Stock Analysis on Net
Stock Analysis on Net
Microsoft Excel LibreOffice Calc

Automatic Data Processing Inc. (NASDAQ:ADP)

Enterprise Value to FCFF (EV/FCFF)

Intermediate level

Free Cash Flow to The Firm (FCFF)

Automatic Data Processing Inc., FCFF 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 
Net noncash charges 1,679,700  1,601,300  986,900  490,800  496,300  602,100 
Changes in operating assets and liabilities, net of effects from acquisitions and divestitures of businesses (1,120,000) (1,205,800) (92,500) (98,300) (128,900) (149,000)
Net cash flows provided by operating activities 3,026,200  2,688,300  2,515,200  2,125,900  1,859,900  1,905,600 
Cash paid for interest, net of tax1 81,220  97,283  75,074  53,499  25,050  3,791 
Capital expenditures (172,700) (162,000) (206,100) (240,200) (168,500) (158,800)
Additions to intangibles (443,700) (404,500) (264,700) (230,400) (217,500) (176,700)
Free cash flow to the firm (FCFF) 2,491,020  2,219,083  2,119,474  1,708,799  1,498,950  1,573,891 

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).

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Item Description The company
FCFF Free cash flow to the firm is the cash flow available to the Automatic Data Processing Inc.’s suppliers of capital after all operating expenses have been paid and necessary investments in working and fixed capital have been made. Automatic Data Processing Inc.’s FCFF increased from 2018 to 2019 and from 2019 to 2020.

Interest Paid, Net of Tax

Automatic Data Processing Inc., interest paid, net of tax calculation

US$ in thousands

Microsoft Excel LibreOffice Calc
12 months ended: Jun 30, 2020 Jun 30, 2019 Jun 30, 2018 Jun 30, 2017 Jun 30, 2016 Jun 30, 2015
Effective Income Tax Rate (EITR)
EITR1 22.50% 23.70% 25.30% 31.50% 33.20% 33.50%
Interest Paid, Net of Tax
Cash paid for interest, before tax 104,800  127,500  100,500  78,100  37,500  5,700 
Less: Cash paid for interest, tax2 23,580  30,218  25,427  24,602  12,450  1,910 
Cash paid for interest, net of tax 81,220  97,283  75,074  53,499  25,050  3,791 

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).

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2 2020 Calculation
Cash paid for interest, tax = Cash paid for interest × EITR
= 104,800 × 22.50% = 23,580

Enterprise Value to FCFF Ratio, Current

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

Microsoft Excel LibreOffice Calc
Selected Financial Data (US$ in thousands)
Enterprise value (EV) 81,178,696 
Free cash flow to the firm (FCFF) 2,491,020 
Valuation Ratio
EV/FCFF 32.59
Benchmarks
EV/FCFF, Competitors1
Accenture PLC 22.92
Waste Management Inc. 32.70
EV/FCFF, Sector
Support Services 26.61
EV/FCFF, Industry
Industrials 39.57

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

1 Click competitor name to see calculations.

If the company EV/FCFF is lower then the EV/FCFF of benchmark then company is relatively undervalued.
Otherwise, if the company EV/FCFF is higher then the EV/FCFF of benchmark then company is relatively overvalued.

Enterprise Value to FCFF Ratio, Historical

Automatic Data Processing Inc., historical EV/FCFF 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 
Free cash flow to the firm (FCFF)2 2,491,020  2,219,083  2,119,474  1,708,799  1,498,950  1,573,891 
Valuation Ratio
EV/FCFF3 23.31 32.94 27.67 28.51 26.50 22.73
Benchmarks
EV/FCFF, Competitors4
Accenture PLC 17.90 18.49 17.18 19.43 17.12 17.71
Waste Management Inc. 27.95 26.26 23.99 23.83 21.71 —
EV/FCFF, Sector
Support Services 20.77 23.25 21.03 22.22 20.07 —
EV/FCFF, Industry
Industrials 34.50 25.25 23.44 25.45 24.09 —

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).

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2 See details »

3 2020 Calculation
EV/FCFF = EV ÷ FCFF
= 58,056,138 ÷ 2,491,020 = 23.31

4 Click competitor name to see calculations.

Valuation ratio Description The company
EV/FCFF Enterprise value to free cash flow to the firm is whole company valuation indicator. Automatic Data Processing Inc.’s EV/FCFF ratio increased from 2018 to 2019 but then decreased significantly from 2019 to 2020.