Automatic Data Processing, Inc. (ADP) Stock Analysis

Automatic Data Processing is a global HCM leader combining cloud software with payroll processing, tax filing, benefits administration and compliance services. Employer Services contributes approximately 67% of revenue and PEO Services 33%, while the company serves more than 1.1 million businesses and pays over 42 million workers globally. **Its core moat is the combination of 92.1% customer retention, high switching costs and direct responsibility for complex money movement and regulatory compliance.** Fiscal Q3 2026 revenue rose 7% to $5.94 billion, adjusted EBIT increased 10% to $1.79 billion, the adjusted EBIT margin expanded 80 basis points to 30.2%, and adjusted diluted EPS grew 10% to $3.37, beating consensus by 2.43%. Management raised FY2026 revenue-growth guidance to 6% to 7%, adjusted EBIT margin expansion to 70 to 80 basis points and adjusted EPS growth to 10% to 11%. The valuation is defensible but not obviously cheap at 20.83x trailing earnings and 18.38x forward earnings. Near-term catalysts include FY2026 results on July 29, 2026, Lyric adoption, WorkForce cross-selling, AI productivity and continued client-fund yields.