Is Automatic Data Processing, Inc. overvalued or undervalued?

Jun 25 2025 08:02 AM IST
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As of April 30, 2025, Automatic Data Processing, Inc. is fairly valued with a P/E ratio of 51 and a PEG ratio of 5.70, indicating premium valuation compared to peers, despite a strong one-year return of 25.11% that outperformed the S&P 500.
As of 30 April 2025, the valuation grade for Automatic Data Processing, Inc. has moved from attractive to fair. Based on the analysis, the company appears to be fairly valued at this time. Key ratios include a P/E ratio of 51, a Price to Book Value of 34.75, and an EV to EBITDA of 34.87, which indicate a premium valuation compared to industry norms.

In comparison with peers, Automatic Data Processing, Inc. has a P/E ratio of 47.94, which is lower than Netflix, Inc. at 57.44 but higher than Paychex, Inc. at 31.34. The PEG ratio of 5.70 also suggests that the stock may be overvalued relative to its growth prospects. Notably, the company's return over the past year has outperformed the S&P 500, with a return of 25.11% compared to 10.26% for the index, reinforcing the perception of fair valuation amidst strong performance.
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