If you buy and hold a stock for many years, you'd hope to be making a profit. But more than that, you probably want to see it rise more than the market average. Unfortunately for shareholders, while the Automatic Data Processing, Inc. (NASDAQ:ADP) share price is up 49% in the last five years, that's less than the market return. Over the last twelve months the stock price has risen a very respectable 15%.
Now it's worth having a look at the company's fundamentals too, because that will help us determine if the long term shareholder return has matched the performance of the underlying business.
To paraphrase Benjamin Graham: Over the short term the market is a voting machine, but over the long term it's a weighing machine. By comparing earnings per share (EPS) and share price changes over time, we can get a feel for how investor attitudes to a company have morphed over time.
Over half a decade, Automatic Data Processing managed to grow its earnings per share at 15% a year. The EPS growth is more impressive than the yearly share price gain of 8% over the same period. So it seems the market isn't so enthusiastic about the stock these days.
The graphic below depicts how EPS has changed over time (unveil the exact values by clicking on the image).
NasdaqGS:ADP Earnings Per Share Growth June 24th 2024
We know that Automatic Data Processing has improved its bottom line lately, but is it going to grow revenue? You could check out this free report showing analyst revenue forecasts.
What About Dividends?
When looking at investment returns, it is important to consider the difference between total shareholder return (TSR) and share price return. Whereas the share price return only reflects the change in the share price, the TSR includes the value of dividends (assuming they were reinvested) and the benefit of any discounted capital raising or spin-off. Arguably, the TSR gives a more comprehensive picture of the return generated by a stock. In the case of Automatic Data Processing, it has a TSR of 66% for the last 5 years. That exceeds its share price return that we previously mentioned. And there's no prize for guessing that the dividend payments largely explain the divergence!
A Different Perspective
Automatic Data Processing shareholders gained a total return of 18% during the year. Unfortunately this falls short of the market return. The silver lining is that the gain was actually better than the average annual return of 11% per year over five year. It is possible that returns will improve along with the business fundamentals. Before deciding if you like the current share price, check how Automatic Data Processing scores on these 3 valuation metrics.
If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of companies that have proven they can grow earnings.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on American exchanges.
Have feedback on this article? Concerned about the content?Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com. This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com
株式を数年間購入し保有すると、利益が出ることを期待しているでしょう。しかし、その上に、市場平均より上昇することを望むこともあるでしょう。残念ながら、Automatic Data Processing, Inc. (NASDAQ:ADP)の株価は過去5年間で49%上昇していますが、市場リターンを下回っています。過去12か月間の株価上昇率は非常に立派な15%です。
留意すべきは、この記事で引用されている市場リターンは、現在オーストラリア取引所で取引されている株式の市場加重平均リターンを反映しています。総株主収益株価収益株価収益株価リターンは、株価の変動のみを反映していますが、TSRには配当金(再投資された場合)、割引資本調達または分離の利益も含まれます。投資家が株式から得たリターンをより包括的に描写していると言えます。Automatic Data Processingの場合、過去5年間のTSRは66%です。先に述べた株価リターンを上回っています。そして、配当支払いがその差異をほぼ説明していることは明らかです!
Automatic Data Processingの株主は、この1年間で合計リターン18%を獲得しました。しかし、これは市場リターンを下回っています。唯一の良いニュースは、このゲインが5年間の平均年率リターン11%を上回っていたことです。企業基盤が改善されると、リターンが改善する可能性があります。現在の株価が好きかどうかを決定する前に、Automatic Data Processingがこれら3つの評価指標でどのようにスコアリングされているかをチェックしてください。
オーストラリアでは、moomooの投資商品及びサービスはMoomoo Securities Australia Limitedによって提供され、オーストラリア証券投資委員会(ASIC)の管理を受けております(AFSL No. 224663)。「金融サービスガイド」、「利用規約」、「プライバシーポリシー」などの詳細は、Moomoo Securities Australia Limitedのウェブサイトhttps://www.moomoo.com/auでご確認いただけます。
オーストラリアでは、moomooの投資商品及びサービスはMoomoo Securities Australia Limitedによって提供され、オーストラリア証券投資委員会(ASIC)の管理を受けております(AFSL No. 224663)。「金融サービスガイド」、「利用規約」、「プライバシーポリシー」などの詳細は、Moomoo Securities Australia Limitedのウェブサイトhttps://www.moomoo.com/auでご確認いただけます。