Paychex (PAYX): Assessing Valuation After a Year-to-Date Share Price Pullback

Paychex (PAYX) has quietly lagged the market this year, with the stock down about 17% year to date even as the business keeps posting steady mid single digit revenue and double digit profit growth.

See our latest analysis for Paychex.

Despite the weak year to date share price return of around 16 percent, recent weeks have seen a modest rebound, and the three year total shareholder return of roughly 11 percent shows the long term story is intact rather than broken.

If Paychex has you rethinking where steady growth fits in your portfolio, this might be a good moment to explore fast growing stocks with high insider ownership for bolder opportunities.

With steady high single digit growth, a modest discount to analyst targets, and a respectable intrinsic discount, is Paychex now a quietly undervalued compounder, or has the market already priced in its next leg of expansion?

Most Popular Narrative: 9.8% Undervalued

With Paychex last closing at $115.64 against a narrative fair value near $128, the story leans toward a modest disconnect between price and projections.

The analysts have a consensus price target of $146.583 for Paychex based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $160.0, and the most bearish reporting a price target of just $122.0.

Read the complete narrative.

Curious how steady revenue growth, slowly expanding margins, and a still rich earnings multiple can all coexist in one model? The narrative spells out the math. Dive in.

Result: Fair Value of $128.21 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, softer organic growth and execution risk around integrating Paycor could still challenge margin expansion and keep the valuation from rerating higher.

Find out about the key risks to this Paychex narrative.

Build Your Own Paychex Narrative

If you see the story differently or want to stress test your own assumptions, you can build a personalized narrative in just a few minutes using Do it your way.

A great starting point for your Paychex research is our analysis highlighting 2 key rewards and 2 important warning signs that could impact your investment decision.

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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.

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