Automatic Data Processing, Inc. (ADP) vs Cadence Design Systems, Inc. (CDNS)

Automatic Data Processing, Inc. and Cadence Design Systems, Inc. are both Software Application companies. Automatic Data Processing, Inc. is the larger, with a market value of $121.3B against $85.5B — 1.4× the size. Automatic Data Processing, Inc. trades at the lower P/E: 27.1× against 61.7×. Cadence Design Systems, Inc. grew revenue faster over the last twelve months: 17.6% against 6.50%. Cadence Design Systems, Inc. has the higher net margin (22.5% vs 20.3%) and the lower return on invested capital (13.8% vs 54.5%). Across the 22 metrics below, Cadence Design Systems, Inc. leads on 12 and Automatic Data Processing, Inc. on 10.

Valuation

Metric ADP CDNS Software Application median
P/E 27.06 61.70 25.90
P/S 5.45 13.93 3.04
P/B 23.82 12.43 2.60
Price to free cash flow 25.51 48.64 17.17
EV/EBITDA 16.33 40.13 15.48
EV/Sales 5.57 14.13 2.89
Earnings yield 3.70% 1.62% 0.00%
Free cash flow yield 3.92% 2.06% 1.98%

Profitability

Metric ADP CDNS Software Application median
Gross margin 46.60% 85.68% 66.89%
Operating margin 26.54% 28.92% 0.00%
Net margin 20.33% 22.51% 0.00%
Free cash flow margin 21.36% 28.64% 5.77%
Return on equity 78.94% 22.87% 0.00%
Return on assets 7.69% 12.65% 0.00%
Return on invested capital 54.47% 13.76% 0.00%

Growth

Metric ADP CDNS Software Application median
Revenue growth (TTM) 6.50% 17.64% 12.27%
EPS growth (last fiscal year) 9.62% 5.45% 32.11%
Revenue growth, 5-year CAGR 7.90% 14.57% 14.34%
Net income growth, 5-year CAGR 11.18% 13.43% 0.00%

Health

Metric ADP CDNS Software Application median
Debt to equity 0.98 0.38 0.02
Current ratio 1.03 1.36 1.53
Net debt to EBITDA 0.10 (0.30) 0.09

Dividend

Metric ADP CDNS Software Application median
Dividend yield 2.22% — 1.10%
Payout ratio 0.60 — 0.28

Size

Metric ADP CDNS Software Application median
Market cap 121.25b 85.45b 487.58m

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