NASDAQIndustrialsSoftware - ApplicationSnapshot 2026-08-31
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Create your account →Warn: Recent financial performance slipped notably this past month, though still top-half.
ADP keeps growing revenue about 7% a year. Profit margins stay strong near 26%. Earnings per share rose from $2.34 to $3.38 in recent quarters. The company has a solid track record of beating earnings estimates.
Profit margin expansion is behind target, risking thinner profits. Rising debt from recent credit agreements could pressure cash flow. If revenue growth slows below 6%, the business model may weaken.
The price is about 2% above our fair value near $242. Analysts expect roughly 7% revenue growth, which matches management's guidance. Our view aligns with consensus on growth but sees margin expansion as a risk.
Breaks if: EPS growth falls below 8% next year
Target adjusted diluted EPS growth of 10% to 11% for fiscal 2026.
This is not a price target or investment advice.
A long-form read on the 1–3 year hold thesis. It updates when the weekly evidence changes.
This investment represents a durable compounder with a focus on revenue and earnings growth. The current thesis state is cautious, as recent performance has been strong but the confidence level has shifted to medium.
The market currently prices in a stretched valuation, indicating that expectations are somewhat high but not excessively so. There is a low fragility tier, suggesting that while execution quality is weak, it is not overly concerning given the current market regime.
Fundamentals are likely to continue showing growth, as management has consistently prioritized revenue and earnings expansion. However, there is a near-term risk of missing expectations, given the recent history of industry peers.
The thesis hinges on the performance of sector bellwethers like UBER, GRAB, and PAYC. Positive earnings and guidance from these companies could support ADP, while negative trends could pose a risk.
The most important moves since the prior daily snapshot.
Yes, our read has strengthened. The latest earnings beat supports this improved outlook. There are no current threats to the thesis.
as of 2026-08-31
Review the evidence to watch, what would become a concern, and what would make it less concerning.
Not investment advice. Scores describe historical and current data; they are not forecasts of future returns. Consult a licensed advisor before making investment decisions.
Breaks if: EBIT margin expansion is less than 0.3% in FY26
Continue adjusted EBIT margin expansion by 70 to 90 basis points in fiscal 2027, building on prior margin improvement momentum.
Management stated adjusted EBIT margin expansion as a priority in 5 of last 5 quarters. The margin increased from 26.0% in 2025 to 26.8% in 2026, with guidance for further expansion of 70 to 90 basis points in 2027. This reflects consistent delivery and ongoing focus on margin improvement.
“Adjusted EBIT margin increased 80 basis points to 26.8% for fiscal 2026; outlook includes expansion of 70 to 90 basis points.”
“Adjusted EBIT margin increased 80 basis points; raising full year guidance for margin expansion.”
“Adjusted EBIT margin increased 80 basis points; raising full year guidance for margin expansion.”
“Maintaining fiscal 2026 outlook for adjusted EBIT margin expansion of 50 to 70 basis points.”
“Fiscal 2026 outlook includes adjusted EBIT margin expansion of 50 to 70 basis points.”
Breaks if: Gross margin falls below 24% next year
Continue adjusted EBIT margin expansion by 70 to 90 basis points in fiscal 2027, building on prior margin improvement momentum.
Management stated adjusted EBIT margin expansion as a priority in 5 of last 5 quarters. The margin increased from 26.0% in 2025 to 26.8% in 2026, with guidance for further expansion of 70 to 90 basis points in 2027. This reflects consistent delivery and ongoing focus on margin improvement.
“Adjusted EBIT margin increased 80 basis points to 26.8% for fiscal 2026; outlook includes expansion of 70 to 90 basis points.”
“Adjusted EBIT margin increased 80 basis points; raising full year guidance for margin expansion.”
“Adjusted EBIT margin increased 80 basis points; raising full year guidance for margin expansion.”
“Maintaining fiscal 2026 outlook for adjusted EBIT margin expansion of 50 to 70 basis points.”
“Fiscal 2026 outlook includes adjusted EBIT margin expansion of 50 to 70 basis points.”
Breaks if: YoY revenue growth falls below 6% next year
Sustain revenue growth of 5% to 6% and adjusted diluted EPS growth of 9% to 11% in fiscal 2027, continuing multi-year growth trajectory.
Stated as a priority in 5 of last 5 quarters. Revenue grew from $20.6 billion in 2025 to $21.9 billion in 2026, with adjusted diluted EPS rising from $10.01 to $11.12. Management's fiscal 2027 outlook targets continued revenue growth of 5% to 6% and adjusted diluted EPS growth of 9% to 11%, indicating delivery on growth commitments.
“Fiscal 2027 consolidated outlook includes revenue growth of 5% to 6%, adjusted diluted EPS growth of 9% to 11%.”
“Raising full year guidance for revenue and adjusted diluted EPS growth.”
“Raising full year guidance for revenue and adjusted diluted EPS growth.”
“Maintaining fiscal 2026 consolidated outlook for revenue growth of 5% to 6%, adjusted diluted EPS growth of 8% to 10%.”
“Fiscal 2026 consolidated outlook includes revenue growth of 5% to 6%, adjusted diluted EPS growth of 8% to 10%.”
In the next 1 to 3 years, ADP's performance will depend on its ability to maintain growth amidst sector dynamics and execution quality. Not investment advice.
