PAYCHEX INC (PAYX) Stock Fundamental Analysis
NASDAQ:PAYX - Nasdaq - US7043261079 - Common Stock
We assign a fundamental rating of 6 out of 10 to PAYX. PAYX was compared to 82 industry peers in the Professional Services industry. PAYX gets an excellent profitability rating and is at the same time showing great financial health properties. PAYX does not seem to be growing, but still is valued expensively.
1. Profitability
1.1 Basic Checks
In the past year PAYX was profitable.
In the past year PAYX had a positive cash flow from operations.
Each year in the past 5 years PAYX has been profitable.
Each year in the past 5 years PAYX had a positive operating cash flow.
1.2 Ratios
With an excellent Return On Assets value of 16.29%, PAYX belongs to the best of the industry, outperforming 93.67% of the companies in the same industry.
Looking at the Return On Equity, with a value of 43.80%, PAYX belongs to the top of the industry, outperforming 88.61% of the companies in the same industry.
With an excellent Return On Invested Capital value of 32.75%, PAYX belongs to the best of the industry, outperforming 97.47% of the companies in the same industry.
Measured over the past 3 years, the Average Return On Invested Capital for PAYX is significantly above the industry average of 13.48%.
The 3 year average ROIC (32.56%) for PAYX is below the current ROIC(32.75%), indicating increased profibility in the last year.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 16.29% | ||
| ROE | 43.8% | ||
| ROIC | 32.75% |
ROA(3y)15.17%
ROA(5y)14.05%
ROE(3y)44.73%
ROE(5y)42.18%
ROIC(3y)32.56%
ROIC(5y)30.21%
1.3 Margins
PAYX has a Profit Margin of 32.02%. This is amongst the best in the industry. PAYX outperforms 96.20% of its industry peers.
PAYX's Profit Margin has improved in the last couple of years.
The Operating Margin of PAYX (42.01%) is better than 98.73% of its industry peers.
In the last couple of years the Operating Margin of PAYX has grown nicely.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 42.01% | ||
| PM (TTM) | 32.02% | ||
| GM | N/A |
OM growth 3Y4.45%
OM growth 5Y2.9%
PM growth 3Y5.79%
PM growth 5Y3.15%
GM growth 3YN/A
GM growth 5YN/A
2. Health
2.1 Basic Checks
PAYX has a Return on Invested Capital (ROIC), which is well above the Cost of Capital (WACC), which means it is creating value.
PAYX has less shares outstanding than it did 1 year ago.
PAYX has more shares outstanding than it did 5 years ago.
Compared to 1 year ago, PAYX has a worse debt to assets ratio.
2.2 Solvency
PAYX has an Altman-Z score of 6.49. This indicates that PAYX is financially healthy and has little risk of bankruptcy at the moment.
The Altman-Z score of PAYX (6.49) is better than 89.87% of its industry peers.
The Debt to FCF ratio of PAYX is 0.53, which is an excellent value as it means it would take PAYX, only 0.53 years of fcf income to pay off all of its debts.
PAYX has a Debt to FCF ratio of 0.53. This is amongst the best in the industry. PAYX outperforms 83.54% of its industry peers.
PAYX has a Debt/Equity ratio of 0.21. This is a healthy value indicating a solid balance between debt and equity.
PAYX has a Debt to Equity ratio of 0.21. This is comparable to the rest of the industry: PAYX outperforms 59.49% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.21 | ||
| Debt/FCF | 0.53 | ||
| Altman-Z | 6.49 |
ROIC/WACC3.52
WACC9.31%
2.3 Liquidity
PAYX has a Current Ratio of 1.39. This is a normal value and indicates that PAYX is financially healthy and should not expect problems in meeting its short term obligations.
Looking at the Current ratio, with a value of 1.39, PAYX is in line with its industry, outperforming 49.37% of the companies in the same industry.
PAYX has a Quick Ratio of 1.39. This is a normal value and indicates that PAYX is financially healthy and should not expect problems in meeting its short term obligations.
PAYX has a Quick ratio (1.39) which is comparable to the rest of the industry.
The current and quick ratio evaluation for PAYX is rather negative, while it does have excellent solvency and profitability. These ratios do not necessarly indicate liquidity issues and need to be evaluated against the specifics of the business.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 1.39 | ||
| Quick Ratio | 1.39 |
3. Growth
3.1 Past
The Earnings Per Share has been growing slightly by 7.14% over the past year.
The Earnings Per Share has been growing by 10.69% on average over the past years. This is quite good.
PAYX shows a small growth in Revenue. In the last year, the Revenue has grown by 4.18%.
