What is the fate of Automatic Data Processing, Inc. (ADP) against Hartford Financial Services Group, Inc. (The) (HIG)?

The shares of Automatic Data Processing, Inc. (NASDAQ:ADP) and Hartford Financial Services Group, Inc. (The) (NYSE:HIG) were among the active stocks of the last trading sessions. Automatic Data Processing, Inc. (NASDAQ:ADP) declined to -2.54% closing at the price of $138.18 whereas the shares of Hartford Financial Services Group, Inc. (The) (NYSE:HIG) declined -3.82% with the decrease of -1.86 points closing at the price of $46.82. Automatic Data Processing, Inc. has currently increase 19.88% in its stock over the period of 6-months while its rival Hartford Financial Services Group, Inc. (The) subtracted -9.39% in the previous 6-months.

Now we have to analyze the facts that if the stocks were worthy off investors’ money? The facts to analyze here are risks, profitability, returns and price trends.

Returns and Profitability

Profitability and returns are the main reason of investment, the investors are looking for profits that they get and return they should expect over the period of time.

The first and foremost return that is considered while making an investment is the ROI or Return on Investment. The ROI is the ratio between the profit against the cost of investment. Currently the ROI of Automatic Data Processing, Inc. (NASDAQ:ADP) is 30.1% while the ROI of Hartford Financial Services Group, Inc. (The) (NYSE:HIG) is 5%. Another figure that is to be considered while analyzing the profitability of a share is its EBITDA margin, ADP’s EBITDA Margin is 22.61 whereas HIG’s is 7.91.

Both the profitability ratios suggest that Automatic Data Processing, Inc. (NASDAQ:ADP) is more suitable investment in terms of profitability and return.

EPS & Surprise Factor

Automatic Data Processing, Inc. (NASDAQ:ADP) reported $0.92/share EPS for the previous quarter where analysts were predicting an EPS to be $0.9/share Thus beating the analyst Estimates with a Surprise Factor of 2.2 Percent. While, Hartford Financial Services Group, Inc. (The) (NYSE:HIG) reported EPS of $1.13/share in the last quarter. The analysts projected EPS of $1.03/share depicting a Surprise of 9.7 Percent.

Taking a look at Earnings per Share, Hartford Financial Services Group, Inc. (The) tends to be beating the analyst estimates more than Automatic Data Processing, Inc.. so HIG is more profitable than ADP.

Technical Analysis of Automatic Data Processing, Inc. & Hartford Financial Services Group, Inc. (The)

Moving average convergence divergence (MACD) shows that Automatic Data Processing, Inc. (NASDAQ:ADP) is on a PRICE RELATIVITY trend While Hartford Financial Services Group, Inc. (The) (NYSE:HIG) is on PRICE RELATIVITY trend. The trend for the past 10-days shows that the Automatic Data Processing, Inc. was in BEARISH territory and Hartford Financial Services Group, Inc. (The) was in BEARISH territory.

ADP’s current statistics gauge that the stock candle is BEARISH with HIGH volatility. While HIG’s candle is BEARISH with HIGH.

EPS Growth Rate: ADP’s 14.6% versus HIG’s 20.06%

Another shareholder value can be analyzed through the EPS growth rate; the next 5 years EPS growth rate is predicted by the analysts after the analyzing the previous trends. The next 5 year EPS growth rate of Automatic Data Processing, Inc. (NASDAQ:ADP) is predicted at 14.6% while Hartford Financial Services Group, Inc. (The) (NYSE:HIG) stands at 20.06%. These numbers suggest that HIG is more suitable investment in terms of EPS growth rate.

Financial Risk and Liquidity Concerns

The current ratio and the debt ratio are the two ratios that show the investor how quickly the company is able to payout its debt and how quickly it can cover its obligations. The current ratio of ADP stands at 1.1 while HIG is at 0 whereas the debt ratio of the prior is 0.58 while the debt ratio of the later is 0.37.

The values of the both ratios suggest that ADP is more suitable investment when the liquidity and risk is the main concern.

Analyst Recommendations

While making an investment, another main factor to consider before investing is the analyst recommendation on the scale of 1 to 5 where 1 is strong buy, 2 is buy, 3 is hold, 4 is Sell and 5 is strong sell. Analyst recommend 2.5 for ADP and 2.5 for HIG which means ADP has Hold rating whereas HIG has Hold rating.

Another recommendation of analyst that is to be considered worthy is the price target. The mare price or price trend does not suggest the suitability of a stock. The price target set by analyst is also to be considered while investing as it suggests to what extent the stock will rise or fall in the near future. The price target set for ADP is $153.06 which is 9.72% of its current price while HIG has price target of 59.13 which is 20.82% of its current price.

Valuation Ratios

Valuation is the process of determining the company’s worth for an investor, the valuation ratios give an insight to that worthiness.

ADP currently has price to earning P/E ratio of 37.79 whereas HIG has 12.77 while the forward P/E ratio for the prior stands at 23.29 and for the later it depicts the value of 9.39.

The price to Book P/B for ADP is 17.49, Price to Sale is at 4.54 and for HIG these ratios stand at 1.34 and 0.93.