AUTOMATIC DATA PROCESSING's gross profit margin for the second quarter of its fiscal year 2015 is essentially unchanged when compared to the same period a year ago. Even though sales increased, the net income has decreased. AUTOMATIC DATA PROCESSING has very weak liquidity. Currently, the Quick Ratio is 0.10 which clearly shows a lack of ability to cover short-term cash needs. The company's liquidity decreased from the same period a year ago, despite already having very weak liquidity to begin with. This would indicate deteriorating cash flow.
During the same period, stockholders' equity ("net worth") has decreased by 12.24% from the same quarter last year. The key liquidity measurements indicate that the company is in a position in which financial difficulties could develop in the near future.
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|Income Statement||Q2 FY15||Q2 FY14|
|Net Sales ($mil)||2661.3||2493.7|
|Net Income ($mil)||331.5||377.0|
|Balance Sheet||Q2 FY15||Q2 FY14|
|Cash & Equiv. ($mil)||1952.7||1289.6|
|Total Assets ($mil)||43503.1||38321.8|
|Total Debt ($mil)||10.3||12.6|
|Profitability||Q2 FY15||Q2 FY14|
|Gross Profit Margin||42.99||43.22|
|Return on Assets||3.3||3.69|
|Return on Equity||26.05||20.52|
|Debt||Q2 FY15||Q2 FY14|
|Share Data||Q2 FY15||Q2 FY14|
|Shares outstanding (mil)||477.1||481.4|
|Div / share||0.49||0.48|
|Book value / share||11.51||13.0|
|Institutional Own %||n/a||n/a|
|Avg Daily Volume||2104279.0||2081787.0|
BUY. AUTOMATIC DATA PROCESSING's P/E ratio indicates a premium compared to an average of 25.72 for the IT Services industry and a premium compared to the S&P 500 average of 19.72. To use another comparison, its price-to-book ratio of 7.59 indicates a significant premium versus the S&P 500 average of 2.78 and a significant discount versus the industry average of 9.18. The price-to-sales ratio is well above the S&P 500 average, but well below the industry average.
|ADP 29.32||Peers 25.72||ADP 21.40||Peers 19.41|
Premium. A higher P/E ratio than its peers can signify a more expensive stock or higher growth expectations.
ADP is trading at a premium to its peers.
Premium. The P/CF ratio, a stock’s price divided by the company's cash flow from operations, is useful for comparing companies with different capital requirements or financing structures.
ADP is trading at a premium to its peers.
|ADP 26.48||Peers 20.41||ADP NM||Peers 2.45|
Premium. A higher price-to-projected earnings ratio than its peers can signify a more expensive stock or higher future growth expectations.
ADP is trading at a significant premium to its peers.
Neutral. The PEG ratio is the stock’s P/E divided by the consensus estimate of long-term earnings growth. Faster growth can justify higher price multiples.
ADP's negative PEG ratio makes this valuation measure meaningless.
|ADP 7.59||Peers 9.18||ADP 12.45||Peers 21.57|
Discount. A lower price-to-book ratio makes a stock more attractive to investors seeking stocks with lower market values per dollar of equity on the balance sheet.
ADP is trading at a discount to its peers.
Lower. Elevated earnings growth rates can lead to capital appreciation and justify higher price-to-earnings ratios.
However, ADP is expected to significantly trail its peers on the basis of its earnings growth rate.
|ADP 3.58||Peers 5.29||ADP 7.99||Peers 9.80|
Discount. In the absence of P/E and P/B multiples, the price-to-sales ratio can display the value investors are placing on each dollar of sales.
ADP is trading at a significant discount to its industry on this measurement.
Lower. A sales growth rate that trails the industry implies that a company is losing market share.
ADP trails its peers on the basis of sales growth
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