ADP vs PAYC

For growth investors, Paycom Software, Inc.

(PAYC) is the stronger pick with 8. 9% revenue growth year-over-year, versus 7. 1% for Automatic Data Processing, Inc. (ADP). Paycom Software, Inc. (PAYC) offers the better valuation at 15. 6x trailing P/E (12. 0x forward), making it the more compelling value choice. Analysts rate Automatic Data Processing, Inc. (ADP) a "Hold" — based on 36 analyst ratings — the highest consensus in this comparison. The "better buy" depends entirely on your goals: growth investors should weight revenue trajectory, value investors should weight P/E and PEG, and income investors should weight dividend yield and streak.

On trailing P/E, Paycom Software, Inc.

(PAYC) is the cheapest at 15. 6x versus Automatic Data Processing, Inc. at 20. 8x. On forward P/E, Paycom Software, Inc. is actually cheaper at 12. 0x. The PEG ratio (P/E divided by earnings growth rate) is the most growth-adjusted single valuation metric: Paycom Software, Inc. wins at 0. 51x versus Automatic Data Processing, Inc. 's 1. 58x — a PEG below 1. 0 traditionally signals the market is underpricing earnings growth.

Over the past 5 years, Automatic Data Processing, Inc.

(ADP) delivered a total return of +19. 5%, compared to -59. 9% for Paycom Software, Inc. (PAYC). Over 10 years, the gap is even starker: PAYC returned +250. 2% versus ADP's +185. 6%. Past returns do not guarantee future results, and the stock with the higher historical return may already have its best growth priced in.

By beta (market sensitivity over 5 years), Automatic Data Processing, Inc.

(ADP) is the lower-risk stock at 0. 37β versus Paycom Software, Inc. 's 0. 59β — meaning PAYC is approximately 56% more volatile than ADP relative to the S&P 500. On balance sheet safety, Paycom Software, Inc. (PAYC) carries a lower debt/equity ratio of 9% versus 146% for Automatic Data Processing, Inc. — giving it more financial flexibility in a downturn.

By revenue growth (latest reported year), Paycom Software, Inc.

(PAYC) is pulling ahead at 8. 9% versus 7. 1% for Automatic Data Processing, Inc. (ADP). On earnings-per-share growth, the picture is similar: Automatic Data Processing, Inc. grew EPS 9. 7% year-over-year, compared to -9. 4% for Paycom Software, Inc.. Over a 3-year CAGR, PAYC leads at 14. 3% annualised revenue growth. Higher growth typically commands a higher valuation multiple — check whether the premium P/E or P/S is justified by the growth rate using the PEG ratio.

Paycom Software, Inc.

(PAYC) is the more profitable company, earning 22. 1% net margin versus 19. 8% for Automatic Data Processing, Inc. — meaning it keeps 22. 1% of every revenue dollar as bottom-line profit. Operating margin tells a similar story: PAYC leads at 27. 6% versus 26. 3% for ADP. At the gross margin level — before operating expenses — PAYC leads at 78. 6%, reflecting greater pricing power or product mix advantage. Stronger margins indicate durable pricing power, lower cost of revenue, or higher mix of software/services. They are one of the clearest signs of business quality.

The PEG ratio (forward P/E divided by expected earnings growth rate) is the most precise measure of undervaluation relative to growth potential.

By this metric, Paycom Software, Inc. (PAYC) is the more undervalued stock at a PEG of 0. 51x versus Automatic Data Processing, Inc. 's 1. 58x. A PEG below 1. 0 is traditionally considered the threshold for growth-adjusted undervaluation. On forward earnings alone, Paycom Software, Inc. (PAYC) trades at 12. 0x forward P/E versus 18. 8x for Automatic Data Processing, Inc. — 6. 7x cheaper on a one-year earnings basis. Analyst consensus price targets imply the most upside for ADP: 20. 2% to $249. 00.

All stocks in this comparison pay dividends.

Automatic Data Processing, Inc. (ADP) offers the highest yield at 2. 8%, versus 1. 2% for Paycom Software, Inc. (PAYC).

For long-horizon retirement investors, Automatic Data Processing, Inc.

(ADP) is the stronger choice — it scores higher on the combination of lower volatility, dividend reliability, and long-term compounding (low volatility (β 0. 37), 2. 8% yield, +185. 6% 10Y return). Both have compounded well over 10 years (ADP: +185. 6%, PAYC: +250. 2%), confirming both are viable long-term holds — but the lower-volatility option typically results in less emotional selling during corrections. Retirement portfolios generally favour predictability over maximum returns. Consult a financial advisor before making allocation decisions.

These companies operate in different sectors (ADP (Industrials) and PAYC (Technology)), which means they face different economic cycles, regulatory environments, and macro sensitivities — making direct comparison nuanced.

In terms of investment character: ADP is a mid-cap quality compounder stock; PAYC is a small-cap deep-value stock. These fundamental differences mean investors should not choose between them on a single metric — the "better stock" depends entirely on which of these characteristics aligns with your investment strategy.