Common Stock Valuation Ratios (Price Multiples)
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 | Adobe Inc. | Cadence Design Systems Inc. | CrowdStrike Holdings Inc. | Fair Isaac Corp. | International Business Machines Corp. | Intuit Inc. | Microsoft Corp. | Oracle Corp. | Palantir Technologies Inc. | Palo Alto Networks Inc. | Salesforce Inc. | ServiceNow Inc. | Synopsys Inc. | Workday Inc. | Software & Services | Information Technology | ||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data | |||||||||||||||||||||
| Current share price (P) | $218.18 | ||||||||||||||||||||
| No. shares of common stock outstanding | 417,747,152 | ||||||||||||||||||||
| Growth rate (g) | 16.44% | ||||||||||||||||||||
| Earnings per share (EPS) | $6.22 | ||||||||||||||||||||
| Next year expected EPS | $7.24 | ||||||||||||||||||||
| Operating profit per share | $7.96 | ||||||||||||||||||||
| Sales per share | $35.92 | ||||||||||||||||||||
| Book value per share (BVPS) | $13.57 | ||||||||||||||||||||
| Valuation Ratios (Price Multiples) | |||||||||||||||||||||
| Price to earnings (P/E) | 35.08 | 26.14 | 28.94 | 84.54 | — | 88.07 | 45.05 | 73.49 | 42.07 | 53.57 | 686.03 | 52.21 | 41.98 | 151.75 | 37.62 | 122.72 | 66.68 | 60.54 | |||
| Price to next year expected earnings | 30.12 | 22.19 | 21.88 | 66.72 | — | 42.02 | 44.74 | 65.52 | 33.05 | 19.05 | 827.06 | 61.04 | 40.05 | 135.46 | 32.68 | 122.69 | 54.51 | 47.53 | |||
| Price-earnings-growth (PEG) | 2.13 | 1.47 | 0.90 | 3.17 | — | 0.80 | 64.46 | 6.04 | 1.54 | 0.30 | — | — | 8.68 | 12.62 | 2.49 | 4,944.12 | 2.99 | 2.21 | |||
| Price to operating profit (P/OP) | 27.42 | 19.79 | 23.87 | 66.06 | — | 61.56 | 28.93 | 59.99 | 33.88 | 37.71 | 1,021.50 | 196.77 | 36.11 | 158.54 | 62.80 | 155.54 | 59.81 | 53.45 | |||
| Price to sales (P/S) | 6.07 | 2.93 | 7.48 | 19.23 | 32.41 | 26.30 | 4.32 | 13.37 | 15.13 | 11.61 | 110.65 | 16.76 | 6.87 | 19.69 | 13.90 | 7.64 | 16.87 | 14.29 | |||
| Price to book value (P/BV) | 16.07 | 6.71 | 11.41 | 19.09 | 39.07 | — | 9.94 | 11.81 | 13.81 | 32.59 | 63.37 | 26.03 | 4.25 | 22.51 | 9.47 | 7.15 | 24.23 | 25.69 | |||
Based on: 10-K (reporting date: 2021-06-30).
If the company price multiple is lower then the price multiple of benchmark then company stock is relatively undervalued.
Otherwise, if the company price multiple is higher then the price multiple of benchmark then company stock is relatively overvalued.
Historical Valuation Ratios (Summary)
Automatic Data Processing Inc., historical price multiples
Based on: 10-K (reporting date: 2021-06-30), 10-K (reporting date: 2020-06-30), 10-K (reporting date: 2019-06-30), 10-K (reporting date: 2018-06-30), 10-K (reporting date: 2017-06-30), 10-K (reporting date: 2016-06-30).
- Price to Earnings (P/E) Ratio
- The price to earnings ratio showed fluctuations over the observed period. Starting at 27.41 in mid-2016, it increased to a peak of 36.29 by mid-2018, indicating a period of rising market valuation relative to earnings. After this peak, the ratio declined to 23.49 in mid-2020, suggesting a decrease in market optimism or earnings growth outpacing price increases. By mid-2021, the ratio rose again significantly to 34.52, reflecting renewed market confidence or pricing adjustments relative to earnings.
