Automatic Data Processing, Inc. (ADP) vs Alphabet Inc. (GOOGL): Which Is the Better Buy in 2026?
As of 2026-09-17, ADP is fairly valued at $272, with a DCF intrinsic value of $258 and a margin of safety of -5%. GOOGL is overvalued at $348, with an intrinsic value of $102 and a margin of safety of -242%. Of the two, ADP 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.
- ★Alphabet Inc. has maintained ROIC above 15% for 4 consecutive years, indicating a durable competitive advantage.
- ★Gross margin of 60.9% indicates strong pricing power — typical of businesses with significant intellectual property or brand strength.
- ★Alphabet Inc. scores 89/100 on the Economic Moat Score (Wide Moat), with roic consistency as the strongest competitive dimension.
Risks
- ⚠PEG ratio of 2.57 indicates the stock is expensive relative to its expected growth — the market may be pricing in more growth than analysts project.
- ⚠8 insider sales totaling $12.3M with no purchases in the past 3 months — insiders are reducing their exposure.
- ⚠FCF yield of 1.7% is below 3%, meaning the market is pricing in substantial future growth to justify the current price.
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 $272?
The market implies +10.6% Owner Earnings growth, roughly in line with history — reasonably priced.
Standard FCF implies +8.3%, reflecting ongoing growth investment.
What growth rate is the market pricing in at $348?
Market pricing in significantly higher growth than history — aggressive.
Economic Moat Score
Learn more →Wide moat with strength across all dimensions. Revenue Predictability is the standout factor.
Wide moat driven primarily by roic consistency. Reinvestment Efficiency is the area most vulnerable to competitive pressure.
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 pricing this stock without strong emotion in either direction"
"Market is pricing this stock without strong emotion in either direction"
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 GOOGL
Is Automatic Data Processing, Inc. or Alphabet Inc. more undervalued in 2026?▼
Based on our discounted cash flow model, ADP trades at a -5.1% margin of safety (intrinsic value $258 vs. price $272), compared to GOOGL's -242.2% margin of safety (intrinsic $102 vs. $348).
Which stock has a wider economic moat, Automatic Data Processing, Inc. or Alphabet Inc.?▼
ADP scores 94/100 (Wide moat), while GOOGL scores 89/100 (Wide moat). The moat score measures competitive advantage durability across ROIC consistency, margin stability, revenue predictability, and reinvestment efficiency.
Is Alphabet Inc. in financial distress?▼
GOOGL's Altman Z-Score of 2.4 places it in the Grey zone, signaling elevated bankruptcy risk. ADP scores 2.4 (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 Alphabet Inc.?▼
Automatic Data Processing, Inc. (ADP) generates a 4.9% free cash flow yield, compared to Alphabet Inc.'s 1.7%. 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 Alphabet Inc.?▼
ADP earns 35.2% ROIC versus GOOGL's 15.7%. A higher ROIC means the company generates more profit per dollar of capital employed, a hallmark of durable competitive advantage in Buffett-style analysis.
Which dividend is safer, Automatic Data Processing, Inc.'s or Alphabet Inc.'s?▼
GOOGL's dividend earns a safety score of 88/100 (Very Safe), compared to ADP's 84/100 (Very Safe). GOOGL has raised its dividend for 1 consecutive years.