ADP vs PCTY: Which Is the Better Buy in 2026?

Same yardstick, side by side (as of August 2026). Valuation lined up like this is most meaningful for two names in the same corner of the market, which these are. Figures are approximate; verify before investing.

Reading it: PCTY is the cheaper of the two on forward earnings, but cheaper is not the same as better. Pair the valuation with growth (how far the forward P/E sits below the trailing P/E) and risk (beta) before you decide.

The metrics above tell you which is the marginally better business. The bigger risk for most people is not picking the slightly worse stock, it is over-concentrating. ADP and PCTY share themes, so owning both, or adding either to what you already hold, can quietly push a large share of your portfolio into one bet.

This is the part a generic comparison page cannot answer, because it depends on what you own. Connect your brokerage and Walnut shows your real, combined ADP and PCTY exposure, flags overlap with your existing positions, and tells you if adding one would tip you past a concentration you are comfortable with, read-only by default, with your login staying at your broker. Walnut is not an investment adviser.

Automatic Data Processing (ADP) is a Roseland, New Jersey-based global technology company providing cloud-based human capital management (HCM) and payroll solutions to businesses of every size, from single-employee firms using ADP RUN to large multinationals using ADP Workforce Now and Lyric. The company operates through two primary segments: Employer Services, which covers payroll processing, tax filing, benefits administration, talent management, time and attendance, and compliance; and Professional Employer Organization (PEO) Services, under the ADP TotalSource brand, which co-employs client workers to deliver Fortune 500-level benefits packages to smaller firms. ADP also earns a meaningful stream of interest income by holding and investing the client funds it collects between payroll runs before remitting them to employees and tax authorities. Founded in 1949 by Henry Taub and Frank Lautenberg as a manual payroll processor and taken public in 1961, ADP pioneered computerized payroll in the 1960s and grew through decades of acquisitions and organic expansion into its present position as the market leader in global payroll software with roughly 9.9% market share. The company is led by President and CEO Maria Black, who took the helm in 2023, and employs approximately 67,000 people worldwide. ADP's fiscal year ends June 30, and its shares trade on the Nasdaq under the ticker ADP.

Full ADP guide

Paylocity Holding Corporation runs a single cloud platform that handles payroll, tax filing, benefits administration, time and attendance, talent management and, since the Airbase acquisition, corporate spend management. Clients are typically US companies with 10 to 5,000 employees, and as of June 30, 2026 there were about 44,400 of them (excluding clients picked up through acquisitions), averaging more than 150 employees each. Pricing is a base fee plus a per-employee charge that scales with how many products a client turns on, which is why revenue grows on two axes: adding logos and selling more modules into the ones already there. In fiscal 2026 the client base grew roughly 7% while recurring revenue grew 12.2%, so about five points came from expansion inside existing accounts. Annual revenue retention has stayed above 92% in each of the last three fiscal years. The company employs around 6,900 people and is headquartered in Schaumburg, Illinois.

Full PCTY guide

Both fit overlapping themes, but they are not interchangeable. The useful comparison is which set of drivers and risks you want exposure to.

• ADP drivers: Sticky recurring revenue and elite client retention; AI-powered platform evolution expanding wallet share.
• PCTY drivers: Land, then expand inside the client; Margin leverage and a shrinking share count.

A faster-growing, richer-valued name usually swings harder, so it suits a longer horizon and a higher tolerance for volatility; a steadier, more cash-generative business suits a more conservative or income-minded investor. The honest test is which set of risks you could hold through a drawdown: ADP's growth is materially sensitive to employment levels and interest rates: a recession that raises unemployment reduces the headcount on which per-employee fees are charged, crimps new-business bookings, and may accelerate small-business client failures, while falling rates shrink the float income earned on client funds held between payroll cycles. For PCTY, the most concrete risk is the deceleration itself: guiding about 8% recurring growth after delivering 12.2%, with the first quarter at about 10%, implies the exit rate is lower still, and multiples on software tend to compress when growth crosses from double digits into single digits.

Growth-minded investors who believe the theme has years to run tend to accept the richer multiple for more upside; value-minded investors lean toward the cheaper forward earnings and steadier profile. Pick ADP if you believe its drivers more; PCTY if you believe its. Many investors hold both, but since they share themes, that is a concentrated bet, not diversification. Decide deliberately and check overlap. For the full detail, see the ADP and PCTY guides.

ADP. ADP's trailing P/E of roughly 20x represents a meaningful discount to both its own five-year average of approximately 29-30x and to the broader software sector, reflecting a combination of share-price weakness from its 52-week high near $316 and accelerating earnings growth. The adjusted EBIT margin of 26% in fiscal 2025, expanding 50 basis points year-over-year, demonstrates operating leverage even as the company invests heavily in AI and global platform development. Management has guided for fiscal 2026 revenue growth of 5% to 6% and adjusted diluted EPS growth of 8% to 10%, implying continued margin expansion through productivity gains and the lapping of acquisition-related costs.

PCTY. The two revenue lines matter and are easy to conflate: screeners usually quote the ~$1.77 billion total, which includes ~$120 million of interest earned on client payroll cash, a line that moves with short-term rates rather than with software demand. Stripping it out, the software business grew 12.2% and carries a 32.4% adjusted EBITDA margin. Enterprise value is roughly $7.9 billion after ~$272 million of cash and ~$81 million of debt, putting the stock near 4.5 times trailing revenue and about 12 times trailing adjusted EBITDA, with a free cash flow yield above 5%.

Headline figures (approximate, 2026-06-27): ADP shows revenue (fy2025, ended june 30, 2025) ~$20.6 billion, revenue (ttm, trailing twelve months to mar 2026) ~$21.6 billion, net income (fy2025) ~$4.1 billion, adjusted diluted eps (fy2025) ~$10.01; PCTY shows revenue (fy2026, ended june 30, 2026) ~$1.77B, up ~11.0%, recurring and other revenue (fy2026) ~$1.65B, up ~12.2%, interest on funds held for clients (fy2026) ~$120M, down ~3%, gaap diluted eps (fy2026) ~$4.92, up ~22.4%.

ADP and PCTY are related but distinct: same themes, different businesses and risks. Neither wins in the abstract; the right pick is whichever thesis you actually believe, sized so you are not over-concentrated in one theme. Walnut can show your combined ADP and PCTY exposure against your real portfolio. It is not an investment adviser.