MeritValue

AUTOMATIC DATA PROCESSING INC

ADPdata completeness 88%18 fiscal years on file

Data notes: no data for concept 'capex'

The thesis, from the filings

AUTOMATIC DATA PROCESSING INC earns about 63% on invested capital, and has bought back 5% of its shares over 5 years. The applicable estimate puts fair value near $86.51 a share.Whether it’s worth owning at today’s price is the last question — and yours to answer, below.

i. The business — what you’d actually own
FigureFY 2021FY 2022FY 2023FY 2024FY 2025
Revenue$15B1$16.5B2$18B3$19.2B3$20.6B3
Net income$2.6B4$2.95B5$3.41B6$3.75B6$4.08B6
Operating cash flow$3.09B7$3.1B8$4.21B9$4.16B9$4.94B9
Capital expenditure—————
Free cash flow (derived)—————
Total debt$2.99B10$2.99B11$2.99B12$2.99B13$8.75B13
Cash & equivalents$2.58B14$1.44B15$2.08B16$2.91B16$3.35B16
Diluted shares428.1M421.1M415.7M412.2M408.7M

Superscripts are receipts. Each links to the SEC filing the number came from (full list at the bottom).

ii. Your slice — ownership made literal
If you owned
shares
Net assets behind them
$151.41
your share of equity
Profit it earned you last year
$99.82
Free cash flow it threw off
—
Debt you’d be carrying
$213.98

10 shares is a claim on $151.41 of net worth that earned you $99.82 last year, against $213.98 of debt.

iii. Is this a good business?
Moat signal · return on invested capital
63% avg · 5y
FY21 43%FY22 63%FY23 82%FY24 87%FY25 38%

It earned an average 63% on invested capital over 5 years. Compare that to what it costs to fund the business.

seeing a moat in the numbers →
Management signal · capital allocation
−5% shares · 5y

Share count is down 5% over 5 years — management has been buying back stock, quietly handing owners a bigger slice. Total debt has risen 193% over the same window.

reading capital allocation →

Signals, not verdicts — read from the filings above. Numbers don’t prove a moat; they show its footprint. You decide.

iv. What it’s worth — engine v0.1.0
DCF · Growth Exit 10Y
not applicable
only 0 years of FCF (need ≥3) — model not applicable
DCF · Growth Exit 5Y
not applicable
only 0 years of FCF (need ≥3) — model not applicable
Earnings Power Value
$86.51
assumptions (8)
  • riskFreeRate4.7%
  • equityRiskPremium5.0%
  • beta100.0%
  • equityWeight85.0%
  • costOfDebtSpread1.5%
  • taxRate21.0%
  • normalizedEarnings$3.41B
  • growthAssumed0.0%
Graham Number
$58.31
assumptions (1)
  • grahamMultiplier2250.0%

Different models answer different questions — which to trust when →

Sources — the receipts
  1. 10-K · period ending 2021-06-30 · accession 0000008670-23-000030 (RevenueFromContractWithCustomerExcludingAssessedTax)
  2. 10-K · period ending 2022-06-30 · accession 0000008670-24-000024 (RevenueFromContractWithCustomerExcludingAssessedTax)
  3. 10-K · period ending 2023-06-30 · accession 0000008670-25-000037 (RevenueFromContractWithCustomerExcludingAssessedTax)
  4. 10-K · period ending 2021-06-30 · accession 0000008670-23-000030 (NetIncomeLoss)
  5. 10-K · period ending 2022-06-30 · accession 0000008670-24-000024 (NetIncomeLoss)
  6. 10-K · period ending 2023-06-30 · accession 0000008670-25-000037 (NetIncomeLoss)
  7. 10-K · period ending 2021-06-30 · accession 0000008670-23-000030 (NetCashProvidedByUsedInOperatingActivities)
  8. 10-K · period ending 2022-06-30 · accession 0000008670-24-000024 (NetCashProvidedByUsedInOperatingActivities)
  9. 10-K · period ending 2023-06-30 · accession 0000008670-25-000037 (NetCashProvidedByUsedInOperatingActivities)
  10. 10-K · period ending 2021-06-30 · accession 0000008670-22-000038 (LongTermDebtNoncurrent)
  11. 10-K · period ending 2022-06-30 · accession 0000008670-23-000030 (LongTermDebtNoncurrent)
  12. 10-K · period ending 2023-06-30 · accession 0000008670-24-000024 (LongTermDebtNoncurrent)
  13. 10-K · period ending 2024-06-30 · accession 0000008670-25-000037 (LongTermDebtNoncurrent)
  14. 10-K · period ending 2021-06-30 · accession 0000008670-23-000030 (CashAndCashEquivalentsAtCarryingValue)
  15. 10-K · period ending 2022-06-30 · accession 0000008670-24-000024 (CashAndCashEquivalentsAtCarryingValue)
  16. 10-K · period ending 2023-06-30 · accession 0000008670-25-000037 (CashAndCashEquivalentsAtCarryingValue)