Automatic Data Processing Inc versus Mastercard Incorporated Head to Head Compare

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This is a head to head compare of Automatic Data Processing Inc (NASDAQ:ADP) and Mastercard Incorporated (NYSE:MA) . We will compare the two companies on revenue growth, earnings, revenue per employee, operating margins, free cash flow and valuation. The head to head compare assigns 100 points in total.

Before we dive into the analysis, we will look at the stock returns for each company over the last three months, six months and the last year. The stock returns do not impact the head to head compare scores which are focused on the fundamentals of each company, but ultimately stock returns are are still a critical piece to a full analysis and compare.

Stock Returns
Symbol 3-Months 6-Months One-Year Fundamentals
ADP +0.1% +19.2% +15.7%
MA +4.4% +11.6% +17.6%

Mastercard Incorporated has a higher fundamental rating then Automatic Data Processing Inc which has an impact on the head-to-head comparison. The CML Star Rating is an objective, quantifiable measure of a company's operating and financial condition. The rating is computed by measuring numerous elements of the company's current financial data and their associated changes over time.

Now, let's dive into the two companies to compare them.

➤ Income Statement
First we turn to the income statement and compare revenue, earnings and revenue per employee for both companies. We note that simple revenue comparisons do not impact the rating.

Automatic Data Processing Inc has larger revenue in the last year than Mastercard Incorporated. Raw revenue comps do not affect the head to head rating.

Both ADP and MA show positive earnings over the last year with the edge to MA.

Net Income

MA generates massively larger revenue per employee ($906,000) than ADP ($205,000).

Revenue per Employee
($ Millions)

➤ Margins
Next we create some derived metrics to compare the the amount of revenue earned per dollar of expense and the amount of free cash flow earned per dollar of revenue. Margins are one of the fairest ways to compare companies since they remove some of the bias of large versus small numbers.

Mastercard Incorporated generates $1.99 in revenue for every $1 of expense, massively higher than Automatic Data Processing Inc's $1.24.

Revenue per Dollar of Expense

MA generates $0.46 in levered free cash flow for every $1 of revenue, massively higher than ADP's $0.15.

Free Cash Flow
per Dollar of Revenue

➤ Growth
Finally we compare the financial metrics related to growth: revenue growth rates and price to sales.

Both companies are growing revenue. Mastercard Incorporated is growing revenue much faster than Automatic Data Processing Inc.

Revenue Growth

For every $1 in revenue, the stock market prices in $3.70 in market cap for ADP and $11.02 in market cap for MA.

Price to Sales

Mastercard Incorporated (NYSE:MA)
Automatic Data Processing Inc (NASDAQ:ADP) : 85 to 15