Stock Analysis on Net

Automatic Data Processing Inc. (NASDAQ:ADP)

Return on Capital (ROC)

Microsoft Excel LibreOffice Calc

Return on Invested Capital (ROIC)

Automatic Data Processing Inc., ROIC calculation, comparison to benchmarks

Microsoft Excel LibreOffice Calc
Jun 30, 2021 Jun 30, 2020 Jun 30, 2019 Jun 30, 2018 Jun 30, 2017 Jun 30, 2016
Selected Financial Data (US$ in thousands)
Net operating profit after taxes (NOPAT)1 2,334,712  2,508,856  2,290,136  1,628,778  1,771,847  1,527,436 
Invested capital2 10,152,600  9,580,300  9,463,158  7,289,794  7,519,836  7,921,908 
Performance Ratio
ROIC3 23.00% 26.19% 24.20% 22.34% 23.56% 19.28%
Benchmarks
ROIC, Competitors4
Accenture PLC 25.83% 26.30% 24.83% 25.00% 21.84% 34.18%
Adobe Inc. 29.44% 21.67% 19.74% 17.25% 22.06% 21.03%
Autodesk Inc. 14.55% 21.62% 0.93% -11.17% -9.45% 8.45%
Fidelity National Information Services Inc. 0.43% 0.77% 4.00% 2.68% 3.11%
Fiserv Inc. 2.87% 2.50% 13.35% 12.78% 12.27%
International Business Machines Corp. 3.50% 7.84% 8.46% 5.77% 10.53%
Intuit Inc. 17.64% 20.65% 34.71% 32.34% 36.84% 34.96%
Mastercard Inc. 34.94% 56.26% 51.15% 42.02% 40.06%
Microsoft Corp. 47.33% 44.49% 39.13% 20.13% 34.61% 52.25%
Oracle Corp. 17.55% 11.53% 15.18% 5.88% 13.04% 15.80%
PayPal Holdings Inc. 14.96% 9.66% 10.31% 2.59% 8.64%
salesforce.com inc. 8.25% 5.13% 9.04% 9.45% 7.67% 8.95%
ServiceNow Inc. 20.51% 19.88% 15.78% 15.89% -10.81%
Visa Inc. 21.41% 18.58% 24.39% 19.20% 17.04% 11.54%

Based on: 10-K (reporting date: 2021-06-30), 10-K (reporting date: 2020-06-30), 10-K (reporting date: 2019-06-30), 10-K (reporting date: 2018-06-30), 10-K (reporting date: 2017-06-30), 10-K (reporting date: 2016-06-30).

1 NOPAT. See details »

2 Invested capital. See details »

3 2021 Calculation
ROIC = 100 × NOPAT ÷ Invested capital
= 100 × 2,334,712 ÷ 10,152,600 = 23.00%

4 Click competitor name to see calculations.

Performance ratio Description The company
ROIC A measure of the periodic, after tax, cash-on-cash yield earned in the business. Automatic Data Processing Inc. ROIC improved from 2019 to 2020 but then deteriorated significantly from 2020 to 2021.

Decomposition of ROIC

Automatic Data Processing Inc., decomposition of ROIC

Microsoft Excel LibreOffice Calc
ROIC = OPM1 × TO2 × 1 – CTR3
Jun 30, 2021 23.00% = 22.37% × 1.48 × 69.63%
Jun 30, 2020 26.19% = 22.01% × 1.52 × 78.33%
Jun 30, 2019 24.20% = 21.27% × 1.49 × 76.24%
Jun 30, 2018 22.34% = 16.45% × 1.83 × 74.42%
Jun 30, 2017 23.56% = 20.71% × 1.65 × 69.05%
Jun 30, 2016 19.28% = 19.44% × 1.48 × 67.22%

Based on: 10-K (reporting date: 2021-06-30), 10-K (reporting date: 2020-06-30), 10-K (reporting date: 2019-06-30), 10-K (reporting date: 2018-06-30), 10-K (reporting date: 2017-06-30), 10-K (reporting date: 2016-06-30).

1 Operating profit margin (OPM). See calculations »

2 Turnover of capital (TO). See calculations »

3 Effective cash tax rate (CTR). See calculations »

The primary reason for the decrease in return on invested capital (ROIC) over 2021 year is the increase in effective cash tax rate (CTR).


