This article originally appeared on The DIV-Net March 2, 2009.
Linked here is a detailed quantitative analysis of Automatic Data Processing Inc. (ADP). Below are some highlights from the above linked analysis:
Company Description: Automatic Data Processing Inc. is one of the world’s largest independent computing services companies, provides a broad range of data processing services.
Fair Value: I consider four calculations of fair value, see page 2 of the linked PDF for a detailed description:
- Avg. High Yield Price
- 20-Year DCF Price
- Avg. P/E Price
- Graham Number
ADP is trading at a discount to 1.) and 3.) above. If I exclude the high and low valuations and average the remaining two, ADP is trading at a 16.0% discount. ADP earned a Star in this section since it is trading at a fair value.
Dividend Analytical Data: In this section I consider five factors, see page 2 of the linked PDF for a detailed description:
- Rolling 4-yr Div. > 15%
- Dividend Growth Rate
- Years of Div. Growth
- 1-Yr. > 5-Yr Growth
- Payout 15% of avg.
ADP earned two Stars in this section for 2.) and 3.) above. With a 15.3% Dividend Growth Rate, ADP will more than double its dividend every 5 years. ADP has paid a cash dividend to shareholders every year since 1974 and has increased its dividend payments for 34 consecutive years.
