Automatic Data Processing Inc (ADP)'s Winning Formula: Financial Metrics and Competitive Strengths

Core Insights - Automatic Data Processing Inc (ADP) has demonstrated strong financial performance, with a current share price of $283.24 and a three-month gain of 20.38% despite a minor daily loss of 0.49% [1] - The company has a GF Score of 95/100, indicating significant growth potential and a strong position for future outperformance [2][3] Financial Overview - ADP has a market capitalization of $115.51 billion and annual sales of $19.20 billion, with an operating margin of 25.85% [3] - The breakdown of financials shows a pretax income of $13.0 billion (67.6% of total), operating income of $5.0 billion (25.9%), and gross profit of $8.7 billion (45.4%) [4] - The company’s interest coverage ratio stands at 13.74, well above the benchmark of 5, and its debt-to-revenue ratio is 0.19, indicating strong financial health [5] Profitability and Growth Metrics - ADP's operating margin has increased to 25.94% in 2024, reflecting improved efficiency in converting revenue into profit [5] - The company has achieved a 3-Year Revenue Growth Rate of 9.9%, outperforming over half of its industry peers [5] Business Model - ADP serves over 1 million clients, providing a range of services from payroll to human capital management, primarily in the United States [3] - The company has a rapidly growing professional employer organization segment that offers HR outsourcing solutions to small and midsize businesses [3]