Automatic Data Processing (ADP) · Q2 2026 results and valuation

At 6.8% growth a year (3-year revenue growth), the model's fair value is $250.89 a share — the stock trades 22% above it. Today's price assumes 9.6% growth a year.

1. Key theme

   ADP achieved 7% revenue growth in Q4 2026 with 140 basis points of adjusted EBIT margin expansion.

   Source quote

   “This morning, we reported strong fourth quarter results that included 7% revenue growth 140 basis points of adjusted EBIT margin... I will start by providing some more detail on our fourth quarter and fiscal 2026 results, before covering our fiscal 2027 financial outlook. These results capped the fiscal year performance at the high end of our updated guidance ranges from last quarter, with 7% revenue growth, 80 basis points of adjusted EBIT margin expansion and 11% adjusted EPS growth.”

2. Guidance

   Employer Services revenue expected to grow 5% to 6% based on key assumptions.

   Source quote

   “Beginning with Employer Services, we expect revenue growth of 5% to 6% driven by the following key assumptions.”

3. Guidance

   Employer Services margins expected to expand in fiscal 2027 from ongoing operational productivity improvements.

   Source quote

   “We expect ES margins to further expand in fiscal 2027, driven both by operational productivity improvements that we are continuing to realize across the business as well as the continued...”

4. Fading

   Insurance and retirement offerings continue driving growth in the small business portfolio, especially in international and compliance solutions.

   Source quote

   “Our insurance and retirement services offerings also continue to contribute to growth in our small business portfolio. Results were particularly strong in international and compliance solutions. Both our employer services retention rate and our overall client satisfaction levels reached new record highs for a third quarter.”

Upbeat — about as upbeat as in Q1 2026.

Sentences that drove the tone

“This morning, we reported strong fourth quarter results including 7% revenue growth, 140 basis points of adjusted EBIT margin expansion and 17% adjusted EPS growth capping a fiscal year that...”

“These results capped the fiscal year performance at the high end of our updated guidance ranges from last quarter, with 7% revenue growth, 80 basis points of adjusted EBIT margin...”

“A large global auto manufacturer has recently expanded their relationship with us as they undergo a large-scale AI-driven workforce transformation aimed at optimizing labor allocation and creating a more efficient...”