Automatic Data Processing Inc

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ADP : NASDAQ : Technology
$101.87 up 0.46 | 0.45%
Today's Range: 101.44 - 102.275
Avg. Daily Volume: 2273500.0
06/27/17 - 9:31 AM ET

Financial Analysis

AUTOMATIC DATA PROCESSING's gross profit margin for the third quarter of its fiscal year 2017 is essentially unchanged when compared to the same period a year ago. The company managed to grow both sales and net income at a faster pace than the average competitor in its industry this quarter as compared to the same quarter a year ago. AUTOMATIC DATA PROCESSING has very weak liquidity. Currently, the Quick Ratio is 0.13 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, indicating improving cash flow.

During the same period, stockholders' equity ("net worth") has decreased by 8.88% 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 FY17 Q3 FY16
Net Sales ($mil)3410.73248.5
EBITDA ($mil)912.9874.8
EBIT ($mil)835.3801.5
Net Income ($mil)588.0532.5

Balance Sheet Q3 FY17 Q3 FY16
Cash & Equiv. ($mil)2998.72965.1
Total Assets ($mil)43855.951125.6
Total Debt ($mil)2010.32010.2
Equity ($mil)4103.14503.2

Profitability Q3 FY17 Q3 FY16
Gross Profit Margin46.2546.46
EBITDA Margin26.7626.92
Operating Margin24.4924.67
Sales Turnover0.280.22
Return on Assets3.983.02
Return on Equity42.6432.6
Debt Q3 FY17 Q3 FY16
Current Ratio1.091.08
Interest Expense16.816.3
Interest Coverage49.7249.17

Share Data Q3 FY17 Q3 FY16
Shares outstanding (mil)447.9456.1
Div / share0.570.53
Book value / share9.169.87
Institutional Own % n/a n/a
Avg Daily Volume2250576.01854916.0


BUY. AUTOMATIC DATA PROCESSING's P/E ratio indicates a discount compared to an average of 31.75 for the IT Services industry and a value on par with the S&P 500 average of 25.75. Conducting a second comparison, its price-to-book ratio of 11.12 indicates a significant premium versus the S&P 500 average of 3.09 and a premium versus the industry average of 9.85. 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.

1 2 3 4 5
premium   discount
  Price/Cash Flow
1 2 3 4 5
premium   discount
ADP 26.33 Peers 31.75   ADP 19.70 Peers 21.57

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.

1 2 3 4 5
premium   discount
  Price to
1 2 3 4 5
premium   discount
ADP 25.73 Peers 22.07   ADP 1.86 Peers 1.73

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.


Average. 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 trades at a valuation on par to its peers.

1 2 3 4 5
premium   discount
  Earnings Growth
1 2 3 4 5
lower   higher
ADP 11.12 Peers 9.85   ADP 21.69 Peers -1.13

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 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.

1 2 3 4 5
premium   discount
  Sales Growth
1 2 3 4 5
premium   discount
ADP 3.74 Peers 5.67   ADP 6.53 Peers 11.40

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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