk Analysis, and Insights by Chartered Professionals
Automatic Data Processing, Inc. (XNAS:ADP) In-Depth Stock/Fundamental/Options Analysis Today
Primary Facts
ADP
Name:
AUTOMATIC DATA PROCESSING, INC. (XNAS:ADP)
Sector:
- 7200.00K
Industry:
Staffing & Employment Services
CEO:
Mr. Carlos Rodriguez
Total Employees:
60,000
Our Technological Advancement Rating
Our Rating:
A+
Technological advancement compared to industry is 701.73% higher
ANALYSIS OF ALL CRITICAL FACTORS & RISKS RELATED TO THE STOCK & FUNDAMENTAL/LONG-TERM ANALYSIS OF AUTOMATIC DATA PROCESSING, INC.(ADP) AS PER DATA ANALYSIS OF LAST 3 YEARS AND COMPARISON WITH COMPETITORS/PEERS, AND STAFFING & EMPLOYMENT SERVICES INDUSTRY. DATE: 07/09/2022
Primary Targets/Price Insights
Previous Close ($) :
238.48
One Month Price Target:
$239.59
Six Month Price Target :
$245.15
Likely Price in One Year's Time:
Ticker:
$251.81
Likely Trading Range Today Under (Normal Volatility)
$237.82
Price Upper limit ($) :
$239.49
Price Lower limit ($) :
Crash Risk Prep/Key Price Levels (High Volatility/Risk)
Price, as per data analysis, isn't likely to fall below:
Today:
$228.51
This week:
$216.2
This month :
$193.91
Other Primary facts
Market Cap:
98.95B
Market Cap Classification:
Large Cap
Number of Shares
IPO Date:
415.52M
Best/Worst Daily Performance (Last 3+ Years)
Highest Daily Appreciation:
11.8%
-15.25%
Worst Daily Decline:
Our Options Trading Entry Points
Iron Condor entry points for options expiring in 1 week's time
Low risk (<2%) entry points
Buy Call:
Sell Call:
Buy Put:
Sell Put:
$284.69
$263.29
$192.27
$213.67
Medium risk (<10%) entry points
Buy Call
Sell Call
$256.32
Buy Put:
Sell Put:
$251.76
$220.58
$225.20
These entry points can be used for other strategies, such as butterflies, straddles, etc.
Risk-Adjusted returns (Sharpe Ratio) of
ADP
Sharpe Ratio:
3.11%
Comparison:
ADP, is amongst the top 20% stocks with highest risk-adjusted returns
Sharpe ratio is 83.94% higher than the industry
& ratio is 36.48% higher than the market/S&P 500 average
Average Returns/Yield of
ADP
Daily returns:
0.07%
Weekly returns:
0.37%
Monthly returns:
1.47%
Yearly returns:
14.00%
Comparison of returns:
Average annual returns/yield (last 3 years) is 25.62% above industry average
Classification:
ADP, is amongst the top 40% highest yielding stocks in terms of daily returns
Results of T-Test of Returns:
0.88
Statistical test of Returns:
ADP has not yielded statistically significant higher returns when compared to the market
Volatility (measured by Standard Deviation)
Daily Volatility:
2.07%
Weekly Volatility:
4.63%
Monthly Volatility:
9.26%
Yearly Volatility:
32.07%
Volitlilty of last five days (Measured by Standard Deviation)
Average Volatility of this Week:
1.55%
Volatility in last five trading days has been -25.18% below long-term volatility
Value at Risk Analysis (VaR)
Daily VaR:
-4.18%
Weekly VaR:
-9.34%
Monthly VaR:
-18.69%
How Much Can the price of
ADP
Decline in a Recession?
Likely price decline in a recession:
Base case (decline):
-16%
Worst case (decline):
-64.74%
This translates to price declining to:
$201.07
This translates to price declining to:
$84.09
Severe Crash Probability
Risk of crash in next 6/12 months: High (50-70%)
What is Value at Risk (VaR)?
