Intrinsic value of Automatic Data Processing - ADP

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$101.41

  Intrinsic Value

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  Value-price divergence*

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$101.41

 
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*Intrinsic value change (in %) minus stock price change (in %) in the past 12 months.

We calculate the intrinsic value of ADP stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 2016), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 45.7

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2016(a)
   2017
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  6.66
  6.40
  6.26
  6.13
  6.02
  5.92
  5.83
  5.74
  5.67
  5.60
  5.54
  5.49
  5.44
  5.40
  5.36
  5.32
  5.29
  5.26
  5.23
  5.21
  5.19
  5.17
  5.15
  5.14
  5.12
  5.11
  5.10
  5.09
  5.08
  5.07
  5.07
Revenue, $m
  11,668
  12,415
  13,192
  14,001
  14,844
  15,723
  16,639
  17,594
  18,592
  19,634
  20,722
  21,859
  23,048
  24,292
  25,593
  26,954
  28,380
  29,872
  31,436
  33,073
  34,790
  36,588
  38,474
  40,450
  42,523
  44,697
  46,977
  49,368
  51,877
  54,508
  57,270
Variable operating expenses, $m
 
  8,928
  9,476
  10,047
  10,642
  11,262
  11,908
  12,583
  13,286
  14,021
  14,789
  15,423
  16,262
  17,140
  18,058
  19,018
  20,024
  21,077
  22,180
  23,336
  24,547
  25,816
  27,146
  28,541
  30,004
  31,537
  33,146
  34,833
  36,603
  38,460
  40,409
Fixed operating expenses, $m
 
  1,098
  1,125
  1,153
  1,182
  1,212
  1,242
  1,273
  1,305
  1,338
  1,371
  1,405
  1,440
  1,476
  1,513
  1,551
  1,590
  1,630
  1,670
  1,712
  1,755
  1,799
  1,844
  1,890
  1,937
  1,986
  2,035
  2,086
  2,138
  2,192
  2,246
Total operating expenses, $m
  9,448
  10,026
  10,601
  11,200
  11,824
  12,474
  13,150
  13,856
  14,591
  15,359
  16,160
  16,828
  17,702
  18,616
  19,571
  20,569
  21,614
  22,707
  23,850
  25,048
  26,302
  27,615
  28,990
  30,431
  31,941
  33,523
  35,181
  36,919
  38,741
  40,652
  42,655
Operating income, $m
  2,220
  2,389
  2,590
  2,801
  3,020
  3,249
  3,488
  3,739
  4,001
  4,275
  4,562
  5,030
  5,345
  5,675
  6,022
  6,385
  6,765
  7,165
  7,585
  8,025
  8,488
  8,973
  9,483
  10,019
  10,582
  11,174
  11,795
  12,449
  13,135
  13,856
  14,615
EBITDA, $m
  2,509
  2,683
  2,892
  3,110
  3,338
  3,576
  3,825
  4,085
  4,357
  4,641
  4,939
  5,251
  5,578
  5,921
  6,280
  6,657
  7,052
  7,467
  7,902
  8,359
  8,839
  9,343
  9,872
  10,428
  11,012
  11,625
  12,270
  12,947
  13,659
  14,407
  15,193
Interest expense (income), $m
  38
  76
  61
  154
  250
  350
  454
  563
  677
  795
  919
  1,048
  1,183
  1,324
  1,472
  1,626
  1,788
  1,957
  2,134
  2,320
  2,515
  2,718
  2,932
  3,156
  3,391
  3,637
  3,895
  4,166
  4,450
  4,747
  5,060
Earnings before tax, $m
  2,235
  2,313
  2,529
  2,647
  2,770
  2,899
  3,034
  3,176
  3,324
  3,480
  3,643
  3,983
  4,162
  4,351
  4,550
  4,758
  4,978
  5,208
  5,450
  5,705
  5,973
  6,255
  6,551
  6,863
  7,192
  7,537
  7,901
  8,283
  8,685
  9,109
  9,555
Tax expense, $m
  742
  624
  683
  715
  748
  783
  819
  857
  898
  940
  984
  1,075
  1,124
  1,175
  1,228
  1,285
  1,344
  1,406
  1,472
  1,540
  1,613
  1,689
  1,769
  1,853
  1,942
  2,035
  2,133
  2,236
  2,345
  2,459
  2,580
Net income, $m
  1,493
  1,688
  1,846
  1,932
  2,022
  2,116
  2,215
  2,318
  2,427
  2,540
  2,659
  2,907
  3,039
  3,176
  3,321
  3,474
  3,634
  3,802
  3,979
  4,165
  4,360
  4,566
  4,783
  5,010
  5,250
  5,502
  5,767
  6,047
  6,340
  6,650
  6,975

