Automatic Data Processing (ADP) provides payroll and tax filing services, brokerage services, comprehensive human resource services and financial services to auto and truck dealerships.
The company has grown profits and dividends 7-14% over the last 10 years and has earned an 18-20% return on equity. While the 2008-2009 recession impacted ADP somewhat, it did very well relative to other companies. Long term, the company should continue to prosper based:
(1) the economic recovery has led to an increase in both customers and the number of checks processed,
(2) the contribution from the recent acquisitions [8 in the last year],
(3) a dedicated effort to technological upgrades,
(4) its stock buy back program.
Negatives:
(1) a decline in the interest earned on funds held,
ADP is rated A++ by Value Line, has only 1% of its capitalization in debt and its stock yields 3.1%.
Statistical Summary
| Stock Yield | Dividend Growth Rate | Payout Ratio | # Increases Since 2002 |
| ADP | 3.1% | 7% | 56% | 10 |
| IND | 1.4 | 9 | 23 | NA |
| Debt/Equity | ROE | EPS Down Since 2002 | Net Margin | Value Line Rating |
| ADP | 1% | 21% | 2 | 13% | A++ |
| IND | 15 | 23 | NA | 12 | NA |
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