Risk Fundamentals
ADP is a 31.90% riskier investment compared to the market/S&P 500 & is 13.00% riskier than Nasdaq (IXIC)
Risk (measured by volatility) is -27.79% below industry average
Overall, it is amongst the top 50% most risky stocks
Beta Examination of
ADP
Beta in relation to market/S&P 500--0.83
Expected beta in 1 year's time:
0.676
Expected beta in 3 year's time:
0.957
Unlevered (debt free) Beta:
0.561
Beta in relation to Nasdaq (XNAS):
0.807
Beta in relation to all global stocks::
0.81
Beta Comparison & Analysis
Beta of competitors/peers::
1.108
Beta is -24.91% lower than peers
Average Industry Beta:
1.192
Beta is -30.24% below industry average
Sustainable Growth Rate Analysis
Sustainable growth rate for this stock/firm:
20.90%
Sustainable growth rate is 26.43% above industry average
Alpha provided | Alpha Analysis
Alpha provided:
0.087
Alpha is 226.13% above industry average alpha yield
Alpha is 556% higher than market/& is unsustainably high
Analysis of Cost of Capital of
ADP
Equity cost of capital:
0.088
Equity cost of capital is -21.82% below industry mean WACC
Unlevered (without debt) cost of capital:
5.97%
Before-tax cost of debt:
2.15%
After-tax cost of debt:
1.70%
Overall debt rating:
Highest AAA investment grade
Weighted average cost of capital (WACC):
1.70%
WACC is -14.42% below industry mean WACC
Key Per-Share Metrics & Analysis
Revenue per share:
$37.98
Revenue growth rate per share of (3Y):
18.52
Annual revenue growth rate is 48.90% above the industry average
EPS:
$6.77
Expected Annual growth rate of EPS (3Y):
7.02%
Expected future EPS growth rate is -11.39% lower than the Staffing & Employment Services industry
Free cash flow (FCF) per share:
$5.44
Balance sheet equity growth per share: 53.08%
Equity growth rate per share is 2027.88% higher than the industry
Debt per share
$8.02
EBITDA per share
$10.30
Valuation Analysis Today of
ADP
P/E Ratio:
34.05
P/E Ratio of Competitors/Peers:
29.32
P/E ratio is 16.15% higher than main peers & is 86.28% higher than the industry
Stock price/value with industry average P/E ratio: $123.76
ADP is 92.69% overvalued if valued using industry average P/E ratio
Share value as per dividend discount (DDM) model: $69.70
Present value of the expected future dividends only: $55.13
P/S (Price to Sales ratio):
6.28
Price to sales ratio is 137.63% above the industry mean
P/B (Price to book value ratio):
18.52
Price to free cash flow: 43.82
Price to free cash flow ratio is -62.84% lower than the industry
Net income growth rate (3Y):
65.70%
Net income growth rate is 1635.73% higher than the average industry net income growth rate
Dividend Analysis
Dividend payout rate: 13.74%
Dividend yeild: 1.70%
Previous Dividend: $1.04
Previous adjusted dividend: $1.04
Previous Dividend: $4.05
Expected next dividend best case: $1.09
Expected next dividend worst case: $0.99
Average dividend payment (long-term): $0.95
Average dividend increase/decrease (growth rate) % per period: 1.40%
Expected next dividend payment date: 29/09/2022
Expected next dividend record date: 09/08/2022
-
Previous dividend payment date: 07/01/2022
Previous dividend record date: 06/10/2022
-
Dividend History:
2022-06-09--$1.04
2021-12-09--$1.04
2021-06-10--$0.93
2022-03-10--$1.04
2021-09-09--$0.93
2021-03-11--$0.93
Dividend growth rate is -109.51% lower than the industry average
In-depth Debt & Leverage Analysis
Debt to equity ratio:
62.26%
Net debt to equity ratio:
33.17%
Debt to assets ratio:
5.55%
Net debt to assets ratio:
2.96%
Debt-to-asset ratio is -91.75% below industry average
Ability to repay debt:
Interest coverage ratio:
58.97
Interest coverage ratio is 102.04% more than industry average
Looking forward:
Debt growth rate:
41.86%
Annual debt growth is -78% lower than industry average debt growth rate
Debt repayment rate in last quarter: 0.01%
Analysis of Key Statistics
Correlation of price movement with the market:
0.805
Statistical significance of correlation:
ADP has a statistically significant correlation with the market
Average Correlation of the industry with the market:
0.529
Stock price is 52.26% more correlated with the market, compared to the industry average correlation
R Squared (percentage of price movement explained by movement of the market):
0.529
Correlation of price movement with Nasdaq (^IXIC):
0.047
Covariance of price movement with the market:
0.056
Kurtosis
10.913
Returns have a significant fat-tails (leptokurtic), i.e., returns considerably higher or lower than the mean returns are more probable, compared to assets with normally distributed returns
Skewness of returns:
-0.471
Returns are, approximately, symmetrical
Fundamental Analysis & Dupont Analysis of