Measured over the past years, PAYX shows a small growth in Revenue. The Revenue has been growing by 6.95% on average per year.
EPS 1Y (TTM)7.14%
EPS 3Y15.79%
EPS 5Y10.69%
EPS Q2Q%5.56%
Revenue 1Y (TTM)4.18%
Revenue growth 3Y9.17%
Revenue growth 5Y6.95%
Sales Q2Q%4.69%
3.2 Future
PAYX is expected to show a small growth in Earnings Per Share. In the coming years, the EPS will grow by 7.10% yearly.
Based on estimates for the next years, PAYX will show a small growth in Revenue. The Revenue will grow by 4.96% on average per year.
EPS Next Y7.78%
EPS Next 2Y6.93%
EPS Next 3Y6.67%
EPS Next 5Y7.1%
Revenue Next Year4.53%
Revenue Next 2Y5.03%
Revenue Next 3Y5.28%
Revenue Next 5Y4.96%
3.3 Evolution
The EPS growth rate is decreasing: in the next years the growth will be less than in the last years.
The Revenue growth rate is decreasing: in the next years the growth will be less than in the last years.
4. Valuation
4.1 Price/Earnings Ratio
Based on the Price/Earnings ratio of 30.30, the valuation of PAYX can be described as expensive.
Based on the Price/Earnings ratio, PAYX is valued a bit more expensive than 60.76% of the companies in the same industry.
The average S&P500 Price/Earnings ratio is at 28.29. PAYX is around the same levels.
A Price/Forward Earnings ratio of 26.95 indicates a quite expensive valuation of PAYX.
PAYX's Price/Forward Earnings ratio is in line with the industry average.
PAYX is valuated at similar levels of the S&P average when we compare the Price/Forward Earnings ratio to 24.44, which is the current average of the S&P500 Index.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 30.3 | ||
| Fwd PE | 26.95 |
4.2 Price Multiples
The rest of the industry has a similar Enterprise Value to EBITDA ratio as PAYX.
The rest of the industry has a similar Price/Free Cash Flow ratio as PAYX.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 33.89 | ||
| EV/EBITDA | 21.41 |
4.3 Compensation for Growth
The high PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates PAYX does not grow enough to justify the current Price/Earnings ratio.
The excellent profitability rating of PAYX may justify a higher PE ratio.
PEG (NY)3.89
PEG (5Y)2.83
EPS Next 2Y6.93%
EPS Next 3Y6.67%
5. Dividend
5.1 Amount
PAYX has a Yearly Dividend Yield of 2.67%.
Compared to an average industry Dividend Yield of 1.82, PAYX pays a better dividend. On top of this PAYX pays more dividend than 92.41% of the companies listed in the same industry.
Compared to an average S&P500 Dividend Yield of 2.28, PAYX has a dividend comparable with the average S&P500 company.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.67% |
5.2 History
The dividend of PAYX is nicely growing with an annual growth rate of 9.63%!
PAYX has paid a dividend for at least 10 years, which is a reliable track record.
PAYX has not decreased its dividend for at least 10 years, so it has a reliable track record of non decreasing dividend.
Dividend Growth(5Y)9.63%
Div Incr Years11
Div Non Decr Years11
5.3 Sustainability
80.23% of the earnings are spent on dividend by PAYX. This is not a sustainable payout ratio.
PAYX's earnings are growing slower than its dividend. This means the dividend growth is not sustainable.
