Automatic Data Processing Inc

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ADP : NASDAQ : Technology
$102.9 -1.5 | -1.4%
Today's Range: 102.84 - 104.84
Avg. Daily Volume: 4543400.0
08/21/17 - 3:59 PM ET

Financial Analysis


AUTOMATIC DATA PROCESSING's gross profit margin for the fourth quarter of its fiscal year 2017 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 0.15 which clearly shows a lack of ability to cover short-term cash needs. The company's liquidity has increased from the same period last year.

During the same period, stockholders' equity ("net worth") has decreased by 11.25% 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 Q4 FY17 Q4 FY16
Net Sales ($mil)3064.92898.3
EBITDA ($mil)507.9551.5
EBIT ($mil)425.4477.6
Net Income ($mil)265.8282.0


Balance Sheet Q4 FY17 Q4 FY16
Cash & Equiv. ($mil)2783.63214.6
Total Assets ($mil)37180.043670.0
Total Debt ($mil)2010.22010.2
Equity ($mil)3977.04481.6


Profitability Q4 FY17 Q4 FY16
Gross Profit Margin42.4243.94
EBITDA Margin16.5719.02
Operating Margin13.8816.48
Sales Turnover0.330.27
Return on Assets4.663.41
Return on Equity43.5833.32
Debt Q4 FY17 Q4 FY16
Current Ratio1.11.1
Debt/Capital0.340.31
Interest Expense22.818.1
Interest Coverage18.6626.39


Share Data Q4 FY17 Q4 FY16
Shares outstanding (mil)445.0455.7
Div / share0.570.53
EPS0.590.62
Book value / share8.949.83
Institutional Own % n/a n/a
Avg Daily Volume4488136.01868538.0

Valuation


BUY. The current P/E ratio indicates a discount compared to an average of 32.72 for the IT Services industry and a premium compared to the S&P 500 average of 24.23. For additional comparison, its price-to-book ratio of 11.71 indicates a significant premium versus the S&P 500 average of 3.02 and a significant premium versus the industry average of 8.83. The price-to-sales ratio is well above the S&P 500 average, but well below the industry average. The valuation analysis reveals that, AUTOMATIC DATA PROCESSING seems to be trading at a discount to investment alternatives within the industry.


Price/Earnings
1 2 3 4 5
premium   discount
  Price/Cash Flow
1 2 3 4 5
premium   discount
ADP 27.26 Peers 32.72   ADP 21.91 Peers 20.35

Discount. A lower P/E ratio than its peers can signify a less expensive stock or lower growth expectations.

ADP is trading at a 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.

 
Price/Projected
Earnings
1 2 3 4 5
premium   discount
  Price to
Earnings/Growth
1 2 3 4 5
premium   discount
ADP 24.81 Peers 23.51   ADP NM Peers 1.32

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 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.

 
Price/Book
1 2 3 4 5
premium   discount
  Earnings Growth
1 2 3 4 5
lower   higher
ADP 11.71 Peers 8.83   ADP 18.15 Peers 10.57

Premium. A higher price-to-book ratio makes a stock less attractive to investors seeking stocks with lower market values per dollar of equity on the balance sheet.

ADP is trading at a significant premium to its peers.

 

Higher. Elevated earnings growth rates can lead to capital appreciation and justify higher price-to-earnings ratios.

ADP is expected to have an earnings growth rate that significantly exceeds its peers.

 
Price/Sales
1 2 3 4 5
premium   discount
  Sales Growth
1 2 3 4 5
premium   discount
ADP 3.76 Peers 5.95   ADP 6.10 Peers 13.22

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 significantly trails its peers on the basis of sales growth

 

 

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