ADP vs PCTY

For growth investors, Paylocity Holding Corporation (PCTY) is the stronger pick with 13.

7% revenue growth year-over-year, versus 7. 1% for Automatic Data Processing, Inc. (ADP). Automatic Data Processing, Inc. (ADP) offers the better valuation at 21. 5x trailing P/E (19. 4x forward), making it the more compelling value choice. Analysts rate Paylocity Holding Corporation (PCTY) a "Buy" — based on 41 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 21. 5x versus Paylocity Holding Corporation at 27. 1x. On forward P/E, Paylocity Holding Corporation is actually cheaper at 14. 0x — notably different from the trailing picture, reflecting expected earnings growth. The PEG ratio (P/E divided by earnings growth rate) is the most growth-adjusted single valuation metric: Paylocity Holding Corporation wins at 0. 50x versus Automatic Data Processing, Inc. 's 1. 64x — 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 +23. 3%, compared to -35. 2% for Paylocity Holding Corporation (PCTY). Over 10 years, the gap is even starker: PCTY returned +218. 2% versus ADP's +192. 5%. 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 Paylocity Holding Corporation's 0. 43β — meaning PCTY is approximately 14% more volatile than ADP relative to the S&P 500. On balance sheet safety, Paylocity Holding Corporation (PCTY) carries a lower debt/equity ratio of 18% versus 146% for Automatic Data Processing, Inc. — giving it more financial flexibility in a downturn.

By revenue growth (latest reported year), Paylocity Holding Corporation (PCTY) is pulling ahead at 13.

7% versus 7. 1% for Automatic Data Processing, Inc. (ADP). On earnings-per-share growth, the picture is similar: Paylocity Holding Corporation grew EPS 10. 7% year-over-year, compared to 9. 7% for Automatic Data Processing, Inc.. Over a 3-year CAGR, PCTY leads at 23. 2% 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.

Automatic Data Processing, Inc.

(ADP) is the more profitable company, earning 19. 8% net margin versus 14. 2% for Paylocity Holding Corporation — meaning it keeps 19. 8% of every revenue dollar as bottom-line profit. Operating margin tells a similar story: ADP leads at 26. 3% versus 19. 1% for PCTY. At the gross margin level — before operating expenses — PCTY 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, Paylocity Holding Corporation (PCTY) is the more undervalued stock at a PEG of 0. 50x versus Automatic Data Processing, Inc. 's 1. 64x. A PEG below 1. 0 is traditionally considered the threshold for growth-adjusted undervaluation. On forward earnings alone, Paylocity Holding Corporation (PCTY) trades at 14. 0x forward P/E versus 19. 4x for Automatic Data Processing, Inc. — 5. 3x cheaper on a one-year earnings basis. Analyst consensus price targets imply the most upside for PCTY: 54. 0% to $168. 08.

In this comparison, ADP (2.

7% yield) pays a dividend. PCTY does not pay a meaningful dividend and should not be held primarily for income.

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. 7% yield, +192. 5% 10Y return). Both have compounded well over 10 years (ADP: +192. 5%, PCTY: +218. 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 PCTY (Technology)), which means they face different economic cycles, regulatory environments, and macro sensitivities — making direct comparison nuanced.

ADP pays a dividend while PCTY does not, making them suitable for different income and tax situations. 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.