DCF Studio

    ADP · NMS · Technology

    Automatic Data Processing, Inc.

    Also onShortfallConsensus DriftCrosscheck

    Implied value per share

    USD 233.12

    Market price

    USD 298.78

    Implied upside

    -22.0%

    10-year forecast · Perpetuity growth terminal value · Mid-year discounting · Base case · Price 2026-11-02 · Accounts to 2026-06-30

    Value Per Share

    Perpetuity growth
    USD 233.12-22.0%
    Exit multiple
    USD 300.79+0.7%
    Market price
    USD 298.78

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (USD). Outflows negative.

    0bn3bn7bnFY27FY28FY29FY30FY31FY32FY33FY34FY35FY36
    Nominal FCFFDiscounted to todayUSD
    LineFY27FY28FY29FY30FY31FY32FY33FY34FY35FY36CAGR
    RevenueUSD 23.3bnUSD 24.6bnUSD 25.9bnUSD 27.2bnUSD 28.5bnUSD 29.6bnUSD 30.7bnUSD 31.8bnUSD 32.7bnUSD 33.5bn+4.1%
    EBITUSD 6.0bnUSD 6.4bnUSD 6.7bnUSD 7.0bnUSD 7.4bnUSD 7.7bnUSD 7.9bnUSD 8.2bnUSD 8.5bnUSD 8.7bn+4.1%
    NOPATUSD 4.8bnUSD 5.0bnUSD 5.3bnUSD 5.6bnUSD 5.8bnUSD 6.1bnUSD 6.3bnUSD 6.5bnUSD 6.7bnUSD 6.8bn+4.1%
    Add depreciation & amortisationUSD 668.0mUSD 706.5mUSD 744.3mUSD 781.2mUSD 816.6mUSD 850.4mUSD 882.1mUSD 911.3mUSD 937.8mUSD 961.2m+4.1%
    Less capital expenditureUSD -686.6mUSD -704.1mUSD -718.6mUSD -729.7mUSD -737.3mUSD -741.1mUSD -741.1mUSD -737.2mUSD -729.3mUSD -717.5m+0.5%
    Capex, % of revenue2.9%2.9%2.8%2.7%2.6%2.5%2.4%2.3%2.2%2.1%-
    Less increase in working capitalUSD -218.2mUSD -219.8mUSD -216.0mUSD -210.2mUSD -202.4mUSD -192.6mUSD -180.8mUSD -166.9mUSD -151.3mUSD -133.8m-5.3%
    Free cashflow to firmUSD 4.5bnUSD 4.8bnUSD 5.1bnUSD 5.4bnUSD 5.7bnUSD 6.0bnUSD 6.2bnUSD 6.5bnUSD 6.7bnUSD 7.0bn+4.9%
    Discount factor0.96060.88640.81790.75470.69630.64250.59290.54710.50480.4658-
    Present valueUSD 4.3bnUSD 4.3bnUSD 4.2bnUSD 4.1bnUSD 4.0bnUSD 3.8bnUSD 3.7bnUSD 3.6bnUSD 3.4bnUSD 3.2bn-
    Present Value Of The ForecastUSD 38.6bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate4.89%US 10-year Treasury (^TNX), 2026-11-02
    Equity risk premium4.23%Damodaran, January 2026
    Beta0.858Reported 0.788, pulled toward 1.0 (Blume)
    Cost of equity8.52%Risk-free + beta x equity risk premium
    Cost of debt6.41%Interest expense / average total debt
    Market capitalisationUSD 117.9bn95.7% of capital
    Total debtUSD 5.3bn4.3% of capital, book value as a proxy
    Tax rate21.0%Effective, capped at statutory
    WACC8.38%E/V x Re + D/V x Rd x (1 - t)

    Terminal Value

    Perpetuity growth is intrinsic. The exit multiple defaults to the company's current EV/EBITDA, so it answers a different question - what the shares are worth if today's rating holds and EBITDA grows as forecast.

    Perpetuity growth at 2.50%

    Value per shareUSD 233.12

    59% of EV

    Forecast FCFF, final year
    USD 7.0bn
    Capex at depreciation, working capital in reinvestment
    USD 7.3bn
    Less reinvestment at g/ROIC (5.4% of NOPAT)
    USD -393.5m
    Capitalised
    USD 7.0bn
    ROIC (reported)
    46.7%
    Terminal value, undiscounted
    USD 121.3bn
    Terminal value, discounted
    USD 56.5bn
    Enterprise value
    USD 95.1bn
    Less net debt
    USD 1.0bn
    Equity value
    USD 94.0bn

    Exit at 18.7x EBITDA

    Value per shareUSD 300.79

    68% of EV

    Terminal value, undiscounted
    USD 179.9bn
    Terminal value, discounted
    USD 83.8bn
    Enterprise value
    USD 122.4bn
    Less net debt
    USD 1.0bn
    Equity value
    USD 121.3bn

    Spread between methods: 25%.

    Sensitivity

    Value per share (USD) by discount rate and long-run growth.

    Long-run growth
    Discount rate1.50%2.00%2.50%3.00%3.50%
    6.38%307.23328.56355.51390.59438.04
    7.38%253.38266.19281.73300.91325.16
    8.38%215.29223.47233.12244.64258.60
    9.38%186.96192.40198.70206.04214.71
    10.38%165.07168.80173.06177.94183.59

    Outlined: this model. Green text: above today's price of 298.78. Shading: distance from this model's own value.

    Priced In

    What each input would have to be to justify the current price, one at a time.

    InputActualModelImplied
    Revenue growth, a year6.8%4.3%7.4%
    EBIT margin26.3%25.9%33.4%
    Discount rate-8.4%7.1%
    Download as Excel

    Live formulas, not pasted numbers - edit a driver and the workbook reprices.

    Yahoo Finance and RBA data. General information, not advice. Methodology.