PAYX

PaychexNasdaqGS:PAYX Stock Report

Market Cap

US$39.2b

7D

-1.4%

1Y

38.4%

Updated

19 Sep, 2021

Data

Company Financials +
PAYX fundamental analysis
Snowflake Score
Valuation0/6
Future Growth2/6
Past Performance3/6
Financial Health5/6
Dividends5/6

PAYX Overview

Paychex, Inc. provides integrated human capital management solutions for human resources (HR), payroll, benefits, and insurance services for small to medium-sized businesses in the United States and Europe.

Paychex Competitors

Automatic Data Processing

NasdaqGS:ADP

US$84.1b

Fidelity National Information Services

NYSE:FIS

US$76.4b

Fiserv

NasdaqGS:FISV

US$71.9b

Global Payments

NYSE:GPN

US$47.6b

Price History & Performance

Summary of all time highs, changes and price drops for Paychex
Historical stock prices
Current Share PriceUS$108.78
52 Week HighUS$75.08
52 Week LowUS$118.22
Beta0.91
1 Month Change-5.75%
3 Month Change4.94%
1 Year Change38.42%
3 Year Change44.56%
5 Year Change81.57%
Change since IPO14,196.98%

Recent News & Updates

Sep 10

With New Investment In Technologies, Paychex Is Worth 35% More

Cloud-based company Paychex, Inc. is a market leader offering human resources and outsourcing services in the United States and Europe. Paychex will have to invest significantly in its Paychex Flex platform in order to obtain the sales growth that I expect in the best-case scenario. In my opinion, new developments in artificial intelligence and acquisitions of other professional employer organizations will mostly bring sales growth and FCF generation. I assumed sales growth of 7% from 2022 to 2026 with CFO/Sales of 33%-35%. The free cash flow would increase from $1.3 billion to more than $1.7 billion. With a beta of 0.95-1.05, cost of equity of 6.7%-7.7%, and average interest rate of 4.2%, I assumed a WACC of 6.4%. In my view, most investors would be using a WACC of 6.8%-7.8%, but I want to be a bit conservative with my assumptions.

Sep 09
Be Wary Of Paychex (NASDAQ:PAYX) And Its Returns On Capital

Be Wary Of Paychex (NASDAQ:PAYX) And Its Returns On Capital

What trends should we look for it we want to identify stocks that can multiply in value over the long term? Amongst...

Aug 25
Is Paychex, Inc. (NASDAQ:PAYX) Potentially Undervalued?

Is Paychex, Inc. (NASDAQ:PAYX) Potentially Undervalued?

Paychex, Inc. ( NASDAQ:PAYX ) saw a double-digit share price rise of over 10% in the past couple of months on the...

Shareholder Returns

PAYXUS ITUS Market
7D-1.4%-0.9%-0.6%
1Y38.4%25.7%33.8%

Return vs Industry: PAYX exceeded the US IT industry which returned 25.7% over the past year.

Return vs Market: PAYX exceeded the US Market which returned 33.8% over the past year.

Price Volatility

Is PAYX's price volatile compared to industry and market?
PAYX volatility
PAYX Beta0.91
Industry Beta1.18
Market Beta1

Stable Share Price: PAYX is less volatile than 75% of US stocks over the past 3 months, typically moving +/- 2% a week.

Volatility Over Time: PAYX's weekly volatility (2%) has been stable over the past year.

About the Company

FoundedEmployeesCEOWebsite
197115,000Marty Muccihttps://www.paychex.com

Paychex, Inc. provides integrated human capital management solutions for human resources (HR), payroll, benefits, and insurance services for small to medium-sized businesses in the United States and Europe. The company offers payroll processing services; payroll tax administration services; employee payment services; and regulatory compliance services, such as new-hire reporting and garnishment processing. It also provides HR solutions, including payroll, employer compliance, HR and employee benefits administration, risk management outsourcing, and the on-site availability of a professionally trained HR representative; and retirement services administration, including plan implementation, ongoing compliance with government regulations, employee and employer reporting, participant and employer online access, electronic funds transfer, and other administrative services.

Paychex Fundamentals Summary

How do Paychex's earnings and revenue compare to its market cap?
PAYX fundamental statistics
Market CapUS$39.23b
Earnings (TTM)US$1.10b
Revenue (TTM)US$4.06b

35.7x

P/E Ratio

9.7x

P/S Ratio

Earnings & Revenue

Key profitability statistics from the latest earnings report
PAYX income statement (TTM)
RevenueUS$4.06b
Cost of RevenueUS$1.27b
Gross ProfitUS$2.79b
ExpensesUS$1.69b
EarningsUS$1.10b

Last Reported Earnings

May 31, 2021

Next Earnings Date

Sep 30, 2021

Earnings per share (EPS)3.05
Gross Margin68.66%
Net Profit Margin27.05%
Debt/Equity Ratio27.3%

How did PAYX perform over the long term?

See historical performance and comparison

Dividends

2.4%

Current Dividend Yield

83%

Payout Ratio

Valuation

Is Paychex undervalued compared to its fair value and its price relative to the market?

35.74x

Price to Earnings (PE) ratio


Share Price vs. Fair Value

Below Fair Value: PAYX ($108.78) is trading above our estimate of fair value ($75.14)

Significantly Below Fair Value: PAYX is trading above our estimate of fair value.


