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Automatic Data Processing Inc. (ADP)


Enterprise Value to EBITDA (EV/EBITDA)

Difficulty: Intermediate


Earnings before Interest, Tax, Depreciation and Amortization (EBITDA)

Automatic Data Processing Inc., EBITDA calculation

US$ in thousands

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12 months ended Jun 30, 2019 Jun 30, 2018 Jun 30, 2017 Jun 30, 2016 Jun 30, 2015 Jun 30, 2014
Net earnings 2,292,800  1,620,800  1,733,400  1,492,500  1,452,500  1,515,900 
Less: Net earnings (loss) from discontinued operations —  —  —  (900) 76,000  13,300 
Add: Income tax expense 712,800  550,300  797,700  741,300  694,200  772,000 
Earnings before tax (EBT) 3,005,600  2,171,100  2,531,100  2,234,700  2,070,700  2,274,600 
Add: Interest expense 129,900  102,700  80,000  56,200  6,500  6,100 
Earnings before interest and tax (EBIT) 3,135,500  2,273,800  2,611,100  2,290,900  2,077,200  2,280,700 
Add: Depreciation and amortization 409,000  377,600  316,100  288,600  277,900  336,200 
Earnings before interest, tax, depreciation and amortization (EBITDA) 3,544,500  2,651,400  2,927,200  2,579,500  2,355,100  2,616,900 

Based on: 10-K (filing date: 2019-08-09), 10-K (filing date: 2018-08-03), 10-K (filing date: 2017-08-04), 10-K (filing date: 2016-08-05), 10-K (filing date: 2015-08-07), 10-K (filing date: 2014-08-08).

Item Description The company
EBITDA To calculate EBITDA analysts start with net earnings. To that earnings number, interest, taxes, depreciation, and amortization are added. EBITDA as a pre-interest number is a flow to all providers of capital. Automatic Data Processing Inc.’s EBITDA declined from 2017 to 2018 but then increased from 2018 to 2019 exceeding 2017 level.

Enterprise Value to EBITDA Ratio, Current

Automatic Data Processing Inc., current EV/EBITDA calculation, comparison to benchmarks

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Selected Financial Data (US$ in thousands)
Enterprise value (EV) 69,442,094 
Earnings before interest, tax, depreciation and amortization (EBITDA) 3,544,500 
Ratio
EV/EBITDA 19.59
Benchmarks
EV/EBITDA, Competitors1
Accenture PLC 17.54
EV/EBITDA, Sector
Support Services 19.93
EV/EBITDA, Industry
Industrials 15.58

Based on: 10-K (filing date: 2019-08-09).

1 Click competitor name to see calculations.

If company EV/EBITDA is lower then the EV/EBITDA of benchmark then company is relatively undervalued.

Otherwise, if company EV/EBITDA is higher then the EV/EBITDA of benchmark then company is relatively overvalued.


Enterprise Value to EBITDA Ratio, Historical

Automatic Data Processing Inc., historical EV/EBITDA calculation, comparison to benchmarks

Microsoft Excel LibreOffice Calc
Jun 30, 2019 Jun 30, 2018 Jun 30, 2017 Jun 30, 2016 Jun 30, 2015 Jun 30, 2014
Selected Financial Data (US$ in thousands)
Enterprise value (EV)1 73,100,232  58,645,010  48,720,904  39,721,987  35,769,795  39,212,490 
Earnings before interest, tax, depreciation and amortization (EBITDA)2 3,544,500  2,651,400  2,927,200  2,579,500  2,355,100  2,616,900 
Ratio
EV/EBITDA3 20.62 22.12 16.64 15.40 15.19 14.98
Benchmarks
EV/EBITDA, Competitors4
Accenture PLC 13.79 15.98 11.03 12.95 9.52
EV/EBITDA, Sector
Support Services 16.14 16.21 12.29 13.66 11.42
EV/EBITDA, Industry
Industrials 15.02 15.26 13.29 11.89 11.61

Based on: 10-K (filing date: 2019-08-09), 10-K (filing date: 2018-08-03), 10-K (filing date: 2017-08-04), 10-K (filing date: 2016-08-05), 10-K (filing date: 2015-08-07), 10-K (filing date: 2014-08-08).

1 See Details »

2 See Details »

3 2019 Calculation
EV/EBITDA = EV ÷ EBITDA
= 73,100,232 ÷ 3,544,500 = 20.62

4 Click competitor name to see calculations.

Ratio Description The company
EV/EBITDA EV/EBITDA is a valuation indicator for the overall company rather than common stock. Automatic Data Processing Inc.’s EV/EBITDA ratio increased from 2017 to 2018 but then slightly declined from 2018 to 2019.