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Automatic Data Processing (ADP) recently reported Q2 fiscal 2026 results that beat earnings and revenue expectations and raised its full year outlook, yet the stock fell as investors focused on softer PEO growth.
See our latest analysis for Automatic Data Processing.
At a share price of $214.36, the stock has seen a 13.15% 1 month share price decline and a 16.21% 3 month share price decline. The 5 year total shareholder return of 33.40% points to a much steadier long run outcome despite concerns about PEO growth and valuation after the latest results.
If this update has you reassessing payroll and HR providers, it could be a good time to broaden your search and check out 19 top founder-led companies as potential alternatives.
With ADP shares down sharply over the past year despite earnings beats and higher guidance, the key question now is whether the recent weakness leaves the stock undervalued or if the market is already pricing in its future growth.
Most Popular Narrative: 44.7% Undervalued
According to a widely followed narrative on Automatic Data Processing, a fair value of $387.77 per share sits well above the last close at $214.36, which puts the recent share price slump in a very different light.
Automatic Data Processing, Inc. (NASDAQ: ADP) remains one of the most reliable pillars in human capital management, blending predictable cash flows with an expanding suite of digital HR solutions. Yet, as the market increasingly values companies for innovation rather than legacy reliability, ADP finds itself at a crossroads between stability and transformation.
Read the complete narrative. Read the complete narrative.
Want to see what sits behind that higher fair value? According to yiannisz, it rests on steady earnings growth, firm profit margins, and a future earnings multiple that assumes ADP keeps turning "boring" payroll into cash rich infrastructure. Curious which specific cash flow assumptions and margin levels support that conclusion, and how sensitive the fair value is to them? The full narrative lays those inputs out in detail.
Result: Fair Value of $387.77 (UNDERVALUED)
Have a read of the narrative in full and understand what's behind the forecasts.
However, this hinges on PEO growth stabilising and AI investments not weighing too heavily on margins, either of which could challenge that undervalued thesis.
Find out about the key risks to this Automatic Data Processing narrative.
Next Steps
If this mix of optimism and concern leaves you on the fence, take a moment to look through the numbers yourself, act promptly while sentiment is unsettled, and then weigh those signals against 5 key rewards .
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If ADP has sharpened your thinking, do not stop here. Put a few minutes into comparing other ideas and you could spot opportunities others are ignoring.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
Companies discussed in this article include ADP .
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