DP80.23%
EPS Next 2Y6.93%
EPS Next 3Y6.67%
PAYCHEX INC
NASDAQ:PAYX (1/22/2025, 2:10:09 PM)
145.42
-0.24 (-0.16%)
Chartmill FA Rating
GICS SectorIndustrials
GICS IndustryGroupCommercial & Professional Services
GICS IndustryProfessional Services
Earnings (Last)
Earnings (Next)
Inst Owners79.95%
Inst Owner Change-0.37%
Ins Owners10.74%
Ins Owner Change-1.53%
Market Cap52.36B
Analysts54.17
Price Target139.82 (-3.85%)
Short Float %4.27%
Short Ratio7.22
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.67% |
Yearly Dividend3.65
Dividend Growth(5Y)9.63%
DP80.23%
Div Incr Years11
Div Non Decr Years11
Ex-DateN/A
Surprises & Revisions
EPS beat(2)0
Avg EPS beat(2)-0.58%
Min EPS beat(2)-0.75%
Max EPS beat(2)-0.41%
EPS beat(4)1
Avg EPS beat(4)-0.54%
Min EPS beat(4)-1.12%
Max EPS beat(4)0.13%
EPS beat(8)2
Avg EPS beat(8)-0.53%
EPS beat(12)5
Avg EPS beat(12)0.81%
EPS beat(16)9
Avg EPS beat(16)2.36%
Revenue beat(2)0
Avg Revenue beat(2)-1.7%
Min Revenue beat(2)-1.75%
Max Revenue beat(2)-1.65%
Revenue beat(4)0
Avg Revenue beat(4)-2.16%
Min Revenue beat(4)-3.21%
Max Revenue beat(4)-1.65%
Revenue beat(8)0
Avg Revenue beat(8)-1.95%
Revenue beat(12)2
Avg Revenue beat(12)-1.18%
Revenue beat(16)5
Avg Revenue beat(16)-0.54%
PT rev (1m)1.93%
PT rev (3m)11.53%
EPS NQ rev (1m)0%
EPS NQ rev (3m)1.71%
EPS NY rev (1m)0%
EPS NY rev (3m)0.23%
Revenue NQ rev (1m)0%
Revenue NQ rev (3m)0.19%
Revenue NY rev (1m)-0.09%
Revenue NY rev (3m)0%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 30.3 | ||
| Fwd PE | 26.95 | ||
| P/S | 9.75 | ||
| P/FCF | 33.89 | ||
| P/OCF | 30.19 | ||
| P/B | 13.34 | ||
| P/tB | 28.06 | ||
| EV/EBITDA | 21.41 |
EPS(TTM)4.8
EY3.3%
EPS(NY)5.4
Fwd EY3.71%
FCF(TTM)4.29
FCFY2.95%
OCF(TTM)4.82
OCFY3.31%
SpS14.91
BVpS10.9
TBVpS5.18
PEG (NY)3.89
PEG (5Y)2.83
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 16.29% | ||
| ROE | 43.8% | ||
| ROCE | 43.17% | ||
| ROIC | 32.75% | ||
| ROICexc | 42.89% | ||
| ROICexgc | 88.34% | ||
| OM | 42.01% | ||
| PM (TTM) | 32.02% | ||
| GM | N/A | ||
| FCFM | 28.78% |
ROA(3y)15.17%
ROA(5y)14.05%
ROE(3y)44.73%
ROE(5y)42.18%
ROIC(3y)32.56%
ROIC(5y)30.21%
ROICexc(3y)46.81%
ROICexc(5y)42%
ROICexgc(3y)125.26%
ROICexgc(5y)115.32%
ROCE(3y)42.88%
ROCE(5y)39.78%
ROICexcg growth 3Y4.58%
ROICexcg growth 5Y-0.02%
ROICexc growth 3Y10.47%
ROICexc growth 5Y6.99%
OM growth 3Y4.45%
OM growth 5Y2.9%
PM growth 3Y5.79%
PM growth 5Y3.15%
GM growth 3YN/A
GM growth 5YN/A
F-Score8
Asset Turnover0.51
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.21 | ||
| Debt/FCF | 0.53 | ||
| Debt/EBITDA | 0.34 | ||
| Cap/Depr | 110.64% | ||
| Cap/Sales | 3.53% | ||
| Interest Coverage | 250 | ||
| Cash Conversion | 71.47% | ||
| Profit Quality | 89.87% | ||
| Current Ratio | 1.39 | ||
| Quick Ratio | 1.39 | ||
| Altman-Z | 6.49 |
F-Score8
WACC9.31%
ROIC/WACC3.52
Cap/Depr(3y)90.01%
Cap/Depr(5y)79.9%
Cap/Sales(3y)3.27%
Cap/Sales(5y)3.24%
Profit Quality(3y)99.34%
Profit Quality(5y)104.08%
High Growth Momentum
Growth
EPS 1Y (TTM)7.14%
EPS 3Y15.79%
EPS 5Y10.69%
EPS Q2Q%5.56%
EPS Next Y7.78%
EPS Next 2Y6.93%
EPS Next 3Y6.67%
EPS Next 5Y7.1%
Revenue 1Y (TTM)4.18%
Revenue growth 3Y9.17%
Revenue growth 5Y6.95%
Sales Q2Q%4.69%
Revenue Next Year4.53%
Revenue Next 2Y5.03%
Revenue Next 3Y5.28%
Revenue Next 5Y4.96%
EBIT growth 1Y7.03%
EBIT growth 3Y14.03%
EBIT growth 5Y10.05%
EBIT Next Year14.36%
EBIT Next 3Y8.91%
EBIT Next 5Y8.12%
FCF growth 1Y3.73%
FCF growth 3Y14.49%
FCF growth 5Y8.35%
OCF growth 1Y6.02%
OCF growth 3Y14.62%
OCF growth 5Y8.34%