Automatic Data Processing (ADP) trades at $204, down 37% from the June 2025 peak.
The market has mispriced ADP as a commoditized payroll processor despite the company’s consistent earnings beats, strong cash flow generation.
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Automatic Data Processing (NASDAQ:ADP) has fallen sharply, and the fundamentals suggest the market may be mispricing a durable business.
If you’re not familiar with ADP, here’s the short version: this company processes payroll and manages human capital for businesses of every size, covering benefits administration, tax compliance, workforce analytics, and HR automation. ADP processes payroll for roughly 1 in 6 U.S. workers. That’s embedded infrastructure for the American economy.
The stock is down 37% from its June 2025 peak and shares trade around $204. The software sector broadly has taken a beating, but ADP’s situation is different. AI isn’t a threat to this business. Companies still need payroll processed, HR compliance managed, and workforce data analyzed. AI just makes ADP better at doing all of it faster and cheaper.
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ADP has raised its dividend for 51 consecutive years, earning it the rare Dividend King designation. The quarterly payout recently increased to $1.70 per share, up from $1.54 earlier in 2025. At the current price, that works out to a yield of roughly 3.3%. You’re getting paid meaningfully to wait while the business keeps compounding.
The dividend history isn’t just a streak. It held through the 2008 financial crisis, through COVID, through every rate cycle of the past five decades. That consistency reflects the durability of the underlying cash flows.
The operating results don’t match the stock’s narrative. In the most recent quarter, ADP posted EPS of $2.62 against a $2.57 estimate and revenue of $5.4 billion, up 6% year-over-year, with net income rising 10% from the prior year. Management then raised full-year guidance, now targeting adjusted diluted EPS growth of 9-10% and revenue growth of approximately 6%.