Using the PEG framework with analyst consensus forward EPS growth of 12.2% plus 2.9% dividend yield, Automatic Data Processing, Inc. has a fair value of $133.27 based on NTM EPS (FY2026) of $10.97. The current PEG ratio is 1.54.
PEG < 1 = bargain, 1–1.5 = fair, > 2 = expensive.
PEG works well for steady growers with predictable earnings.
| EPS Growth RateForward | 9.3% |
| Dividend Yield | +2.9% |
| Adjusted Growth (clamped 8–25%) | 12.2% |
| Fair P/E | 12.2x |
| NTM EPS (FY2026) | $10.97 |
| Fair Value | $133.27 |
| Period | EPS Est. | Growth | Analysts |
|---|---|---|---|
| FY2025 (actual) | $9.98 | — | — |
| FY2026E | $10.97 | +9.9% | 13 |
| FY2027E | $12.00 | +9.4% | 13 |
| FY2028E | $13.02 | +8.5% | 11 |
3Y Forward EPS CAGR: 9.3%
| Year | Net Income | EPS | YoY |
|---|---|---|---|
| FY2021 | $2.6B | $6.07 | — |
| FY2022 | $2.9B | $7.00 | +15.3% |
| FY2023 | $3.4B | $8.21 | +17.3% |
| FY2024 | $3.8B | $9.10 | +10.8% |
| FY2025 | $4.1B | $9.98 | +9.7% |
4Y Historical EPS CAGR: 13.2%
The PEG Fair Value uses the Price/Earnings-to-Growth framework. A stock is fairly valued when its P/E ratio equals its earnings growth rate (PEG = 1.0). This model adds dividend yield to the growth rate per the original PEGY formula.
Growth rate priority: analyst consensus forward EPS CAGR (when ≥ 3 analysts cover the stock), falling back to historical EPS CAGR. Using EPS rather than net income avoids distortion from share buybacks. The growth rate is clamped between 8% and 25% — below 8% would undervalue stable earners, while above 25% would overvalue unsustainable spikes.