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  3,215
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  43,670
  43,107
  45,805
  48,615
  51,542
  54,592
  57,773
  61,092
  64,556
  68,172
  71,951
  75,899
  80,028
  84,346
  88,863
  93,591
  98,540
  103,723
  109,151
  114,838
  120,797
  127,043
  133,589
  140,453
  147,650
  155,197
  163,113
  171,416
  180,127
  189,265
  198,853
Adjusted assets (=assets-cash), $m
  40,455
  43,107
  45,805
  48,615
  51,542
  54,592
  57,773
  61,092
  64,556
  68,172
  71,951
  75,899
  80,028
  84,346
  88,863
  93,591
  98,540
  103,723
  109,151
  114,838
  120,797
  127,043
  133,589
  140,453
  147,650
  155,197
  163,113
  171,416
  180,127
  189,265
  198,853
Revenue / Adjusted assets
  0.288
  0.288
  0.288
  0.288
  0.288
  0.288
  0.288
  0.288
  0.288
  0.288
  0.288
  0.288
  0.288
  0.288
  0.288
  0.288
  0.288
  0.288
  0.288
  0.288
  0.288
  0.288
  0.288
  0.288
  0.288
  0.288
  0.288
  0.288
  0.288
  0.288
  0.288
Average production assets, $m
  1,197
  1,279
  1,359
  1,442
  1,529
  1,619
  1,714
  1,812
  1,915
  2,022
  2,134
  2,251
  2,374
  2,502
  2,636
  2,776
  2,923
  3,077
  3,238
  3,407
  3,583
  3,769
  3,963
  4,166
  4,380
  4,604
  4,839
  5,085
  5,343
  5,614
  5,899
Working capital, $m
  3,653
  472
  501
  532
  564
  597
  632
  669
  706
  746
  787
  831
  876
  923
  973
  1,024
  1,078
  1,135
  1,195
  1,257
  1,322
  1,390
  1,462
  1,537
  1,616
  1,698
  1,785
  1,876
  1,971
  2,071
  2,176
Total debt, $m
  2,008
  1,616
  4,045
  6,573
  9,208
  11,953
  14,816
  17,803
  20,920
  24,175
  27,576
  31,130
  34,845
  38,731
  42,797
  47,052
  51,506
  56,171
  61,056
  66,174
  71,537
  77,158
  83,050
  89,228
  95,705
  102,498
  109,622
  117,095
  124,934
  133,159
  141,788
Total liabilities, $m
  39,188
  38,796
  41,225
  43,753
  46,388
  49,133
  51,996
  54,983
  58,100
  61,355
  64,756
  68,310
  72,025
  75,911
  79,977
  84,232
  88,686
  93,351
  98,236
  103,354
  108,717
  114,338
  120,230
  126,408
  132,885
  139,678
  146,802
  154,275
  162,114
  170,339
  178,968
Total equity, $m
  4,482
  4,311
  4,581
  4,861
  5,154
  5,459
  5,777
  6,109
  6,456
  6,817
  7,195
  7,590
  8,003
  8,435
  8,886
  9,359
  9,854
  10,372
  10,915
  11,484
  12,080
  12,704
  13,359
  14,045
  14,765
  15,520
  16,311
  17,142
  18,013
  18,927
  19,885
Total liabilities and equity, $m
  43,670
  43,107
  45,806
  48,614
  51,542
  54,592
  57,773
  61,092
  64,556
  68,172
  71,951
  75,900
  80,028
  84,346
  88,863
  93,591
  98,540
  103,723
  109,151
  114,838
  120,797
  127,042
  133,589
  140,453
  147,650
  155,198
  163,113
  171,417
  180,127
  189,266
  198,853
Debt-to-equity ratio
  0.448
  0.370
  0.880
  1.350
  1.790
  2.190
  2.560
  2.910
  3.240
  3.550
  3.830
  4.100
  4.350
  4.590
  4.820
  5.030
  5.230
  5.420
  5.590
  5.760
  5.920
  6.070
  6.220
  6.350
  6.480
  6.600
  6.720
  6.830
  6.940
  7.040
  7.130
Adjusted equity ratio
  0.031
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  1,493
  1,688
  1,846
  1,932
  2,022
  2,116
  2,215
  2,318
  2,427
  2,540
  2,659
  2,907
  3,039
  3,176
  3,321
  3,474
  3,634
  3,802
  3,979