- Price to Operating Profit (P/OP) Ratio
- The price to operating profit ratio exhibited a general upward trend until mid-2019, starting at 18.67 in 2016 and increasing to 24.07 by mid-2019. This rise points to an increasing market valuation relative to operating profit during this period. However, the ratio then declined sharply to 18.44 in mid-2020, before recovering substantially to 26.98 in mid-2021. This pattern suggests periods of market reassessment or volatility in operating profitability or investor sentiment.
- Price to Sales (P/S) Ratio
- The price to sales ratio consistently increased from 3.51 in mid-2016 to a high of 5.13 in mid-2019, indicating growing investor willingness to pay more for each unit of sales. There was a notable decline to 3.97 in mid-2020, possibly reflective of market adjustments during economic uncertainty. However, by mid-2021, the ratio surged to 5.98, reaching the highest value in the observed period and signaling strong investor confidence or improved sales prospects.
- Price to Book Value (P/BV) Ratio
- The price to book value ratio displayed considerable variability. Starting at 9.13 in 2016, it increased substantially to 17 by mid-2018, indicating elevated market valuations relative to the company's book equity. Following this peak, the ratio decreased to 10.07 in mid-2020, reflecting a correction or change in asset valuation perceptions. By mid-2021, the ratio rebounded to 15.82, suggesting renewed positive market sentiment or an increase in intangible asset valuation.
Price to Earnings (P/E)
Automatic Data Processing Inc., historical P/E calculation, comparison to benchmarks
| Jun 30, 2021 | Jun 30, 2020 | Jun 30, 2019 | Jun 30, 2018 | Jun 30, 2017 | Jun 30, 2016 | ||
|---|---|---|---|---|---|---|---|
| No. shares of common stock outstanding1 | 423,080,556 | 429,965,405 | 433,942,837 | 438,082,756 | 444,374,752 | 456,176,951 | |
| Selected Financial Data (US$) | |||||||
| Net earnings (in thousands) | 2,598,500) | 2,466,500) | 2,292,800) | 1,620,800) | 1,733,400) | 1,492,500) | |
| Earnings per share (EPS)2 | 6.14 | 5.74 | 5.28 | 3.70 | 3.90 | 3.27 | |
| Share price1, 3 | 212.00 | 134.77 | 167.73 | 134.25 | 111.39 | 89.67 | |
| Valuation Ratio | |||||||
| P/E ratio4 | 34.52 | 23.49 | 31.75 | 36.29 | 28.56 | 27.41 | |
| Benchmarks | |||||||
| P/E Ratio, Competitors5 | |||||||
| Accenture PLC | 36.58 | 28.32 | 24.58 | — | — | — | |
| Adobe Inc. | 48.90 | 41.69 | 57.17 | — | — | — | |
| Cadence Design Systems Inc. | 53.88 | 62.89 | — | — | — | — | |
| CrowdStrike Holdings Inc. | — | — | — | — | — | — | |
| Fair Isaac Corp. | 27.12 | 56.83 | 49.99 | — | — | — | |
| International Business Machines Corp. | 19.40 | 19.30 | — | — | — | — | |
| Intuit Inc. | 75.17 | 49.52 | 48.17 | — | — | — | |
| Microsoft Corp. | 35.14 | 35.04 | 26.86 | — | — | — | |
| Oracle Corp. | 15.84 | 16.69 | — | — | — | — | |
| Palantir Technologies Inc. | — | — | — | — | — | — | |
| Palo Alto Networks Inc. | — | — | — | — | — | — | |
| Salesforce Inc. | 48.20 | 1,204.70 | — | — | — | — | |
| ServiceNow Inc. | 487.70 | 978.47 | — | — | — | — | |
| Synopsys Inc. | 73.37 | 55.92 | 39.55 | — | — | — | |
| Workday Inc. | — | — | — | — | — | — | |
| P/E Ratio, Sector | |||||||
| Software & Services | 37.37 | 38.32 | — | — | — | — | |
| P/E Ratio, Industry | |||||||
| Information Technology | 29.49 | 31.10 | — | — | — | — | |
Based on: 10-K (reporting date: 2021-06-30), 10-K (reporting date: 2020-06-30), 10-K (reporting date: 2019-06-30), 10-K (reporting date: 2018-06-30), 10-K (reporting date: 2017-06-30), 10-K (reporting date: 2016-06-30).
