On October 30, 2025, I disclose in my Exposure Increased As ADP Valuation Improves my decision to acquire an additional 200 shares @ $269.78 in a 'Core' account in the FFJ Portfolio on October 29.
I conclude that post stating:
I plan to acquire additional shares if ADP's valuation remains attractive.
As luck would have it, ADP's share price has weakened leading to the purchase of another 100 shares @ $256.035 on November 3.
The following compares my assessment of ADP's current valuation following this share price decline versus my assessment as recently as just a few days ago.
Valuation
ADP's closing share price on November 3, 2025 is $257.17 but I acquired shares at $256.035.
The forward adjusted diluted PE levels using the current brokers’ adjusted diluted earnings estimates and my purchase price are:
- FY2026: 16 brokers – current mean $10.91 and $10.67/$11.00 low/high range; ~23.5 using the mean.
- FY2027: 16 brokers – current mean $11.94 and $11.39/$12.40 low/high range; ~21.4 using the mean.
- FY2028: 9 brokers – current mean $13.02 and $12.49/$13.60 low/high range; ~19.7 using the mean.
ADP's valuation was extremely high in early June 2025 (52 week high share price of ~$330) considering ~$280 is what I consider to be fair.
This is my assessment of ADP's valuation in my prior post.
ADP's closing share price on October 29, 2025 is $261.22 giving us a forward adjusted diluted PE of ~23.7 - ~24.2.
ADP’s forward adjusted diluted PE levels using the current brokers’ adjusted diluted earnings estimates are:
- FY2026: 16 brokers – current mean $10.93 and $10.85/$11.00 low/high range; ~24 using the mean.
- FY2027: 16 brokers – current mean $11.96 and $11.39/$12.40 low/high range; ~21.8 using the mean.
- FY2028: 9 brokers – current mean $13.02 and $12.49/$13.35 low/high range; ~20 using the mean.
The FCF/Net Earnings Ratio in Q1 2026 is likely to improve as the year progresses. On a modified basis, I envision the ratio will likely be ~90% - ~95%. If my estimate is correct, ADP's P/FCF valuation will be slightly worse than on an adjusted PE basis. Nevertheless, my valuation estimates using adjusted earnings and FCF are superior to ADP's valuation at just about every point in the last few years.
Final Thoughts
My Final Thoughts are unchanged from my October 30, 2025 post.
I wish you much success on your journey to financial freedom!
Note: Thanks for reading this article. Please send any feedback, corrections, or questions to [email protected].
Disclosure: I am long ADP.
Disclaimer: I do not know your circumstances and am not providing individualized advice or recommendations. I encourage you not to make any investment decisions without conducting your research and due diligence. You should also consult your financial advisor about your specific situation.
I wrote this article myself and it expresses my own opinions. I am not receiving compensation for it and have no business relationship with any company whose stock is mentioned in this article.
