Common Stock Valuation Ratios (Price Multiples)

Difficulty: Beginner

Valuation ratios measure the quantity of an asset or flaw (e.g., earnings) associated with ownership of a specified claim (e.g., a share of ownership of the enterprise).


Current Valuation Ratios

Automatic Data Processing Inc., current price multiples

 
Automatic Data Processing Inc. Accenture PLC Support Services Industrials
Selected Financial Data
Current share price (P) $ 130.27
No. shares of common stock outstanding 440,522,324
Growth rate (g) 12.45%
 
Earnings per share (EPS) $ 3.93
Next year expected EPS $ 4.42
Operating profit per share $ 5.28
Sales per share $ 28.10
Book value per share (BVPS) $ 9.03
Ratios (Price Multiples)
Price to earnings (P/E) 33.11 29.07 30.42 31.44
Price to next year expected earnings 29.44 21.75 24.79 28.72
Price-earnings-growth (PEG) 2.66 0.86 1.34 3.32
Price to operating profit (P/OP) 24.66 21.62 22.64 16.76
Price to sales (P/S) 4.64 2.87 3.34 2.17
Price to book value (P/BV) 14.43 11.19 12.19 6.34

If company price multiple is lower then the price multiple of benchmark then company stock is relatively undervalued.

Otherwise, if company price multiple is higher then the price multiple of benchmark then company stock is relatively overvalued.

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Historical Valuation Ratios (Summary)

Automatic Data Processing Inc., historical price multiples

 
Jun 30, 2017 Jun 30, 2016 Jun 30, 2015 Jun 30, 2014 Jun 30, 2013 Jun 30, 2012
Price to earnings (P/E) 28.56 27.41 25.75 25.73 24.69 20.36
Price to operating profit (P/OP) 21.27 18.67 18.57 17.67 17.38 14.43
Price to sales (P/S) 4.00 3.51 3.42 3.20 3.07 2.65
Price to book value (P/BV) 12.45 9.13 7.78 5.85 5.61 4.62
Ratio Description The company
P/E ratio The P/E ratio tells analyst how much an investor in common stock pays per dollar of current earnings. Automatic Data Processing Inc.'s P/E ratio increased from 2015 to 2016 and from 2016 to 2017.
P/OP ratio Because P/E ratio is calculated using net income, the ratio can be sensitive to nonrecurring earnings and capital structure, analysts may use price to operating profit. Automatic Data Processing Inc.'s P/OP ratio increased from 2015 to 2016 and from 2016 to 2017.
P/S ratio An rationale for the P/S ratio is that sales, as the top line in an income statement, are generally less subject to distortion or manipulation than other fundamentals such as EPS or book value. Sales are also more stable than earnings and never negative. Automatic Data Processing Inc.'s P/S ratio increased from 2015 to 2016 and from 2016 to 2017.
P/BV ratio The P/BV ratio is interpreted as an indicator of market judgment about the relationship between a company's required rate of return and its actual rate of return. Automatic Data Processing Inc.'s P/BV ratio increased from 2015 to 2016 and from 2016 to 2017.

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Price to Earnings (P/E)

Automatic Data Processing Inc., historical P/E calculation, comparison to benchmarks

 
Jun 30, 2017 Jun 30, 2016 Jun 30, 2015 Jun 30, 2014 Jun 30, 2013 Jun 30, 2012
No. shares of common stock outstanding1 444,374,752 456,176,951 465,810,128 480,912,107 482,823,076 484,504,817
Selected Financial Data (USD $)
Net earnings (in thousands) 1,733,400  1,492,500  1,452,500  1,515,900  1,405,800  1,388,500 
Earnings per share (EPS)3 3.90 3.27 3.12 3.15 2.91 2.87
Share price1, 2 111.39 89.67 80.29 81.12 71.90 58.36
Ratio
P/E ratio4 28.56 27.41 25.75 25.73 24.69 20.36
Benchmarks
P/E Ratio, Competitors
Accenture PLC 26.18 18.07 22.75 17.46 15.20 17.95
P/E Ratio, Sector
Support Services 26.97 20.55 23.72 20.27 18.05
P/E Ratio, Industry
Industrials 30.57 22.66 23.82 18.71 18.63

1 Data adjusted for splits and stock dividends.

2 Close price on the filing date of Automatic Data Processing Inc.'s Annual Report.

2017 Calculations

3 EPS = Net earnings ÷ No. shares of common stock outstanding
= 1,733,400,000 ÷ 444,374,752 = 3.90

4 P/E ratio = Share price ÷ EPS
= 111.39 ÷ 3.90 = 28.56

Ratio Description The company
P/E ratio The P/E ratio tells analyst how much an investor in common stock pays per dollar of current earnings. Automatic Data Processing Inc.'s P/E ratio increased from 2015 to 2016 and from 2016 to 2017.

