What is the stock price of Automatic Data Processing, Inc. (NASDAQ:ADP) doing?

Let’s talk about the popular Automatic Data Processing, Inc. (NASDAQ: ADP). The company’s shares have seen decent share price growth at the teen level on the NASDAQGS over the past few months. With many analysts covering large-cap stocks, we can expect any price-sensitive announcements to have already factored into the stock price. But what if there is still an opportunity to buy? Let’s take a closer look at the Automatic Data Processing valuation and outlook to see if there is still a bargain opportunity.

See our latest analysis for automatic data processing

Is automatic data processing always cheap?

The stock currently seems quite valued according to my valuation model. It trades around 6.6% below my intrinsic value, which means that if you buy automatic data processing today, you will pay the right price for it. And if you think the true value of the business is $259.77, then there’s not much benefit to be gained from poor pricing. On top of that, ADP has a low beta, which suggests its stock price is less volatile than the broader market.

What does the future of automatic data processing look like?

earnings-and-revenue-growth

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 36% 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 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 have not considered today, such as the financial strength of the company. Have these factors changed since the last time you looked at the stock? Will you be confident enough to invest in the business if the price drops below its fair 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. Example: we have identified 1 warning sign for automatic data processing you should be aware.

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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