1 Data adjusted for splits and stock dividends.
2 2021 Calculation
EPS = Net earnings ÷ No. shares of common stock outstanding
= 2,598,500,000 ÷ 423,080,556 = 6.14
3 Closing price as at the filing date of Automatic Data Processing Inc. Annual Report.
4 2021 Calculation
P/E ratio = Share price ÷ EPS
= 212.00 ÷ 6.14 = 34.52
5 Click competitor name to see calculations.
- Share Price
- The share price exhibited a consistent upward trajectory from June 2016 to June 2019, increasing from $89.67 to a peak of $167.73. This was followed by a decline in 2020 to $134.77, likely influenced by external market conditions. However, the share price rebounded strongly in 2021, reaching $212, which represents the highest value in the observed period.
- Earnings per Share (EPS)
- The EPS demonstrated an overall growth trend throughout the six-year period. Starting at $3.27 in 2016, there was a steady increase with brief stagnation in 2018. The EPS rose significantly from 2018 to 2019, from $3.7 to $5.28, continuing to grow through 2021, culminating at $6.14. This reflects improved profitability on a per-share basis over time.
- Price-to-Earnings (P/E) Ratio
- The P/E ratio showed considerable fluctuation during the period. It began at 27.41 in 2016 and increased to a peak of 36.29 in 2018, indicating a higher market valuation relative to earnings. This was followed by a decline to 23.49 in 2020, possibly linked to the share price dip in that year. Subsequently, the ratio rose again to 34.52 in 2021, suggesting renewed investor confidence and a higher price multiple despite elevated earnings.
- Overall Observations
- The share price and EPS trends generally correlate, with both increasing over the six years, albeit with some volatility in share price during 2020. The P/E ratio volatility illustrates market sentiment changes and valuation adjustments relative to earnings performance. The substantial rise in share price and EPS by 2021 indicates strong financial performance and positive market perception at the end of the period.
Price to Operating Profit (P/OP)
Automatic Data Processing Inc., historical P/OP calculation, comparison to benchmarks
| Jun 30, 2021 | Jun 30, 2020 | Jun 30, 2019 | Jun 30, 2018 | Jun 30, 2017 | Jun 30, 2016 | ||
|---|---|---|---|---|---|---|---|
| No. shares of common stock outstanding1 | 423,080,556 | 429,965,405 | 433,942,837 | 438,082,756 | 444,374,752 | 456,176,951 | |
| Selected Financial Data (US$) | |||||||
| Operating income (in thousands) | 3,324,600) | 3,141,700) | 3,024,400) | 2,511,700) | 2,326,800) | 2,190,500) | |
| Operating profit per share2 | 7.86 | 7.31 | 6.97 | 5.73 | 5.24 | 4.80 | |
| Share price1, 3 | 212.00 | 134.77 | 167.73 | 134.25 | 111.39 | 89.67 | |
| Valuation Ratio | |||||||
| P/OP ratio4 | 26.98 | 18.44 | 24.07 | 23.42 | 21.27 | 18.67 | |
| Benchmarks | |||||||
| P/OP Ratio, Competitors5 | |||||||
| Accenture PLC | 28.35 | 22.21 | 18.63 | — | — | — | |
| Adobe Inc. | 40.64 | 51.75 | 51.63 | — | — | — | |
| Cadence Design Systems Inc. | 48.13 | 57.54 | — | — | — | — | |
| CrowdStrike Holdings Inc. | — | — | — | — | — | — | |
| Fair Isaac Corp. | 21.03 | 45.39 | 37.88 | — | — | — | |
| International Business Machines Corp. | 16.23 | 15.90 | — | — | — | — | |
| Intuit Inc. | 62.00 | 41.56 | 40.45 | — | — | — | |
| Microsoft Corp. | 30.79 | 29.30 | 24.54 | — | — | — | |
| Oracle Corp. | 14.31 | 12.17 | — | — | — | — | |
| Palantir Technologies Inc. | — | — | — | — | — | — | |
| Palo Alto Networks Inc. | — | — | — | — | — | — | |
| Salesforce Inc. | 431.39 | 511.08 | — | — | — | — | |
| ServiceNow Inc. | 436.46 | 583.07 | — | — | — | — | |
| Synopsys Inc. | 75.64 | 59.90 | 40.48 | — | — | — | |
| Workday Inc. | — | — | — | — | — | — | |
| P/OP Ratio, Sector | |||||||
| Software & Services | 33.52 | 31.79 | — | — | — | — | |
| P/OP Ratio, Industry | |||||||
| Information Technology | 26.04 | 26.91 | — | — | — | — | |
Based on: 10-K (reporting date: 2021-06-30), 10-K (reporting date: 2020-06-30), 10-K (reporting date: 2019-06-30), 10-K (reporting date: 2018-06-30), 10-K (reporting date: 2017-06-30), 10-K (reporting date: 2016-06-30).
