ADP Profit Margins
Gross, Operating & Net Margin Analysis for Automatic Data Processing Inc
Margin Quality
Unknown
Current Profit Margins
Gross Margin
46.0%
$9.46B gross profit
Operating Margin
0.0%
$0.00 operating income
Net Profit Margin
19.8%
$4.08B net income
5-Year Margin Trends
What Margins Indicate About ADP
Business Quality
Moderate gross margins indicate Automatic Data Processing Inc operates in a competitive market with balanced pricing dynamics.
Operational Efficiency
Stable operating margins suggest consistent execution and predictable business operations.
Profitability
Net margins above 15% demonstrate excellent profitability and suggest strong competitive positioning.
Investment Implications
Mixed margin trends require deeper analysis to understand underlying business dynamics and sustainability.
Understanding Profit Margins
Gross Margin
(Revenue - Cost of Goods Sold) / Revenue. Measures pricing power and production efficiency before operating expenses.
Operating Margin
Operating Income / Revenue. Shows profitability from core operations after all operating expenses but before interest and taxes.
Net Profit Margin
Net Income / Revenue. The bottom line - shows how much profit the company keeps from each dollar of revenue after all expenses.
Analyze ADP Profitability
Get complete financial analysis with profitability trends, ROE, ROIC, and more
Frequently Asked Questions
What is ADP's profit margin?
ADP (Automatic Data Processing Inc) has a net profit margin of 19.8%, meaning the company keeps $0.19842030261321245 in profit for every dollar of revenue. This represents a change from the previous year's net margin of 19.8%.
What is ADP's gross margin?
ADP's gross margin is 46.0%. Gross margin measures the percentage of revenue remaining after subtracting the cost of goods sold. A moderate gross margin like this reflects the competitive dynamics of the Industrials.
What is ADP's operating margin?
ADP has an operating margin of 0.0%. Operating margin shows profitability after operating expenses but before interest and taxes. This metric helps investors understand how efficiently Automatic Data Processing Inc manages its operations.
Are ADP's profit margins good?
ADP's margins are considered unknown. When evaluating margins, it's important to compare against Professional Services peers, as different sectors have structurally different margin profiles.
How do profit margins affect ADP stock?
Profit margins are a key indicator of ADP's business quality and competitive position. High margins suggest strong competitive advantages and pricing power, which typically support premium valuations. Expanding margins often lead to stock price appreciation, while contracting margins can signal competitive pressures.
What drives ADP's profit margins?
ADP's profit margins are influenced by several factors: pricing power vs competitors, operational efficiency, scale advantages, input costs (materials, labor), Professional Services-specific dynamics, and management execution. The significant expansion in gross margin suggests changes in these underlying drivers.
Disclaimer: Margin analysis is based on reported financial statements and should be compared to industry peers for context. Different sectors have structurally different margin profiles. This information is for educational purposes only and should not be considered financial advice.