ADP vs MSFT

For growth investors, Microsoft Corporation (MSFT) is the stronger pick with 14.

9% revenue growth year-over-year, versus 7. 1% for Automatic Data Processing, Inc. (ADP). Automatic Data Processing, Inc. (ADP) offers the better valuation at 20. 8x trailing P/E (18. 8x forward), making it the more compelling value choice. Analysts rate Microsoft Corporation (MSFT) a "Buy" — based on 81 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, Automatic Data Processing, Inc.

(ADP) is the cheapest at 20. 8x versus Microsoft Corporation at 30. 3x. On forward P/E, Automatic Data Processing, Inc. is actually cheaper at 18. 8x. The PEG ratio (P/E divided by earnings growth rate) is the most growth-adjusted single valuation metric: Microsoft Corporation wins at 1. 32x versus Automatic Data Processing, Inc. 's 1. 58x — a reasonable growth-adjusted valuation.

Over the past 5 years, Microsoft Corporation (MSFT) delivered a total return of +71.

5%, compared to +19. 5% for Automatic Data Processing, Inc. (ADP). Over 10 years, the gap is even starker: MSFT returned +768. 1% 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 Microsoft Corporation's 0. 89β — meaning MSFT is approximately 136% more volatile than ADP relative to the S&P 500. On balance sheet safety, Microsoft Corporation (MSFT) carries a lower debt/equity ratio of 33% versus 146% for Automatic Data Processing, Inc. — giving it more financial flexibility in a downturn.

By revenue growth (latest reported year), Microsoft Corporation (MSFT) is pulling ahead at 14.

9% versus 7. 1% for Automatic Data Processing, Inc. (ADP). On earnings-per-share growth, the picture is similar: Microsoft Corporation grew EPS 15. 6% year-over-year, compared to 9. 7% for Automatic Data Processing, Inc.. Over a 3-year CAGR, MSFT leads at 12. 4% 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.

Microsoft Corporation (MSFT) is the more profitable company, earning 36.

1% net margin versus 19. 8% for Automatic Data Processing, Inc. — meaning it keeps 36. 1% of every revenue dollar as bottom-line profit. Operating margin tells a similar story: MSFT leads at 45. 6% versus 26. 3% for ADP. At the gross margin level — before operating expenses — MSFT leads at 68. 8%, 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, Microsoft Corporation (MSFT) is the more undervalued stock at a PEG of 1. 32x versus Automatic Data Processing, Inc. 's 1. 58x. A PEG below 1. 5 suggests fair-to-attractive pricing relative to expected growth. On forward earnings alone, Automatic Data Processing, Inc. (ADP) trades at 18. 8x forward P/E versus 24. 9x for Microsoft Corporation — 6. 1x cheaper on a one-year earnings basis. Analyst consensus price targets imply the most upside for MSFT: 33. 3% to $551. 75.

All stocks in this comparison pay dividends.

Automatic Data Processing, Inc. (ADP) offers the highest yield at 2. 8%, versus 0. 8% for Microsoft Corporation (MSFT).

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%, MSFT: +768. 1%), 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 MSFT (Technology)), which means they face different economic cycles, regulatory environments, and macro sensitivities — making direct comparison nuanced.

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.