1 Data adjusted for splits and stock dividends.
2 2021 Calculation
Operating profit per share = Operating income ÷ No. shares of common stock outstanding
= 3,324,600,000 ÷ 423,080,556 = 7.86
3 Closing price as at the filing date of Automatic Data Processing Inc. Annual Report.
4 2021 Calculation
P/OP ratio = Share price ÷ Operating profit per share
= 212.00 ÷ 7.86 = 26.98
5 Click competitor name to see calculations.
- Share Price Trend
- The share price demonstrated a consistent upward trajectory from 2016 to 2019, increasing from $89.67 to $167.73. However, there was a notable decline in 2020 to $134.77, followed by a robust recovery in 2021, reaching $212. This fluctuating pattern suggests sensitivity to external market conditions, particularly evident in the decline observed in 2020.
- Operating Profit per Share Trend
- The operating profit per share showed steady growth throughout the entire period. Beginning at $4.80 in 2016, it increased in each subsequent year, reaching $7.86 by 2021. This consistent increase indicates improving operational efficiency or profitability on a per-share basis over the years.
- Price to Operating Profit (P/OP) Ratio Trend
- The P/OP ratio indicated a general upward trend from 2016 to 2019, rising from 18.67 to 24.07, implying increasing market valuation relative to operating profit during this period. In 2020, the ratio decreased significantly to 18.44, coinciding with the dip in share price, before surging to its highest point of 26.98 in 2021. The elevated P/OP ratio in 2021 reflects heightened market optimism or expectations relative to actual operating profit.
- Overall Observations
- Over the six-year period, improvements in operating profit per share were consistent and significant. Share price movements broadly aligned with these improvements, except for the dip in 2020 which may relate to external factors. The P/OP ratio suggests that while valuation grew alongside profitability initially, market sentiment became more volatile in the later years, culminating in a peak valuation multiple in 2021. This indicates investor confidence or speculative interest outpacing fundamental profit growth during that year.