ADP
Gross Profit Margin Ratio:
165%
Operating Profit Margin Ratio:
20.52%
Operating profit margin is 192.13% higher than the industry
Net Profit Margin Ratio:
165%
Effective Tax Rate:
22.62%
Effective tax rate is -11.80% lower than the industry
Dupont Method
Net Profit Margin
Return on Equity Ratio (ROE):
×
ROA
=
×
53.48%
Return on equity (ROE) is 124.95% higher than the industry
Financial Leverage
Asset Turnover Ratio (ROA):
4.77%
Return on assets (ROA) is -32.90% lower than the industry
Financial Leverage:
1.1x
Current Ratio:
1.05
Current ratio is -37.81% below industry average
Cash Conversion Cycle (days):
60.3
Cash conversion cycle is 308.61% above industry average
The remaining useful life of property plant & equipment is: 25.9 years
Stock based compensation to net income ratio:
1.48%
In-depth Efficiency Analysis
Revenue generated per employee:
263.0K
Each employee generates -48% less revenue than industry average revenue per employee
EBITDA generated per employee:
71.4K
Each employee generates 84% more EBITDA than industry average revenue per employee
Profit generated per employee:
47.7K
Each employee generates 136% more net income/profit than industry average revenue per employee
Free cash flow (FCF) generated per employee:
- 0.1K
Each employee generates -99% less free cash flow than industry average revenue per employee
Assets/Capital per employee
132.3K
Each employee generates -99% less free cash flow than industry average revenue per employee
Research & Development (R&D) Analysis
-
-
Competitors/Peer firms of
ADP
CSX Corporation (XNAS:CSX)
PAYCHEX, INC. (XNAS:PAYX)
CINTAS CORPORATION (XNAS:CTAS)
Fastenal Company (XNAS:FAST)
VERISK ANALYTICS, INC. (XNAS:VRSK)
PACCAR INC (XNAS:PCAR)
COPART, INC. (XNAS:CPRT)
RYANAIR HOLDINGS PUBLIC LIMITED COMPANY (XNAS:RYAAY)
EXPEDITORS INTERNATIONAL OF WASHINGTON, INC (XNAS:EXPD)
Current Analyst Ratings
Strong buy�8%
Buy�0%
Hold�67%
Sell�0%
Strong sell�0%
Overall analyst sentiment is: Hold
Income Statement
Period:
TTM
Date:
3/31/22
Revenue:
15.78B
Cost of Revenue:
Gross Profit:
R&D Expense
General & Admin Expenses:
Selling, General & Admin Expenses
Sales and Marketing Expenses
Other Expenses :
Operating Expenses :
Cost & Expenses :
Interest Income:
Interest Expenses:
Depreciation & Amortization:
EBITDA:
Operating Income:
Other Income Expenses:
Income Before Tax:
Income Tax Expense:
Net Income:
Balance Sheet
Date:
Calendar Year:
Period:
Cash & Cash Equivalents:
Short Term Investments:
Cash & Short Term Investments:
Net Receivables:
Inventory:
Other Current Assets:
Total Current Assets:
PP&E:
Goodwill:
Intangible Assets:
Long Term Investments:
Tax Assets:
Other Non-Current Assets:
Total Non-Current Assets:
Other Assets:
Total Assets:
Accounts Payable:
Short Term Debt:
Tax Payables:
Deferred Revenue:
Other Current Liabilities:
Total Current Liabilities:
Long Term Debt:
Other Non-Current Liabilities:
Total Non Current Liabilities:
Other Liabilities:
Total Liabilities:
Common Stock:
Retained Earnings:
Accumulated Other Comprehensive Loss:
Other Total Stockholders' Equity:
Total Stockholders' Equity:
Total Liabilities and Stockholders' Equity:
Total Investments:
Total Debt:
Net Debt:
9.28B
6.50B
-
-
3.16B
-
-
3.16B
356.50M
72.60M
510.60M
4.28B
3.24B
2.86B
3.70B
836.30M
2.86B
Statement of Cash Flow
Date:
Period:
129.10M
Differed Income Tax :
25.60M
Stock Based Compensation :
42.30M
Change in Working Capital :
- 1021700.00K
Accounts Receivables:
- 51800.00K
Other Working Capital:
2.38B
Other Non-Cash Items:
246.10M
Net Cash Provided by Operating Activities:
121.90M
Investments in PP&E:
-
Net Acquisitions:
-
Purchases of Investments:
- 2412600.00K
Sales/Maturities of Investments:
Other Investing Activities:
Net Cash Used for Investing Activities:
Debt Repayment:
Common Stock Issued:
Common Stock Repurchased:
Dividend Paid:
Other Financing Activities:
Net Cash Used Provided by Financing Activities:
Effect of FOREX on Changes in Cash:
Net Changes in Cash:
Cash at End of Period:
Cash at Beginning of Period:
Operating Cash Flow:
Capital Expenditure:
Free Cash Flow (FCF):
9/30/21
2022
Q1
1.60B
-
1.60B
2.77B
-
47.68B
52.05B
1.11B
2.33B
1.21B
-
-
3.29B
7.94B
-
59.99B
77.80M
45.80M
179.30M
191.60M
49.35B
49.67B
3.33B
813.60M
4.97B
-
54.64B
63.90M
19.75B
- 122900.0K
- 14345100.00K
September 30, 2021 at 6:00:00 AM
12.44B
5.35B
59.99B
-
3.38B
1.8B
1.28B
- 102900.00K
- 1236400.00K
- 200.00K
-
- 528000.00K
- 393200.00K
12.11B
11.18B
- 21200.00K
10.05B
23.19B
13.14B
121.90M
- 129100.00K
- 7200.00K
Our Proprietary Portfolio Rating
Our Rating:
A+
Price Forecast/Expected Price in Next 5 Years of
ADP
2023
2024
2025
2026
2027
$272.17
$287.39
$303.45
$320.42
$338.33