Is Automatic Data Processing, Inc. overvalued or undervalued?

As of 17 October 2025, the valuation grade for Automatic Data Processing, Inc. has moved from expensive to attractive, indicating a shift in perception regarding its value. The company appears undervalued based on its current metrics, with a P/E ratio of 51, a Price to Book Value of 34.75, and an EV to EBITDA ratio of 34.87. In comparison, peers such as Paychex, Inc. have a P/E of 27.39 and an EV to EBITDA of 20.18, suggesting that Automatic Data Processing, Inc. may offer a more favorable valuation relative to its earnings potential.
Despite recent stock performance trailing the S&P 500, with a year-to-date return of -3.91% compared to the S&P 500's 13.30%, the company's strong ROCE of 73.05% and ROE of 68.23% highlight its operational efficiency and profitability. This combination of attractive valuation ratios and robust financial performance supports the conclusion that Automatic Data Processing, Inc. is currently undervalued in the market.