Price to Sales (P/S)
Automatic Data Processing Inc., historical P/S calculation, comparison to benchmarks
| Jun 30, 2021 | Jun 30, 2020 | Jun 30, 2019 | Jun 30, 2018 | Jun 30, 2017 | Jun 30, 2016 | ||
|---|---|---|---|---|---|---|---|
| No. shares of common stock outstanding1 | 423,080,556 | 429,965,405 | 433,942,837 | 438,082,756 | 444,374,752 | 456,176,951 | |
| Selected Financial Data (US$) | |||||||
| Revenues (in thousands) | 15,005,400) | 14,589,800) | 14,175,200) | 13,325,800) | 12,379,800) | 11,667,800) | |
| Sales per share2 | 35.47 | 33.93 | 32.67 | 30.42 | 27.86 | 25.58 | |
| Share price1, 3 | 212.00 | 134.77 | 167.73 | 134.25 | 111.39 | 89.67 | |
| Valuation Ratio | |||||||
| P/S ratio4 | 5.98 | 3.97 | 5.13 | 4.41 | 4.00 | 3.51 | |
| Benchmarks | |||||||
| P/S Ratio, Competitors5 | |||||||
| Accenture PLC | 4.28 | 3.26 | 2.72 | — | — | — | |
| Adobe Inc. | 14.94 | 17.04 | 15.11 | — | — | — | |
| Cadence Design Systems Inc. | 12.55 | 13.85 | — | — | — | — | |
| CrowdStrike Holdings Inc. | 48.70 | 22.79 | — | — | — | — | |
| Fair Isaac Corp. | 8.08 | 10.38 | 8.28 | — | — | — | |
| International Business Machines Corp. | 1.94 | 1.47 | — | — | — | — | |
| Intuit Inc. | 16.09 | 11.78 | 11.05 | — | — | — | |
| Microsoft Corp. | 12.81 | 10.85 | 8.38 | — | — | — | |
| Oracle Corp. | 5.38 | 4.33 | — | — | — | — | |
| Palantir Technologies Inc. | 15.58 | 39.86 | — | — | — | — | |
| Palo Alto Networks Inc. | 10.72 | 6.66 | 7.06 | — | — | — | |
| Salesforce Inc. | 9.24 | 8.88 | — | — | — | — | |
| ServiceNow Inc. | 19.02 | 25.66 | — | — | — | — | |
| Synopsys Inc. | 13.22 | 10.08 | 6.27 | — | — | — | |
| Workday Inc. | 13.95 | 10.65 | — | — | — | — | |
| P/S Ratio, Sector | |||||||
| Software & Services | 9.46 | 7.68 | — | — | — | — | |
| P/S Ratio, Industry | |||||||
| Information Technology | 6.96 | 6.11 | — | — | — | — | |
Based on: 10-K (reporting date: 2021-06-30), 10-K (reporting date: 2020-06-30), 10-K (reporting date: 2019-06-30), 10-K (reporting date: 2018-06-30), 10-K (reporting date: 2017-06-30), 10-K (reporting date: 2016-06-30).
1 Data adjusted for splits and stock dividends.
2 2021 Calculation
Sales per share = Revenues ÷ No. shares of common stock outstanding
= 15,005,400,000 ÷ 423,080,556 = 35.47
3 Closing price as at the filing date of Automatic Data Processing Inc. Annual Report.
4 2021 Calculation
P/S ratio = Share price ÷ Sales per share
= 212.00 ÷ 35.47 = 5.98
5 Click competitor name to see calculations.
- Share Price Trend
- The share price exhibited a consistent upward trajectory from 2016 through 2019, increasing from $89.67 to $167.73. However, there was a notable decline in 2020, where the price fell to $134.77, followed by a significant rebound in 2021, reaching a peak of $212. This pattern indicates both growth potential and some volatility, particularly around 2020.
- Sales Per Share Evolution
- Sales per share steadily increased over the entire period, starting at $25.58 in 2016 and rising incrementally each year to reach $35.47 in 2021. This consistent growth suggests improving business performance and revenue generation capabilities on a per-share basis.
- Price-to-Sales Ratio (P/S) Analysis
- The P/S ratio showed an overall upward trend from 3.51 in 2016 to 5.98 in 2021. Notably, there was a peak at 5.13 in 2019, followed by a decline to 3.97 in 2020, which corresponds with the share price drop during the same period. The ratio then surged to the highest level of 5.98 in 2021, indicating increased market valuation relative to sales, likely driven by the surge in share price.
- General Insights
- The data indicates a company experiencing consistent sales growth alongside fluctuating market valuations. The decline in share price and P/S ratio in 2020 could reflect external challenges affecting investor sentiment, whereas the recovery and subsequent high valuation in 2021 imply restored confidence and strong market expectations relative to the underlying sales performance.
