ADP
Automatic Data Processing, Inc.
$270.88
Stable Earnings Power
65%
P/Adj-EPS × Normalized Multiple
Moderate
·
Conviction
Overvalued
Trading 15.1% above fair value
You pay
$270.88
Bear
$197.10
Fair
$235.42
Bull
$273.75
Bear
$197.10
-27.2%
$10.95 × 18x P/E
Fair
$235.42
-13.1%
$10.95 × 22x P/E
Bull
$273.75
+1.1%
$10.95 × 25x P/E
Adjust Assumptions
21.5x
10.95$
Key Value Driver
Normalized P/E multiple (22x base case)
Implied Market Multiple
24.7x
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (36 analysts)
$267.67
Divergence from AlphaVal
12%
Summary
Applying a 22x P/E to adjusted EPS of $10.95, the base-case value is $235.42 per share.
Key Risks
- Growth DCF inappropriate — terminal value assumptions dominate
- EV/EBITDA misleading for regulated businesses where capex is mandated
- Regulatory risk is a fat tail not visible in normal multiples