Automatic Data Processing (NASDAQ:ADP) vs. Toast (NYSE:TOST) Critical Review

Automatic Data Processing (NASDAQ:ADPGet Free Report) and Toast (NYSE:TOSTGet Free Report) are both large-cap business services companies, but which is the superior stock? We will compare the two businesses based on the strength of their institutional ownership, risk, earnings, dividends, valuation, profitability and analyst recommendations.

Volatility and Risk

Automatic Data Processing has a beta of 0.78, indicating that its share price is 22% less volatile than the S&P 500. Comparatively, Toast has a beta of 1.75, indicating that its share price is 75% more volatile than the S&P 500.


This table compares Automatic Data Processing and Toast’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Automatic Data Processing 19.56% 93.09% 6.69%
Toast -6.02% -21.45% -12.99%

Earnings and Valuation

This table compares Automatic Data Processing and Toast’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Automatic Data Processing $18.91 billion 5.25 $3.41 billion $8.96 27.08
Toast $3.87 billion 2.66 -$246.00 million ($0.50) -45.44

Automatic Data Processing has higher revenue and earnings than Toast. Toast is trading at a lower price-to-earnings ratio than Automatic Data Processing, indicating that it is currently the more affordable of the two stocks.

Analyst Recommendations

This is a summary of current ratings and recommmendations for Automatic Data Processing and Toast, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Automatic Data Processing 2 7 2 0 2.00
Toast 1 10 10 0 2.43

Automatic Data Processing presently has a consensus target price of $255.42, suggesting a potential upside of 5.27%. Toast has a consensus target price of $26.14, suggesting a potential upside of 15.07%. Given Toast’s stronger consensus rating and higher possible upside, analysts clearly believe Toast is more favorable than Automatic Data Processing.

Insider & Institutional Ownership

80.0% of Automatic Data Processing shares are held by institutional investors. Comparatively, 82.9% of Toast shares are held by institutional investors. 0.3% of Automatic Data Processing shares are held by insiders. Comparatively, 13.3% of Toast shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.


Automatic Data Processing beats Toast on 8 of the 14 factors compared between the two stocks.

About Automatic Data Processing

(Get Free Report)

Automatic Data Processing, Inc. provides cloud-based human capital management solutions worldwide. It operates in two segments, Employer Services and Professional Employer Organization (PEO). The Employer Services segment offers strategic, cloud-based platforms, and human resources (HR) outsourcing solutions. Its offerings include payroll services, benefits administration, talent management, HR management, workforce management, insurance, retirement, and compliance services, as well as integrated HCM solutions. The PEO Services segment provides HR outsourcing solution to businesses through a co-employment model. This segment offers employee benefits, protection and compliance, talent engagement, expertise, comprehensive outsourcing, and recruitment process outsourcing services. Automatic Data Processing, Inc. was founded in 1949 and is headquartered in Roseland, New Jersey.

About Toast

(Get Free Report)

Toast, Inc. operates a cloud-based digital technology platform for the restaurant industry in the United States, Ireland, and India. The company offers software products for restaurant operations and point of sale, such as Toast POS, Toast now, multi-location management, kitchen display system, Toast mobile order and pay, Toast catering and events, Toast invoicing, Toast tables, and restaurant retail; and hardware products, including Toast flex, Toast flex for guest, Toast go 2, Toast tap, kiosks, and Delphi by Toast. It provides toast online ordering and toast takeout, first-party delivery toast delivery services, and third-party delivery integrations and orders hub; and loyalty, email marketing, and toast gift cards. In addition, the company offers payroll and team management, Sling by Toast, Toast pay card and payout, and tips manager, as well as partner-enabled products comprising insurance and benefits; supply chain and accounting products, such as xtraCHEF by toast; and financial technology solutions consisting of payment processing, toast capital, and purchase plans. Further, it offers reporting and analytics, Toast shop, and Toast partner connect and application programming interfaces. The company was formerly known as Opti Systems, Inc. and changed its name to Toast, Inc. in May 2012. Toast, Inc. was incorporated in 2011 and is headquartered in Boston, Massachusetts.

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