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Price to Operating Profit (P/OP)

Automatic Data Processing Inc., historical P/OP calculation, comparison to benchmarks

 
Jun 30, 2017 Jun 30, 2016 Jun 30, 2015 Jun 30, 2014 Jun 30, 2013 Jun 30, 2012
No. shares of common stock outstanding1 444,374,752 456,176,951 465,810,128 480,912,107 482,823,076 484,504,817
Selected Financial Data (USD $)
Operating income (in thousands) 2,326,800  2,190,500  2,014,000  2,207,800  1,997,200  1,959,000 
Operating profit per share3 5.24 4.80 4.32 4.59 4.14 4.04
Share price1, 2 111.39 89.67 80.29 81.12 71.90 58.36
Ratio
P/OP ratio4 21.27 18.67 18.57 17.67 17.38 14.43
Benchmarks
P/OP Ratio, Competitors
Accenture PLC 19.47 15.44 15.66 11.94 11.50 11.84
P/OP Ratio, Sector
Support Services 20.07 16.45 16.57 13.89 13.35
P/OP Ratio, Industry
Industrials 16.30 16.54 13.40 14.26 14.11

1 Data adjusted for splits and stock dividends.

2 Close price on the filing date of Automatic Data Processing Inc.'s Annual Report.

2017 Calculations

3 Operating profit per share = Operating income ÷ No. shares of common stock outstanding
= 2,326,800,000 ÷ 444,374,752 = 5.24

4 P/OP ratio = Share price ÷ Operating profit per share
= 111.39 ÷ 5.24 = 21.27

Ratio Description The company
P/OP ratio Because P/E ratio is calculated using net income, the ratio can be sensitive to nonrecurring earnings and capital structure, analysts may use price to operating profit. Automatic Data Processing Inc.'s P/OP ratio increased from 2015 to 2016 and from 2016 to 2017.

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Price to Sales (P/S)

Automatic Data Processing Inc., historical P/S calculation, comparison to benchmarks

 
Jun 30, 2017 Jun 30, 2016 Jun 30, 2015 Jun 30, 2014 Jun 30, 2013 Jun 30, 2012
No. shares of common stock outstanding1 444,374,752 456,176,951 465,810,128 480,912,107 482,823,076 484,504,817
Selected Financial Data (USD $)
Revenues (in thousands) 12,379,800  11,667,800  10,938,500  12,206,500  11,310,100  10,665,200 
Sales per share3 27.86 25.58 23.48 25.38 23.42 22.01
Share price1, 2 111.39 89.67 80.29 81.12 71.90 58.36
Ratio
P/S ratio4 4.00 3.51 3.42 3.20 3.07 2.65
Benchmarks
P/S Ratio, Competitors
Accenture PLC 2.59 2.26 2.24 1.71 1.75 1.64
P/S Ratio, Sector
Support Services 2.96 2.59 2.55 2.14 2.12
P/S Ratio, Industry
Industrials 2.11 1.96 1.72 1.84 1.72

1 Data adjusted for splits and stock dividends.

2 Close price on the filing date of Automatic Data Processing Inc.'s Annual Report.

2017 Calculations

3 Sales per share = Revenues ÷ No. shares of common stock outstanding
= 12,379,800,000 ÷ 444,374,752 = 27.86

4 P/S ratio = Share price ÷ Sales per share
= 111.39 ÷ 27.86 = 4.00

Ratio Description The company
P/S ratio An rationale for the P/S ratio is that sales, as the top line in an income statement, are generally less subject to distortion or manipulation than other fundamentals such as EPS or book value. Sales are also more stable than earnings and never negative. Automatic Data Processing Inc.'s P/S ratio increased from 2015 to 2016 and from 2016 to 2017.

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Price to Book Value (P/BV)

Automatic Data Processing Inc., historical P/BV calculation, comparison to benchmarks

 
Jun 30, 2017 Jun 30, 2016 Jun 30, 2015 Jun 30, 2014 Jun 30, 2013 Jun 30, 2012
No. shares of common stock outstanding1 444,374,752 456,176,951 465,810,128 480,912,107 482,823,076 484,504,817
Selected Financial Data (USD $)
Stockholders' equity (in thousands) 3,977,000  4,481,600  4,808,500  6,670,200  6,189,900  6,114,000 
Book value per share (BVPS)3 8.95 9.82 10.32 13.87 12.82 12.62
Share price1, 2 111.39 89.67 80.29 81.12 71.90 58.36
Ratio
P/BV ratio4 12.45 9.13 7.78 5.85 5.61 4.62
Benchmarks
P/BV Ratio, Competitors
Accenture PLC 10.08 9.83 11.33 8.96 10.06 11.05
P/BV Ratio, Sector
Support Services 10.81 9.57 9.77 7.29 7.59
P/BV Ratio, Industry
Industrials 6.16 5.48 4.25 4.01 3.32

1 Data adjusted for splits and stock dividends.

2 Close price on the filing date of Automatic Data Processing Inc.'s Annual Report.

2017 Calculations

3 BVPS = Stockholders' equity ÷ No. shares of common stock outstanding
= 3,977,000,000 ÷ 444,374,752 = 8.95

4 P/BV ratio = Share price ÷ BVPS
= 111.39 ÷ 8.95 = 12.45

Ratio Description The company
P/BV ratio The P/BV ratio is interpreted as an indicator of market judgment about the relationship between a company's required rate of return and its actual rate of return. Automatic Data Processing Inc.'s P/BV ratio increased from 2015 to 2016 and from 2016 to 2017.

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