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.
Price History & Performance
|Historical stock prices|
|Current Share Price||US$109.37|
|52 Week High||US$75.08|
|52 Week Low||US$118.22|
|1 Month Change||-5.28%|
|3 Month Change||4.88%|
|1 Year Change||43.78%|
|3 Year Change||48.62%|
|5 Year Change||90.21%|
|Change since IPO||14,274.52%|
Recent News & Updates
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.
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...
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...
|PAYX||US IT||US Market|
Return vs Industry: PAYX exceeded the US IT industry which returned 22.3% over the past year.
Return vs Market: PAYX exceeded the US Market which returned 31.5% over the past year.
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
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
|PAYX fundamental statistics|
Is PAYX overvalued?See Fair Value and valuation analysis
Earnings & Revenue
|PAYX income statement (TTM)|
|Cost of Revenue||US$1.27b|
Last Reported Earnings
May 31, 2021
Next Earnings Date
Sep 30, 2021
|Earnings per share (EPS)||3.05|
|Net Profit Margin||27.05%|
How did PAYX perform over the long term?See historical performance and comparison
2.4%Current Dividend Yield
Is Paychex undervalued compared to its fair value and its price relative to the market?
Price to Earnings (PE) ratio
Share Price vs. Fair Value
Below Fair Value: PAYX ($109.37) is trading above our estimate of fair value ($75.23)
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 (35.9x) compared to the US IT industry average (34.4x).
PE vs Market: PAYX is poor value based on its PE Ratio (35.9x) compared to the US market (17.5x).
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 (13.4x) compared to the US IT industry average (5.1x).
How is Paychex forecast to perform in the next 1 to 3 years based on estimates from 17 analysts?
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 (14.9% 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%)
How has Paychex performed over the past 5 years?
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.
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 ($1.3B).
Debt to Equity History and Analysis
Debt Level: PAYX's debt to equity ratio (27.3%) is considered satisfactory.
Reducing Debt: PAYX's debt to equity ratio has increased from 0.03% to 27.3% over the past 5 years.
Debt Coverage: PAYX's debt is well covered by operating cash flow (156.6%).
Interest Coverage: PAYX's interest payments on its debt are well covered by EBIT (43.6x coverage).
What is Paychex current dividend yield, its reliability and sustainability?
Current Dividend Yield
Dividend Yield vs Market
Notable Dividend: PAYX's dividend (2.41%) is higher than the bottom 25% of dividend payers in the US market (1.37%).
High Dividend: PAYX's dividend (2.41%) is low compared to the top 25% of dividend payers in the US market (3.67%).
Stability and Growth of Payments
Stable Dividend: PAYX's dividends per share have been stable in the past 10 years.
Growing Dividend: PAYX's dividend payments have increased over the past 10 years.
Current Payout to Shareholders
Dividend Coverage: At its current payout ratio (82.6%), PAYX's payments are covered by earnings.
Future Payout to Shareholders
Future Dividend Coverage: PAYX's dividends in 3 years are forecast to be covered by earnings (70.8% payout ratio).
How experienced are the management team and are they aligned to shareholders interests?
Average management tenure
Marty Mucci (61 yo)
Mr. Martin Mucci, also known as Marty, has been an Independent Director at NCR Corporation since April 20, 2021. He has been the Chief Executive Officer and President of Paychex, Inc. since September 30, 2...
CEO Compensation Analysis
Compensation vs Market: Marty's total compensation ($USD9.63M) is about average for companies of similar size in the US market ($USD11.42M).
Compensation vs Earnings: Marty's compensation has been consistent with company performance over the past year.
Experienced Management: PAYX's management team is seasoned and experienced (9.1 years average tenure).
Experienced Board: PAYX's board of directors are seasoned and experienced ( 10.9 years average tenure).
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
Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.
Paychex, Inc.'s employee growth, exchange listings and data sources
- Name: Paychex, Inc.
- Ticker: PAYX
- Exchange: NasdaqGS
- Founded: 1971
- Industry: Data Processing and Outsourced Services
- Sector: Software
- Market Cap: US$39.441b
- Shares outstanding: 360.62m
- Website: https://www.paychex.com
Number of Employees
- Paychex, Inc.
- 911 Panorama Trail South
- New York
- United States
Company Analysis and Financial Data Status
|Data||Last Updated (UTC time)|
|Company Analysis||2021/09/22 22:33|
|End of Day Share Price||2021/09/22 00:00|
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.