  4,165
  4,360
  4,566
  4,783
  5,010
  5,250
  5,502
  5,767
  6,047
  6,340
  6,650
  6,975
Depreciation, amort., depletion, $m
  289
  294
  301
  310
  318
  327
  336
  346
  356
  366
  377
  221
  233
  245
  258
  272
  287
  302
  317
  334
  351
  369
  389
  408
  429
  451
  474
  499
  524
  550
  578
Funds from operations, $m
  1,731
  1,982
  2,148
  2,242
  2,340
  2,443
  2,551
  2,664
  2,783
  2,907
  3,037
  3,128
  3,271
  3,422
  3,580
  3,746
  3,920
  4,103
  4,296
  4,499
  4,712
  4,936
  5,171
  5,419
  5,679
  5,953
  6,242
  6,545
  6,864
  7,200
  7,553
Change in working capital, $m
  -129
  28
  30
  31
  32
  33
  35
  36
  38
  40
  41
  43
  45
  47
  49
  52
  54
  57
  59
  62
  65
  68
  72
  75
  79
  83
  87
  91
  95
  100
  105
Cash from operations, $m
  1,860
  1,976
  2,118
  2,211
  2,308
  2,410
  2,516
  2,628
  2,745
  2,867
  2,995
  3,085
  3,226
  3,375
  3,530
  3,694
  3,866
  4,047
  4,237
  4,436
  4,646
  4,867
  5,099
  5,344
  5,601
  5,871
  6,155
  6,454
  6,769
  7,100
  7,448
Maintenance CAPEX, $m
  0
  -117
  -125
  -133
  -141
  -150
  -159
  -168
  -178
  -188
  -198
  -209
  -221
  -233
  -245
  -258
  -272
  -287
  -302
  -317
  -334
  -351
  -369
  -389
  -408
  -429
  -451
  -474
  -499
  -524
  -550
New CAPEX, $m
  -386
  -82
  -80
  -83
  -87
  -90
  -94
  -98
  -103
  -107
  -112
  -117
  -122
  -128
  -134
  -140
  -147
  -154
  -161
  -169
  -177
  -185
  -194
  -204
  -213
  -224
  -235
  -246
  -258
  -271
  -284
Cash from investing activities, $m
  -9,087
  -199
  -205
  -216
  -228
  -240
  -253
  -266
  -281
  -295
  -310
  -326
  -343
  -361
  -379
  -398
  -419
  -441
  -463
  -486
  -511
  -536
  -563
  -593
  -621
  -653
  -686
  -720
  -757
  -795
  -834
Free cash flow, $m
  -7,227
  1,776
  1,913
  1,995
  2,080
  2,170
  2,263
  2,361
  2,464
  2,572
  2,685
  2,758
  2,883
  3,014
  3,151
  3,295
  3,447
  3,606
  3,774
  3,950
  4,136
  4,331
  4,536
  4,752
  4,979
  5,218
  5,469
  5,734
  6,012
  6,305
  6,613
Issuance/(repayment) of debt, $m
  10,800
  -392
  2,429
  2,529
  2,634
  2,745
  2,863
  2,987
  3,117
  3,255
  3,401
  3,554
  3,716
  3,886
  4,066
  4,255
  4,454
  4,664
  4,885
  5,118
  5,363
  5,621
  5,892
  6,177
  6,477
  6,793
  7,124
  7,473
  7,839
  8,224
  8,629
Issuance/(repurchase) of shares, $m
  -1,156
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  9,734
  -392
  2,429
  2,529
  2,634
  2,745
  2,863
  2,987
  3,117
  3,255
  3,401
  3,554
  3,716
  3,886
  4,066
  4,255
  4,454
  4,664
  4,885
  5,118
  5,363
  5,621
  5,892
  6,177
  6,477
  6,793
  7,124
  7,473
  7,839
  8,224
  8,629
Total cash flow (excl. dividends), $m
  2,496
  1,385
  4,341
  4,523
  4,714
  4,915
  5,126
  5,348
  5,582
  5,827
  6,086
  6,312
  6,598
  6,900
  7,217
  7,550
  7,901
  8,271
  8,660
  9,069
  9,499
  9,952
  10,428
  10,929
  11,456
  12,010
  12,593
  13,206
  13,851
  14,529
  15,243
Retained Cash Flow (-), $m
  327
  -3,044
  -270
  -281
  -293
  -305
  -318
  -332
  -346
  -362
  -378
  -395
  -413
  -432
  -452
  -473
  -495
  -518
  -543
  -569
  -596
  -625
  -655
  -686
  -720
  -755
  -792
  -830
  -871
  -914
  -959
Prev. year cash balance distribution, $m
 
