Name: Automatic Data Processing Inc. (NASDAQ:ADP) | Enterprise Value (EV)
Creator: Stock Analysis on Net

Current EV
Historical EV

Automatic Data Processing Inc., current enterprise value calculation

Current share price (P)	$218.18
No. shares of common stock outstanding	417,747,152
US$ in thousands
Common equity (market value)¹	91,144,074)
Add: Preferred stock, $1.00 par value; issued, none (per books)	—)
Total equity	91,144,074)
Add: Obligations under reverse repurchase agreements (per books)	23,500)
Add: Short-term debt (per books)	—)
Add: Long-term debt (per books)	2,985,000)
Total equity and debt	94,152,574)
Less: Cash and cash equivalents	2,575,200)
Less: Funds held for clients	34,905,800)
Enterprise value (EV)	56,671,574)

Based on: 10-K (reporting date: 2021-06-30).

¹ Common equity (market value) = Share price × No. shares of common stock outstanding
= 218.18 × 417,747,152

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Automatic Data Processing Inc., EV calculation

	Jun 30, 2021	Jun 30, 2020	Jun 30, 2019	Jun 30, 2018	Jun 30, 2017	Jun 30, 2016
Share price^1, 2	$212.00	$134.77	$167.73	$134.25	$111.39	$89.67
No. shares of common stock outstanding¹	423,080,556	429,965,405	433,942,837	438,082,756	444,374,752	456,176,951
US$ in thousands
Common equity (market value)³	89,693,078)	57,946,438)	72,785,232)	58,812,610)	49,498,904)	40,905,387)
Add: Preferred stock, $1.00 par value; issued, none (book value)	—)	—)	—)	—)	—)	—)
Total equity	89,693,078)	57,946,438)	72,785,232)	58,812,610)	49,498,904)	40,905,387)
Add: Obligations under reverse repurchase agreements (book value)	23,500)	13,600)	262,000)	—)	—)	—)
Add: Short-term debt (book value)	—)	1,001,800)	—)	—)	—)	—)
Add: Long-term debt (book value)	2,985,000)	1,002,800)	2,002,200)	2,002,400)	2,002,400)	2,007,700)
Total equity and debt	92,701,578)	59,964,638)	75,049,432)	60,815,010)	51,501,304)	42,913,087)
Less: Cash and cash equivalents	2,575,200)	1,908,500)	1,949,200)	2,170,000)	2,780,400)	3,191,100)
Less: Funds held for clients	34,905,800)	26,708,100)	29,434,200)	27,137,800)	27,291,500)	33,841,200)
Enterprise value (EV)	55,220,578)	31,348,038)	43,666,032)	31,507,210)	21,429,404)	5,880,787)

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 Data adjusted for splits and stock dividends.

² Closing price as at the filing date of Automatic Data Processing Inc. Annual Report.

³ 2021 Calculation
Common equity (market value) = Share price × No. shares of common stock outstanding
= 212.00 × 423,080,556

An analysis of the financial position from June 30, 2016, to June 30, 2021, reveals a general upward trajectory in valuation, characterized by steady growth through 2019, a notable contraction in 2020, and a strong recovery by 2021.

Equity Valuation Trends: Common equity market value experienced consistent growth over the first four years, rising from 40,905,387 thousand USD in 2016 to a peak of 72,785,232 thousand USD in 2019. A significant decline occurred in 2020, where value dropped to 57,946,438 thousand USD, before surging to its highest point of 89,693,078 thousand USD in 2021.
Enterprise Value (EV) Evolution: Enterprise value exhibited more aggressive volatility than equity market value. Starting at 5,880,787 thousand USD in 2016, the EV grew rapidly to 43,666,032 thousand USD by 2019. Similar to the equity trend, a contraction was observed in 2020, with the value falling to 31,348,038 thousand USD, followed by a recovery to 55,220,578 thousand USD in 2021.
Equity and Debt Relationship: Total equity and debt remained closely aligned with the market value of common equity throughout the period. The marginal difference between total equity and total equity and debt suggests a relatively low level of debt relative to the overall capitalization of the entity.
Analysis of Enterprise Value relative to Market Capitalization: A consistent pattern is observed where the Enterprise Value remains significantly lower than the market value of common equity. This divergence indicates the presence of substantial cash and cash equivalents on the balance sheet, which offsets the market capitalization and debt to lower the effective theoretical takeover price of the organization.

The synchronization of the dips in 2020 and the subsequent peaks in 2021 across all measured metrics suggests that the organization's valuation is highly sensitive to the same external market drivers, with the recovery in 2021 representing a significant expansion in both market capitalization and enterprise value.

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Automatic Data Processing Inc. (NASDAQ:ADP)

Enterprise Value (EV)

Current Enterprise Value (EV)

Historical Enterprise Value (EV)