Once a Market Darling, This Software-as-a-Service Stock Has Been Crushed. Time to Buy?

• ADP shares are down astir 23% from their 52-week high, adjacent arsenic the concern continues to station coagulated growth.

• Revenue roseate 7% twelvemonth implicit twelvemonth successful the archetypal 4th of fiscal 2026, and absorption reiterated its full-year outlook.

• Softening measurement connected 1 of the cardinal metrics investors ticker intimately astatine ADP has investors reevaluating the stock's premium valuation.

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Investors emotion to telephone Automatic Data Processing (NASDAQ: ADP) a "boring" company. But the marketplace has seldom priced it similar one. The payroll and quality resources bundle supplier has often traded astatine a premium due to the fact that the concern is sticky, recurring, and tied to 1 of the astir indispensable workflows successful firm America: getting radical paid.

Looking to ADP's caller concern results, let's commencement with what didn't change: dependable growth.

In the archetypal 4th of fiscal 2026 (ended Sept. 30, 2025), ADP's gross roseate 7% twelvemonth implicit twelvemonth to $5.2 billion. And its net per stock climbed 6% to $2.49, portion its non- mostly accepted accounting principles (GAAP) net per stock roseate 7% twelvemonth implicit year.

At a precocious level, ADP's dependable compounding continued.

Underneath the service, however, there's a occupation brewing. ADP's halfway measurement trend, oregon its "pays per control," is cooling. This metric is fundamentally ADP's same-store sales-style measurement of however galore employees are connected ADP clients' payrolls successful the U.S.

In the archetypal 4th of fiscal 2026, ADP's U.S. pays per power was astir level twelvemonth implicit year. That's a deceleration from the 1% maturation ADP reported successful some the 3rd and 4th quarters of fiscal 2025.

While this isn't a monolithic alteration successful trend, it's inactive concerning due to the fact that it represents a deterioration successful a cardinal metric. If it stays flat, oregon adjacent worse, turns negative, investors whitethorn statesman calling into question the durability of the company's dependable maturation -- and the stocks' premium valuation.

For now, level remains the expectation. For fiscal 2026, ADP guided for U.S. pays per power to beryllium "approximately" flat. In addition, its outlook calls for a flimsy deceleration successful top-line growth. The institution guided for fiscal 2026 gross to emergence 5% to 6% implicit fiscal 2024.