Is It Overvalued? Look at the P/S Ratio: Automatic Data Processing, Inc. (ADP), Xylem Inc. (XYL)

Automatic Data Processing, Inc. (NASDAQ:ADP) shares were trading higher by 0.21 percent ($0.24) at $115.92 a piece in Wednesday’s session. It had closed the previous session at $115.68. ADP trades with a P/S ratio of 4.09. This is lower than the industry’s 4.72 but higher compared with the wider sector’s 2.66. A low price-to-sales ratio, typically less than 1.0, is considered a good value. Also, it has an estimated price-earnings (P/E) multiple of 26.81 and a trailing 12-month price-earnings (P/E) multiple of 29.42. Shares of ADP have uptrended 6.43% in the past three months, while the S&P 500 has moved 1.59% in that time. Automatic Data Processing, Inc. (ADP) has a market cap of $51.26 billion and over the last 12 months, Automatic Data Processing, Inc. (NASDAQ:ADP) has gone stronger by 20.75%. During the last 52 weeks, the (NASDAQ:ADP) price has been as high as $121.77 and as low as $94.11. Automatic Data Processing, Inc. earnings have risen with an annualized rate of 6.6% over the last 5 years.

Automatic Data Processing, Inc. (Mean Target Price: $110.89)

The average 1-year price target for Automatic Data Processing, Inc. (ADP) — averaging the work of different analysts — reveals a mean PT of $110.89/share. That’s a potential -4.34 decrease relative to where Automatic Data Processing, Inc. (NASDAQ:ADP) has been trading recently. The current price is seen ranging between $115.53 and $116.93. There are brokerage firms with lower targets than the average, including one setting a price target of $80. And then on the other side of the spectrum one analyst entrenched in the bullish camp has a target as high as $131.

Automatic Data Processing, Inc. (ADP) Consensus Recommendation

The collective rating of 2.8 for Automatic Data Processing, Inc. (NASDAQ:ADP) also leans strongly towards the neutral end of the spectrum. Of the 18 analysts surveyed by Reuters that track ADP 15 of them rate its stock a hold. The other 3, though not evenly; between analysts who think you should buy Automatic Data Processing, Inc. versus those who think you should sell it. A 3 analysts rate it as either a buy or a strong buy, while0 believe that investors should either steer clear of ADP or, if they already own its stock, sell it.

Is Xylem Inc. (NYSE:XYL) Cheap From Peers?

Xylem Inc. (XYL) pulled off a 0.21 percent gain and now trades for $67.98. XYL comes in with a P/S ratio of 2.7 that’s greater than 1, potentially implying that it could be expensive relative to the overall sector (9.74) and its peers (4.67). Also, it has an estimated price-earnings (P/E) multiple of 24.39 and a trailing 12-month price-earnings (P/E) multiple of 39.64. During the last 52 weeks, the price has been as high as $69.88 and as low as $46.67. Xylem Inc. (NYSE:XYL) earnings have declined with a quarterly rate of -0.2% over the last 5 years. Shares of XYL have increased 8.8% in the past three monthswhile the S&P 500 has gained 2.44% in that time.

Xylem Inc. (Price Objective: $71.24)

Xylem Inc. (NYSE:XYL) has a market cap of $12.21 billion and over the last 12 months, XYL has risen by 30.3%. The average 1-year price target for (XYL) reveals an average price target of $71.24 per share. That’s a potential 4.8 gain from where (NYSE:XYL) has been trading recently. There are brokerage firms with lower targets than the average, including one setting a price target of $54. And then on the other side of the spectrum one analyst entrenched in the bullish camp has a target as high as $84.

Analyst Thoughts About Xylem Inc. (NYSE:XYL)

The consensus recommendation — averaging the work of 15 analysts — of 2.2 for Xylem Inc. (XYL) points to moderate case. Of the analysts surveyed by Reuters that track Xylem Inc. 6 of them rate its stock a hold. The other 9 are split, though not evenly, between analysts who think you should buy its stock versus those who think you should sell it. A 9 analysts rate it as either a buy or a strong buy, while 0 believe that investors should either steer clear of (NYSE:XYL) or, if they already own its stock, sell it.