Operating Profit Margin (OPM)

Automatic Data Processing Inc., OPM calculation, comparison to benchmarks

Microsoft Excel LibreOffice Calc
Jun 30, 2021 Jun 30, 2020 Jun 30, 2019 Jun 30, 2018 Jun 30, 2017 Jun 30, 2016
Selected Financial Data (US$ in thousands)
Net operating profit after taxes (NOPAT)1 2,334,712  2,508,856  2,290,136  1,628,778  1,771,847  1,527,436 
Add: Cash operating taxes2 1,018,322  694,262  713,664  559,875  794,364  744,765 
Net operating profit before taxes (NOPBT) 3,353,034  3,203,118  3,003,800  2,188,653  2,566,210  2,272,201 
 
Revenues 15,005,400  14,589,800  14,175,200  13,325,800  12,379,800  11,667,800 
Add: Increase (decrease) in deferred revenues (16,800) (36,900) (53,800) (20,000) 10,000  23,000 
Adjusted revenues 14,988,600  14,552,900  14,121,400  13,305,800  12,389,800  11,690,800 
Profitability Ratio
OPM3 22.37% 22.01% 21.27% 16.45% 20.71% 19.44%
Benchmarks
OPM, Competitors4
Accenture PLC 16.65% 16.59% 14.89% 14.07% 12.99% 16.91%
Adobe Inc. 40.89% 34.42% 31.93% 35.32% 33.91% 31.32%
Autodesk Inc. 23.23% 30.50% 3.88% -13.37% -9.48% 13.40%
Fidelity National Information Services Inc. 5.60% 8.35% 15.31% 15.46% 14.87%
Fiserv Inc. 13.42% 17.56% 28.43% 28.56% 29.21%
International Business Machines Corp. 9.78% 16.43% 14.56% 16.13% 16.19%
Intuit Inc. 28.02% 29.42% 28.33% 25.71% 28.07% 29.36%
Mastercard Inc. 53.66% 58.58% 48.97% 53.01% 52.93%
Microsoft Corp. 43.49% 38.29% 36.61% 35.11% 31.99% 30.09%
Oracle Corp. 40.03% 34.29% 34.21% 35.42% 34.66% 35.32%
PayPal Holdings Inc. 24.50% 16.58% 14.93% 16.31% 14.53%
salesforce.com inc. 20.31% 15.74% 19.31% 16.41% 15.28% 15.60%
ServiceNow Inc. 17.81% 14.97% 14.28% 13.97% -7.00%
Visa Inc. 65.79% 64.63% 65.53% 62.93% 66.29% 55.52%

Based on: 10-K (reporting date: 2021-06-30), 10-K (reporting date: 2020-06-30), 10-K (reporting date: 2019-06-30), 10-K (reporting date: 2018-06-30), 10-K (reporting date: 2017-06-30), 10-K (reporting date: 2016-06-30).

1 NOPAT. See details »

2 Cash operating taxes. See details »

3 2021 Calculation
OPM = 100 × NOPBT ÷ Adjusted revenues
= 100 × 3,353,034 ÷ 14,988,600 = 22.37%

4 Click competitor name to see calculations.

Profitability ratio Description The company
OPM The operating profit margin (OPM) is the ratio of pretax economic earnings, or NOPBT, to sales. Automatic Data Processing Inc. OPM improved from 2019 to 2020 and from 2020 to 2021.

Turnover of Capital (TO)

Automatic Data Processing Inc., TO calculation, comparison to benchmarks

Microsoft Excel LibreOffice Calc
Jun 30, 2021 Jun 30, 2020 Jun 30, 2019 Jun 30, 2018 Jun 30, 2017 Jun 30, 2016
Selected Financial Data (US$ in thousands)
Revenues 15,005,400  14,589,800  14,175,200  13,325,800  12,379,800  11,667,800 
Add: Increase (decrease) in deferred revenues (16,800) (36,900) (53,800) (20,000) 10,000  23,000 
Adjusted revenues 14,988,600  14,552,900  14,121,400  13,305,800  12,389,800  11,690,800 
 
