Automatic Data Processing, Inc. (ADP) vs Berkshire Hathaway Inc. (BRK-B): Which Is the Better Buy in 2026?
As of 2026-11-01, ADP is overvalued at $294, with a DCF intrinsic value of $260 and a margin of safety of -13%. BRK-B is fairly valued at $542, with an intrinsic value of $590 and a margin of safety of 8%. Of the two, BRK-B has the wider margin of safety.
Rewards
- ★Automatic Data Processing, Inc. has maintained ROIC above 15% for 4 consecutive years, indicating a durable competitive advantage.
- ★Automatic Data Processing, Inc. scores 94/100 on the Economic Moat Score (Wide Moat), with revenue predictability as the strongest competitive dimension.
- ★Return on equity has consistently exceeded 20% over 4 years, indicating efficient use of shareholder capital.
- ★Each dollar of retained earnings has created $3.95 of earning power — management is an exceptional capital allocator.
- ★Net debt/EBITDA of -1.8x means the company holds more cash than debt — a net cash position.
Risks
- ⚠FCF yield of 5.6% suggests reasonable valuation assuming continued moderate growth.
- ⚠PEG ratio of 2.70 indicates the stock is expensive relative to its expected growth — the market may be pricing in more growth than analysts project.
- ⚠7 insider sales totaling $11.6M with no purchases in the past 3 months — insiders are reducing their exposure.
- ⚠FCF yield of 6.2% suggests reasonable valuation assuming continued moderate growth.
- ⚠PEG ratio of 10.06 indicates the stock is expensive relative to its expected growth — the market may be pricing in more growth than analysts project.
Key Valuation Metrics
Learn more →Historical Fundamentals
Learn more →Price ÷ Earnings Per Share — how many years of current earnings you're paying for at today's price. Lower P/E may indicate undervaluation. The dashed forward point is the forward P/E — today's price ÷ analyst consensus EPS.
Price ÷ Earnings Per Share — how many years of current earnings you're paying for at today's price. Lower P/E may indicate undervaluation. The dashed forward point is the forward P/E — today's price ÷ analyst consensus EPS.
Price ÷ Earnings Per Share — how many years of current earnings you're paying for at today's price. Lower P/E may indicate undervaluation. The dashed forward point is the forward P/E — today's price ÷ analyst consensus EPS.
$1 Retained Earnings Test
Learn more →> $1 created per $1 retained = Value Creator · < $1 created = Value Destroyer
> $1 created per $1 retained = Value Creator · < $1 created = Value Destroyer
Buffett's "$1 Test": For every $1 of earnings retained, has management created at least $1 of market value?
> $1 created per $1 retained = Value Creator · < $1 created = Value Destroyer
Discounted Cash Flow (DCF) Analysis
Learn more →Reverse DCF — Market-Implied Growth
Learn more →What growth rate is the market pricing in at $294?
The market implies +11.7% Owner Earnings growth, roughly in line with history — reasonably priced.
Standard FCF implies +6.5%, reflecting ongoing growth investment.
What growth rate is the market pricing in at $542?
The market implies +2.6% Owner Earnings growth, above historical trends.
Standard FCF implies a demanding +1.6%, reflecting heavy growth investment.
Economic Moat Score
Learn more →Wide moat with strength across all dimensions. Revenue Predictability is the standout factor.
Narrow moat with reinvestment efficiency as the key competitive advantage. Improving revenue predictability would strengthen the moat.
Forensic Accounting
Learn more →M-Score Trend
M-Score Trend
Beneish's 8-variable model estimates the probability of earnings manipulation. An M-Score above -1.78 signals elevated risk — companies in this range have historically been 3-5× more likely to be manipulating earnings. Scores between -2.22 and -1.78 fall in a grey zone warranting further investigation.
Ownership Breakdown
Learn more →High insider ownership aligns management incentives with shareholders. Institutional concentration can indicate smart-money conviction but also crowding risk.
Insider Buying Activity
Learn more →Open market purchases · includes direct & indirect ownership · excludes option exercises.
Insider Selling Activity
Learn more →Direct ownership only · excludes indirect, option exercises, planned (10b5-1) sales & derivatives.
🎭 Mr. Market's Mood
Learn more →"Market is optimistic — be cautious and ensure you have a margin of safety"
"Market is optimistic — be cautious and ensure you have a margin of safety"
Composite sentiment score based on market signals. Inspired by Buffett’s "Mr. Market" allegory — fear = potential opportunity, greed = potential risk. Must be used alongside fundamental analysis, not in isolation.
⚖️ Buffett Signal
Learn more →The Buffett Signal cross-references market sentiment with DCF valuation. Configure the DCF Analysis above to generate a signal.
The Buffett Signal cross-references market sentiment with DCF valuation. Configure the DCF Analysis above to generate a signal.
Frequently Asked Questions: ADP vs BRK-B
Is Automatic Data Processing, Inc. or Berkshire Hathaway Inc. more undervalued in 2026?▼
Based on our discounted cash flow model, BRK-B trades at a 8.0% margin of safety (intrinsic value $590 vs. price $542), compared to ADP's -13.1% margin of safety (intrinsic $260 vs. $294).
Which stock has a wider economic moat, Automatic Data Processing, Inc. or Berkshire Hathaway Inc.?▼
ADP scores 94/100 (Wide moat), while BRK-B scores 40/100 (Narrow moat). The moat score measures competitive advantage durability across ROIC consistency, margin stability, revenue predictability, and reinvestment efficiency.
Is Berkshire Hathaway Inc. in financial distress?▼
BRK-B's Altman Z-Score of 2.5 places it in the Grey zone, signaling elevated bankruptcy risk. ADP scores 2.5 (Grey zone). The Altman Z-Score is a five-factor model that predicts insolvency within two years; scores below 1.81 indicate significant distress.
Which company has better free cash flow, Automatic Data Processing, Inc. or Berkshire Hathaway Inc.?▼
Berkshire Hathaway Inc. (BRK-B) generates a 6.2% free cash flow yield, compared to Automatic Data Processing, Inc.'s 5.6%. A higher FCF yield means the business converts more of its market value into cash that can be returned to shareholders or reinvested.
Which stock has higher return on invested capital, Automatic Data Processing, Inc. or Berkshire Hathaway Inc.?▼
ADP earns 44.0% ROIC versus BRK-B's 11.3%. A higher ROIC means the company generates more profit per dollar of capital employed, a hallmark of durable competitive advantage in Buffett-style analysis.