  3,215
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
 
  1,556
  4,071
  4,242
  4,422
  4,610
  4,808
  5,016
  5,235
  5,466
  5,708
  5,917
  6,186
  6,468
  6,765
  7,078
  7,406
  7,753
  8,117
  8,500
  8,903
  9,327
  9,773
  10,242
  10,736
  11,255
  11,802
  12,376
  12,980
  13,616
  14,284
Discount rate, %
 
  4.30
  4.52
  4.74
  4.98
  5.23
  5.49
  5.76
  6.05
  6.35
  6.67
  7.00
  7.35
  7.72
  8.11
  8.51
  8.94
  9.39
  9.86
  10.35
  10.87
  11.41
  11.98
  12.58
  13.21
  13.87
  14.56
  15.29
  16.05
  16.86
  17.70
PV of cash for distribution, $m
 
  1,492
  3,727
  3,692
  3,641
  3,573
  3,489
  3,389
  3,272
  3,140
  2,992
  2,810
  2,640
  2,459
  2,271
  2,078
  1,882
  1,687
  1,495
  1,309
  1,131
  965
  811
  671
  547
  438
  344
  266
  201
  149
  108
Current shareholders' claim on cash, %
  100
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0

Automatic Data Processing, Inc., together with its subsidiaries, provides business process outsourcing services worldwide. The company operates through two segments, Employer Services and Professional Employer Organization (PEO) Services. The Employer Services segment offers a range of business outsourcing and technology-enabled human capital management (HCM) solutions, including payroll services, benefits administration services, talent management, human resources management solutions, time and attendance management solutions, insurance services, retirement services, and tax and compliance solutions. This segmentÂ’s integrated HCM solutions include RUN Powered by ADP, ADP Workforce Now, ADP Vantage HCM, and ADP GlobalView, which assist employers of all sizes in all stages of the employment cycle from recruitment to retirement; and ADP SmartCompliance and ADP Health Compliance. The PEO Services segment provides a human resources (HR) outsourcing solution through a co-employment model to small and mid-sized businesses. This segment offers ADP TotalSource that provides various HR management services and employee benefits functions, such as HR administration, employee benefits, and employer liability management into a single-source solution. The company was founded in 1949 and is headquartered in Roseland, New Jersey.

FINANCIAL RATIOS  of  Automatic Data Processing (ADP)

Valuation Ratios
P/E Ratio 31
Price to Sales 4
Price to Book 10.3
Price to Tangible Book
Price to Cash Flow 24.8
Price to Free Cash Flow 31.4
Growth Rates
Sales Growth Rate 6.7%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 14.9%
Cap. Spend. - 3 Yr. Gr. Rate 10.4%
Financial Strength
Quick Ratio NaN
Current Ratio 1
LT Debt to Equity 44.8%
Total Debt to Equity 44.8%
Interest Coverage 60
Management Effectiveness
Return On Assets 4%
Ret/ On Assets - 3 Yr. Avg. 4.4%
Return On Total Capital 26.4%
Ret/ On T. Cap. - 3 Yr. Avg. 22.6%
Return On Equity 32.1%
Return On Equity - 3 Yr. Avg. 27%
Asset Turnover 0.3
Profitability Ratios
Gross Margin 43.2%
Gross Margin - 3 Yr. Avg. 43.1%
EBITDA Margin 22%
EBITDA Margin - 3 Yr. Avg. 21.5%
Operating Margin 19%
Oper. Margin - 3 Yr. Avg. 18.4%
Pre-Tax Margin 19.2%
Pre-Tax Margin - 3 Yr. Avg. 18.8%
Net Profit Margin 12.8%
Net Profit Margin - 3 Yr. Avg. 13.6%
Effective Tax Rate 33.2%
Eff/ Tax Rate - 3 Yr. Avg. 33.5%
Payout Ratio 63.2%

ADP stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the ADP stock intrinsic value calculation we used $11668 million for the last fiscal year's total revenue generated by Automatic Data Processing. The default revenue input number comes from 2016 income statement of Automatic Data Processing. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our ADP stock valuation model: a) initial revenue growth rate of 6.4% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 4.3%, whose default value for ADP is calculated based on our internal credit rating of Automatic Data Processing, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Automatic Data Processing.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of ADP stock the variable cost ratio is equal to 72%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $1071 million in the base year in the intrinsic value calculation for ADP stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 3.8% for Automatic Data Processing.

Corporate tax rate of 27% is the nominal tax rate for Automatic Data Processing. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the ADP stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for ADP are equal to 10.3%.

Life of production assets of 10.2 years is the average useful life of capital assets used in Automatic Data Processing operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for ADP is equal to 3.8%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $4482 million for Automatic Data Processing - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 450.78 million for Automatic Data Processing is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Automatic Data Processing at the current share price and the inputted number of shares is $45.7 billion.


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Stock chart of ADP Financial statements of ADP Annual reports of ADP
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