Price to Book Value (P/BV)
Automatic Data Processing Inc., historical P/BV calculation, comparison to benchmarks
| Jun 30, 2021 | Jun 30, 2020 | Jun 30, 2019 | Jun 30, 2018 | Jun 30, 2017 | Jun 30, 2016 | ||
|---|---|---|---|---|---|---|---|
| No. shares of common stock outstanding1 | 423,080,556 | 429,965,405 | 433,942,837 | 438,082,756 | 444,374,752 | 456,176,951 | |
| Selected Financial Data (US$) | |||||||
| Stockholders’ equity (in thousands) | 5,670,100) | 5,752,200) | 5,399,900) | 3,459,600) | 3,977,000) | 4,481,600) | |
| Book value per share (BVPS)2 | 13.40 | 13.38 | 12.44 | 7.90 | 8.95 | 9.82 | |
| Share price1, 3 | 212.00 | 134.77 | 167.73 | 134.25 | 111.39 | 89.67 | |
| Valuation Ratio | |||||||
| P/BV ratio4 | 15.82 | 10.07 | 13.48 | 17.00 | 12.45 | 9.13 | |
| Benchmarks | |||||||
| P/BV Ratio, Competitors5 | |||||||
| Accenture PLC | 11.06 | 8.51 | 8.15 | — | — | — | |
| Adobe Inc. | 15.94 | 16.53 | 16.03 | — | — | — | |
| Cadence Design Systems Inc. | 13.68 | 14.90 | — | — | — | — | |
| CrowdStrike Holdings Inc. | 48.91 | 14.78 | — | — | — | — | |
| Fair Isaac Corp. | — | 40.58 | 33.14 | — | — | — | |
| International Business Machines Corp. | 5.90 | 5.24 | — | — | — | — | |
| Intuit Inc. | 15.71 | 17.71 | 20.00 | — | — | — | |
| Microsoft Corp. | 15.16 | 13.11 | 10.30 | — | — | — | |
| Oracle Corp. | 41.57 | 14.01 | — | — | — | — | |
| Palantir Technologies Inc. | 10.48 | 28.60 | — | — | — | — | |
| Palo Alto Networks Inc. | 71.88 | 20.61 | 12.91 | — | — | — | |
| Salesforce Inc. | 4.73 | 4.48 | — | — | — | — | |
| ServiceNow Inc. | 30.36 | 40.91 | — | — | — | — | |
| Synopsys Inc. | 10.50 | 7.57 | 5.16 | — | — | — | |
| Workday Inc. | 18.38 | 15.54 | — | — | — | — | |
| P/BV Ratio, Sector | |||||||
| Software & Services | 13.58 | 11.64 | — | — | — | — | |
| P/BV Ratio, Industry | |||||||
| Information Technology | 12.51 | 11.10 | — | — | — | — | |
Based on: 10-K (reporting date: 2021-06-30), 10-K (reporting date: 2020-06-30), 10-K (reporting date: 2019-06-30), 10-K (reporting date: 2018-06-30), 10-K (reporting date: 2017-06-30), 10-K (reporting date: 2016-06-30).
1 Data adjusted for splits and stock dividends.
2 2021 Calculation
BVPS = Stockholders’ equity ÷ No. shares of common stock outstanding
= 5,670,100,000 ÷ 423,080,556 = 13.40
3 Closing price as at the filing date of Automatic Data Processing Inc. Annual Report.
4 2021 Calculation
P/BV ratio = Share price ÷ BVPS
= 212.00 ÷ 13.40 = 15.82
5 Click competitor name to see calculations.
- Share Price
- The share price displayed a consistent upward trend from 2016 to 2019, increasing from $89.67 to $167.73. In 2020, the price experienced a notable decline to $134.77, followed by a substantial rebound in 2021, reaching $212. This pattern suggests a period of growth interrupted by a temporary market adjustment in 2020, with strong recovery thereafter.
- Book Value per Share (BVPS)
- The book value per share demonstrated some volatility over the examined period. It decreased from $9.82 in 2016 to a low of $7.9 in 2018, then increased sharply to $12.44 in 2019 and continued rising to $13.4 by 2021. This indicates an overall improvement in the company's net asset value per share following a decline in the earlier years.
- Price to Book Value (P/BV) Ratio
- The P/BV ratio fluctuated considerably, starting at 9.13 in 2016 and rising to a peak of 17 in 2018. It then declined to 10.07 by 2020 before climbing again to 15.82 in 2021. These movements reflect changing investor sentiment and valuation dynamics, with periods of high market optimism around 2018, followed by a more conservative valuation in 2020, and renewed confidence in 2021.