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Automatic Data Processing, Inc. (ADP)

Company Dividend Discount ModelIndustry: Staffing & Employment ServicesSector: Industrials

Valuation Snapshot

Stable Growth$239.00 - $638.03$366.17
Multi-Stage$169.94 - $185.32$177.49
Blended Fair Value$271.83
Current Price$293.50
Upside-7.38%
DecisionDon't Buy

Dividend History & Growth Metrics (10Y)

Metric5Y CAGR10Y CAGR2025202420232022202120202019201820172016
DPS10.28%9.97%5.885.354.674.073.863.603.172.612.442.31
YoY Growth--9.89%14.68%14.74%5.30%7.14%13.73%21.56%6.88%5.47%1.72%
Dividend Yield--2.00%1.93%1.94%1.80%1.93%2.58%1.96%1.73%2.23%2.62%

Stable Growth Model (Adjusted)

(USD in Millions except Per Share Data)
Net Income To Common (M)4,136.30
(-) Cash Dividends Paid (M)2,453.00
(=) Cash Retained (M)1,683.30
MetricLOWBASEHIGH
Required Retention Ratio20.0%12.5%7.5%
(=) Cash Required (M)827.26517.04310.22
Cash Retained (M)1,683.301,683.301,683.30
(-) Cash Required (M)-827.26-517.04-310.22
(=) Excess Retained (M)856.041,166.261,373.08
(/) Shares Outstanding (M)408.01408.01408.01
(=) Excess Retained per Share2.102.863.37
LTM Dividend per Share6.016.016.01
(+) Excess Retained per Share2.102.863.37
(=) Adjusted Dividend8.118.879.38
WACC / Discount Rate9.08%9.08%9.08%
Growth Rate5.50%6.50%7.50%
Fair Value$239.00$366.17$638.03
Upside / Downside-18.57%24.76%117.39%

Multi-Stage Model: Projections

(USD in Millions)
MetricTTMDec-27Dec-28Dec-29Dec-30Dec-31Terminal
Net Income (M)4,136.304,405.164,691.494,996.445,321.215,667.095,837.10
Payout Ratio59.30%65.44%71.58%77.72%83.86%90.00%92.50%
Projected Dividends (M)2,453.002,882.883,358.293,883.324,462.415,100.385,399.32

Multi-Stage Valuation

MetricLOWBASEHIGH
WACC / Discount Rate9.08%9.08%9.08%
Growth Rate5.50%6.50%7.50%
Year 1 PV (M)2,618.092,642.912,667.72
Year 2 PV (M)2,769.712,822.462,875.71
Year 3 PV (M)2,908.552,992.043,077.12
Year 4 PV (M)3,035.293,152.023,272.09
Year 5 PV (M)3,150.583,302.763,460.76
PV of Terminal Value (M)54,855.9957,505.5660,256.53
Equity Value (M)69,338.2172,417.7575,609.93
Shares Outstanding (M)408.01408.01408.01
Fair Value$169.94$177.49$185.32
Upside / Downside-42.10%-39.53%-36.86%

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