What moat does Automatic Data Processing have?

The advantage is the payroll already running and the fear of getting the employment tax wrong if the provider changes. The change does happen, and it happens as a project. It is not a total aversion. The moat narrows if a small company leaves for someone else, or if rates fall and the float stops adding.

How do you read the Automatic Data Processing radar?

Health is not a factory's. If the axis looks odd, separate the payroll fee from the financial result of the float. Quality is that service margin. Growth follows the customers' employment. P/E valuation is read against rates, because the float is not stable. Shareholder return is the dividend, crossed with the cash after that rate cycle.

Which multiples matter for Automatic Data Processing?

The P/E of a year of high rates is not normal earnings: part of it is the float. The payroll fee is the figure that remains when the rate falls. Do not use a bank multiple, or Paychex's, as if the customer size were the same. A dash means the ADP cache is cold.

What does this Automatic Data Processing analysis leave out?

Not advice on ADP. Vaultflake does not count workers and does not split the float from the fee in the cached figure. This is not a dividend streak. Read the filings. A past dividend is not a right. The table is a snapshot, not a target price.

Automatic Data Processing (ADP) analysis

Automatic Data Processing, Inc.

Sector:Technology · Payroll

Country:United States

Profile and moat

ADP runs payroll and employment taxes for companies in the United States. Taking payroll out of there is a project: the tax compliance has to be rebuilt and the payment cannot be wrong. Paychex competes above all at the small company. This report does not say which share of the market is whose, and it does not say ADP pays one in six workers.

Part of the financial profit comes from withholding money ADP holds before remitting it. That float earns when rates are high and earns less when they fall. It is not a free profit forever.

The dividend has to fit in the cash of the fees and of that float. This report does not state a streak of years.

Sustainable Competitive Advantage

Automatic Data Processing (ADP) analysis

Automatic Data Processing, Inc.

Sector:Technology · Payroll

Country:United States

Profile and moat

Part of the financial profit comes from withholding money ADP holds before remitting it. That float earns when rates are high and earns less when they fall. It is not a free profit forever.

The dividend has to fit in the cash of the fees and of that float. This report does not state a streak of years.

Sustainable Competitive Advantage

Automatic Data Processing (ADP) analysis

Profile and moat

Automatic Data Processing (ADP) analysis

Profile and moat

Radar axes

Limits of this report

Questions from this report

What moat does Automatic Data Processing have?

How do you read the Automatic Data Processing radar?

Which multiples matter for Automatic Data Processing?

What does this Automatic Data Processing analysis leave out?

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