Benzinga·2026-01-05 15:01Core Insights - The article provides an extensive analysis of Automatic Data Processing (ADP) in comparison to its competitors in the Professional Services industry, focusing on financial metrics, market position, and growth prospects [1] Company Overview - Automatic Data Processing is a global technology company specializing in cloud-based human capital management solutions, serving over 1.1 million clients and paying more than 42 million workers across 140 countries as of fiscal 2025 [2] Financial Metrics Comparison - ADP has a Price to Earnings (P/E) ratio of 24.96, which is below the industry average by 0.86x, indicating potential undervaluation [5] - The Price to Book (P/B) ratio of 16.05 is 2.42x the industry average, suggesting that ADP may be overvalued in terms of book value [5] - The Price to Sales (P/S) ratio of 4.94 is 1.92x the industry average, indicating potential overvaluation relative to sales performance [5] - ADP's Return on Equity (ROE) stands at 16.13%, which is 11.12% above the industry average, reflecting efficient equity utilization [5] - The company exhibits an EBITDA of $1.59 billion, which is 10.6x above the industry average, indicating strong profitability [5] - ADP's gross profit of $2.34 billion is 5.32x above the industry average, showcasing robust earnings from core operations [5] - Revenue growth for ADP is 7.09%, exceeding the industry average of 4.04%, indicating strong sales performance [5] Debt to Equity Ratio - ADP has a debt-to-equity (D/E) ratio of 1.49, placing it in the middle of its top 4 peers, suggesting a balanced financial structure with a moderate level of debt relative to equity [8] Key Takeaways - ADP's low P/E ratio compared to peers indicates potential undervaluation, while high P/B and P/S ratios suggest overvaluation relative to industry standards [9] - The company demonstrates strong performance in ROE, EBITDA, gross profit, and revenue growth compared to industry peers, reflecting favorable financial health and growth prospects [9]