AUTOMATIC DATA PROCESSING's gross profit margin for the third 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 0.11 which clearly shows a lack of ability to cover short-term cash needs. The company's liquidity has decreased from the same period last year.
During the same period, stockholders' equity ("net worth") has decreased by 21.73% 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||Q3 FY15||Q3 FY14|
|Net Sales ($mil)||3031.7||2825.1|
|Net Income ($mil)||489.6||521.5|
|Balance Sheet||Q3 FY15||Q3 FY14|
|Cash & Equiv. ($mil)||1835.5||1693.9|
|Total Assets ($mil)||37107.3||36596.5|
|Total Debt ($mil)||9.7||12.1|
|Profitability||Q3 FY15||Q3 FY14|
|Gross Profit Margin||46.64||46.17|
|Return on Assets||3.78||3.97|
|Return on Equity||27.28||18.68|
|Debt||Q3 FY15||Q3 FY14|
|Share Data||Q3 FY15||Q3 FY14|
|Shares outstanding (mil)||471.1||481.9|
|Div / share||0.49||0.48|
|Book value / share||10.99||13.73|
|Institutional Own %||n/a||n/a|
|Avg Daily Volume||1715903.0||2123913.0|
BUY. This stock's P/E ratio indicates a significant discount compared to an average of 43.51 for the IT Services industry and a premium compared to the S&P 500 average of 20.83. For additional comparison, its price-to-book ratio of 7.94 indicates a significant premium versus the S&P 500 average of 2.88 and a discount versus the industry average of 9.13. The price-to-sales ratio is well above the S&P 500 average, but well below the industry average. Upon assessment of these and other key valuation criteria, AUTOMATIC DATA PROCESSING proves to trade at a discount to investment alternatives within the industry.
|ADP 29.48||Peers 43.51||ADP 19.94||Peers 19.54|
Discount. A lower P/E ratio than its peers can signify a less expensive stock or lower growth expectations.
ADP is trading at a significant discount to its peers.
Average. 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 valuation on par to its peers.
|ADP 26.37||Peers 20.78||ADP NM||Peers 3.77|
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 7.94||Peers 9.13||ADP 15.62||Peers 21.09|
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 3.63||Peers 5.36||ADP 8.17||Peers 6.95|
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.
Higher. A sales growth rate that exceeds the industry implies that a company is gaining market share.
ADP has a sales growth rate that exceeds its peers.
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