Is now a good time to review Automatic Data Processing, Inc. (NASDAQ: ADP)?
Automatic Data Processing, Inc. (NASDAQ:ADP) has received a lot of attention following a substantial price increase 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, could the stock still trade at a relatively cheap price? 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.
See our latest analysis for automatic data processing
Is automatic data processing always cheap?
According to my valuation model, automatic data processing seems to be valued at around 7.6% 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 stock is really worth $279.36, then there’s not much room for the stock price to rise beyond where it’s currently trading. Additionally, the low automatic data processing beta means the stock is less volatile than the broader market.
Can we expect growth in Automatic Data Processing?
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. Automatic data processing revenues over the next few years are expected to increase by 37%, indicating a very optimistic future. This should lead to more robust cash flow, fueling higher share value.
What this means for you
Are you a shareholder? It looks like the market has already priced in the positive outlook for ADP, 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 it is worth digging deeper into other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.
If you want to learn more about automatic data processing as a business, it is important to be aware of the risks it faces. You would be interested to know that we have found 1 warning sign for automatic data processing and you will want to know.
If you are no longer interested in automatic data processing, you can use our free platform to view our list of over 50 other stocks with high 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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