Invested capital1 10,152,600  9,580,300  9,463,158  7,289,794  7,519,836  7,921,908 
Efficiency Ratio
TO2 1.48 1.52 1.49 1.83 1.65 1.48
Benchmarks
TO, Competitors3
Accenture PLC 1.95 1.97 2.16 2.38 2.33 2.52
Adobe Inc. 0.80 0.70 0.67 0.61 0.77 0.77
Autodesk Inc. 0.72 0.76 0.61 0.69 0.67 0.79
Fidelity National Information Services Inc. 0.17 0.14 0.38 0.40 0.39
Fiserv Inc. 0.25 0.17 0.57 0.63 0.63
International Business Machines Corp. 0.58 0.59 0.71 0.73 0.75
Intuit Inc. 0.79 0.89 1.50 1.50 1.80 1.77
Mastercard Inc. 0.78 1.15 1.34 1.29 1.06
Microsoft Corp. 1.25 1.38 1.38 1.44 1.27 1.91
Oracle Corp. 0.51 0.44 0.55 0.55 0.49 0.58
PayPal Holdings Inc. 0.71 0.80 0.87 0.75 0.66
salesforce.com inc. 0.44 0.41 0.51 0.62 0.56 0.67
ServiceNow Inc. 1.22 1.36 1.18 1.24 1.33
Visa Inc. 0.40 0.36 0.45 0.43 0.36 0.32

Based on: 10-K (reporting date: 2021-06-30), 10-K (reporting date: 2020-06-30), 10-K (reporting date: 2019-06-30), 10-K (reporting date: 2018-06-30), 10-K (reporting date: 2017-06-30), 10-K (reporting date: 2016-06-30).

1 Invested capital. See details »

2 2021 Calculation
TO = Adjusted revenues ÷ Invested capital
= 14,988,600 ÷ 10,152,600 = 1.48

3 Click competitor name to see calculations.

Efficiency ratio Description The company
TO The turnover of capital (TO) is the ratio of sales to invested capital. Capital turnover is a function of the efficiency of working capital management and of net fixed assets. Automatic Data Processing Inc. TO improved from 2019 to 2020 but then deteriorated significantly from 2020 to 2021.

Effective Cash Tax Rate (CTR)

Automatic Data Processing Inc., CTR calculation, comparison to benchmarks

Microsoft Excel LibreOffice Calc
Jun 30, 2021 Jun 30, 2020 Jun 30, 2019 Jun 30, 2018 Jun 30, 2017 Jun 30, 2016
Selected Financial Data (US$ in thousands)
Net operating profit after taxes (NOPAT)1 2,334,712  2,508,856  2,290,136  1,628,778  1,771,847  1,527,436 
Add: Cash operating taxes2 1,018,322  694,262  713,664  559,875  794,364  744,765 
Net operating profit before taxes (NOPBT) 3,353,034  3,203,118  3,003,800  2,188,653  2,566,210  2,272,201 
Tax Rate
CTR3 30.37% 21.67% 23.76% 25.58% 30.95% 32.78%
Benchmarks
CTR, Competitors4
Accenture PLC 20.47% 19.34% 22.96% 25.38% 27.85% 19.91%
Adobe Inc. 10.28% 9.63% 7.06% 19.97% 15.15% 12.85%
Autodesk Inc. 13.48% 6.38% 60.79% 20.47%
Fidelity National Information Services Inc. 53.97% 33.45% 30.46% 57.05% 45.70%
Fiserv Inc. 13.84% 14.01% 17.87% 28.58% 33.04%
International Business Machines Corp. 37.71% 18.55% 18.30% 51.29% 13.24%
Intuit Inc. 20.15% 20.99% 18.37% 16.40% 27.07% 32.70%
Mastercard Inc. 16.35% 16.67% 21.83% 38.60% 28.53%
Microsoft Corp. 13.05% 15.80% 22.65% 60.11% 14.62% 9.05%
Oracle Corp. 13.28% 23.42% 19.20% 70.01% 22.82% 22.47%
PayPal Holdings Inc. 13.86% 27.01% 20.58% 78.73% 10.06%
salesforce.com inc. 6.84% 19.81% 7.75% 7.69% 9.84% 13.86%
ServiceNow Inc. 5.88% 2.51% 6.49% 8.20%
Visa Inc. 17.90% 19.02% 17.44% 29.55% 28.46% 34.94%

Based on: 10-K (reporting date: 2021-06-30), 10-K (reporting date: 2020-06-30), 10-K (reporting date: 2019-06-30), 10-K (reporting date: 2018-06-30), 10-K (reporting date: 2017-06-30), 10-K (reporting date: 2016-06-30).

1 NOPAT. See details »

2 Cash operating taxes. See details »

3 2021 Calculation
CTR = 100 × Cash operating taxes ÷ NOPBT
= 100 × 1,018,322 ÷ 3,353,034 = 30.37%

4 Click competitor name to see calculations.

Tax rate Description The company
CTR Effective cash tax rate on operating income. Automatic Data Processing Inc. CTR decreased from 2019 to 2020 but then increased from 2020 to 2021 exceeding 2019 level.