Stock Analysis on Net
Stock Analysis on Net
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Automatic Data Processing Inc. (NASDAQ:ADP)

Enterprise Value to EBITDA (EV/EBITDA)

Intermediate level


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, 2020 Jun 30, 2019 Jun 30, 2018 Jun 30, 2017 Jun 30, 2016 Jun 30, 2015
Net earnings 2,466,500  2,292,800  1,620,800  1,733,400  1,492,500  1,452,500 
Less: Net earnings (loss) from discontinued operations —  —  —  —  (900) 76,000 
Add: Income tax expense 716,100  712,800  550,300  797,700  741,300  694,200 
Earnings before tax (EBT) 3,182,600  3,005,600  2,171,100  2,531,100  2,234,700  2,070,700 
Add: Interest expense 107,100  129,900  102,700  80,000  56,200  6,500 
Earnings before interest and tax (EBIT) 3,289,700  3,135,500  2,273,800  2,611,100  2,290,900  2,077,200 
Add: Depreciation and amortization 480,000  409,000  377,600  316,100  288,600  277,900 
Earnings before interest, tax, depreciation and amortization (EBITDA) 3,769,700  3,544,500  2,651,400  2,927,200  2,579,500  2,355,100 

Based on: 10-K (filing date: 2020-08-05), 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).

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 increased from 2018 to 2019 and from 2019 to 2020.

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) 57,957,246 
Earnings before interest, tax, depreciation and amortization (EBITDA) 3,769,700 
Valuation Ratio
EV/EBITDA 15.37
Benchmarks
EV/EBITDA, Competitors1
Accenture PLC 18.27
EV/EBITDA, Sector
Support Services 17.66
EV/EBITDA, Industry
Industrials 13.88

Based on: 10-K (filing date: 2020-08-05).

1 Click competitor name to see calculations.

If the company EV/EBITDA is lower then the EV/EBITDA of benchmark then company is relatively undervalued.
Otherwise, if the 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, 2020 Jun 30, 2019 Jun 30, 2018 Jun 30, 2017 Jun 30, 2016 Jun 30, 2015
Selected Financial Data (US$ in thousands)
Enterprise value (EV)1 58,056,138  73,089,732  58,645,010  48,720,904  39,721,987  35,769,795 
Earnings before interest, tax, depreciation and amortization (EBITDA)2 3,769,700  3,544,500  2,651,400  2,927,200  2,579,500  2,355,100 
Valuation Ratio
EV/EBITDA3 15.40 20.62 22.12 16.64 15.40 15.19
Benchmarks
EV/EBITDA, Competitors4
Accenture PLC 15.60 13.79 15.98 11.03 12.95
EV/EBITDA, Sector
Support Services 17.26 16.14 16.21 12.29 13.66
EV/EBITDA, Industry
Industrials 15.05 14.96 15.10 13.13 11.85

Based on: 10-K (filing date: 2020-08-05), 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).

1 See details »

2 See details »

3 2020 Calculation
EV/EBITDA = EV ÷ EBITDA
= 58,056,138 ÷ 3,769,700 = 15.40

4 Click competitor name to see calculations.

Valuation ratio Description The company
EV/EBITDA Enterprise value to earnings before interest, tax, depreciation and amortization is a valuation indicator for the overall company rather than common stock. Automatic Data Processing Inc.’s EV/EBITDA ratio decreased from 2018 to 2019 and from 2019 to 2020.