Is it too late to consider buying Automatic Data Processing, Inc. (NASDAQ: ADP)?
Automatic Data Processing, Inc. (NASDAQ:ADP) has seen decent teen-level stock price growth on the NASDAQGS over the past few months. As a large-cap stock with high analyst coverage, you can assume that any recent changes in the company’s outlook are already priced into the stock. However, what if the stock is still a bargain? Let’s examine the prospects and value of automatic data processing based on the most recent financial data to see if the opportunity still exists.
What is the desirability of automatic data processing?
According to my valuation model, automatic data processing seems to be valued at around 16% below my intrinsic value, which means that if you buy automatic data processing today, you will pay a reasonable price for it. And if you think the true value of the business is $261.45, then there’s not much benefit to be gained from poor pricing. Additionally, the Automatic Data Processing stock price might be more stable over time (relative to the market), as indicated by its low beta.
What kind of growth will automatic data processing generate?
Future prospects are an important aspect when considering buying a stock, especially if you are an investor looking to grow your portfolio. Buying a big company with solid prospects at a cheap price is always a good investment, so let’s also take a look at the company’s future expectations. With profits expected to increase by 27% over the next two years, the future looks bright for automatic data processing. It seems that a higher cash flow is expected for the stock, which should translate into a higher valuation of the stock.
What does this mean to you :
Are you a shareholder? ADP’s optimistic future growth appears to have been factored into the current share price, with the stock trading around its fair value. However, there are also other important factors that we haven’t considered today, such as the background of its management team. Have these factors changed since the last time you looked at the stock? Will you have enough conviction to buy if the price fluctuates below the true value?
Are you a potential investor? If you’ve been keeping an eye on ADP, now might not be the best time to buy, given that it’s trading around its fair value. However, the positive outlook is encouraging for the company, which means that it is worth further examining other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.
It can be very useful to consider what analysts expect from the automatic processing of data from their most recent forecasts. Fortunately, you can consult what analysts predict by clicking here.
If you are no longer interested in automatic data processing, you can use our free platform to see our list of more 50 other stocks with strong growth potential.
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This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts only using unbiased methodology and our articles are not intended to be financial advice. It is not a recommendation to buy or sell stocks and does not take into account your objectives or financial situation. Our goal is to bring you targeted long-term analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price-sensitive companies or qualitative materials. Simply Wall St has no position in the stocks mentioned.
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