Price To Earnings Ratio

PE vs Industry: PAYX is poor value based on its PE Ratio (35.7x) compared to the US IT industry average (34.4x).

PE vs Market: PAYX is poor value based on its PE Ratio (35.7x) compared to the US market (17.8x).


Price to Earnings Growth Ratio

PEG Ratio: PAYX is poor value based on its PEG Ratio (4.5x)


Price to Book Ratio

PB vs Industry: PAYX is overvalued based on its PB Ratio (13.3x) compared to the US IT industry average (5.2x).


Future Growth

How is Paychex forecast to perform in the next 1 to 3 years based on estimates from 17 analysts?

7.9%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: PAYX's forecast earnings growth (7.9% per year) is above the savings rate (2%).

Earnings vs Market: PAYX's earnings (7.9% per year) are forecast to grow slower than the US market (14.8% per year).

High Growth Earnings: PAYX's earnings are forecast to grow, but not significantly.

Revenue vs Market: PAYX's revenue (6% per year) is forecast to grow slower than the US market (9.8% per year).

High Growth Revenue: PAYX's revenue (6% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: PAYX's Return on Equity is forecast to be high in 3 years time (37.7%)


Past Performance

How has Paychex performed over the past 5 years?

7.8%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: PAYX has high quality earnings.

Growing Profit Margin: PAYX's current net profit margins (27.1%) are lower than last year (27.2%).


Past Earnings Growth Analysis

Earnings Trend: PAYX's earnings have grown by 7.8% per year over the past 5 years.

Accelerating Growth: PAYX's has had negative earnings growth over the past year, so it can't be compared to its 5-year average.

Earnings vs Industry: PAYX had negative earnings growth (-0.06%) over the past year, making it difficult to compare to the IT industry average (28%).


Return on Equity

High ROE: PAYX's Return on Equity (37.2%) is considered high.


Financial Health

How is Paychex's financial position?


Financial Position Analysis

Short Term Liabilities: PAYX's short term assets ($6.2B) exceed its short term liabilities ($4.9B).

Long Term Liabilities: PAYX's short term assets ($6.2B) exceed its long term liabilities ($1.3B).


Debt to Equity History and Analysis

Debt Level: PAYX's debt to equity ratio (27.3%) is considered satisfactory.

Reducing Debt: PAYX's debt to equity ratio has increased from 0.03% to 27.3% over the past 5 years.

Debt Coverage: PAYX's debt is well covered by operating cash flow (156.6%).

Interest Coverage: PAYX's interest payments on its debt are well covered by EBIT (43.6x coverage).


Balance Sheet


Dividend

What is Paychex current dividend yield, its reliability and sustainability?

2.43%

Current Dividend Yield


Dividend Yield vs Market

Notable Dividend: PAYX's dividend (2.43%) is higher than the bottom 25% of dividend payers in the US market (1.33%).

High Dividend: PAYX's dividend (2.43%) is low compared to the top 25% of dividend payers in the US market (3.6%).


Stability and Growth of Payments

Stable Dividend: PAYX's dividends per share have been stable in the past 10 years.

Growing Dividend: PAYX's dividend payments have increased over the past 10 years.


Current Payout to Shareholders

Dividend Coverage: At its current payout ratio (82.6%), PAYX's payments are covered by earnings.


Future Payout to Shareholders

Future Dividend Coverage: PAYX's dividends in 3 years are forecast to be covered by earnings (70.8% payout ratio).


Next Steps

Management

How experienced are the management team and are they aligned to shareholders interests?

9.1yrs

Average management tenure


CEO

Marty Mucci (61 yo)

11yrs

Tenure

US$9,627,247

Compensation

Mr. Martin Mucci, also known as Marty, has been an Independent Director at NCR Corporation since April 20, 2021. He has been the Chief Executive Officer and President of Paychex, Inc. since September 30, 2...


CEO Compensation Analysis

Compensation vs Market: Marty's total compensation ($USD9.63M) is about average for companies of similar size in the US market ($USD11.33M).

Compensation vs Earnings: Marty's compensation has been consistent with company performance over the past year.


Leadership Team

Experienced Management: PAYX's management team is seasoned and experienced (9.1 years average tenure).


Board Members

Experienced Board: PAYX's board of directors are seasoned and experienced ( 10.9 years average tenure).


Ownership

Who are the major shareholders and have insiders been buying or selling?


Insider Trading Volume

Insider Buying: PAYX insiders have only sold shares in the past 3 months.


Recent Insider Transactions

Ownership Breakdown

Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.


Top Shareholders

Company Information

Paychex, Inc.'s employee growth, exchange listings and data sources


Key Information

  • Name: Paychex, Inc.
  • Ticker: PAYX
  • Exchange: NasdaqGS
  • Founded: 1971
  • Industry: Data Processing and Outsourced Services
  • Sector: Software
  • Market Cap: US$39.228b
  • Shares outstanding: 360.62m
  • Website: https://www.paychex.com

Number of Employees


Location

  • Paychex, Inc.
  • 911 Panorama Trail South
  • Rochester
  • New York
  • 14625-2396
  • United States

Listings


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2021/09/19 22:02
End of Day Share Price2021/09/17 00:00
Earnings2021/05/31
Annual Earnings2021/05/31


Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.