106.63 USD
-0.56 (-0.52%)
106.532 USD
-0.1 (-0.09%)
We assign a fundamental rating of 6 out of 10 to PAYX. PAYX was compared to 87 industry peers in the Professional Services industry. PAYX has an excellent profitability rating, but there are some minor concerns on its financial health. PAYX has a correct valuation and a medium growth rate. Finally PAYX also has an excellent dividend rating.
1. Profitability
1.1 Basic Checks
- PAYX had positive earnings in the past year.
- PAYX had a positive operating cash flow in the past year.
- PAYX had positive earnings in each of the past 5 years.
- Each year in the past 5 years PAYX had a positive operating cash flow.
1.2 Ratios
- With a decent Return On Assets value of 9.66%, PAYX is doing good in the industry, outperforming 78.16% of the companies in the same industry.
- With an excellent Return On Equity value of 41.13%, PAYX belongs to the best of the industry, outperforming 93.10% of the companies in the same industry.
- The Return On Invested Capital of PAYX (19.25%) is better than 89.66% of its industry peers.
- The Average Return On Invested Capital over the past 3 years for PAYX is significantly above the industry average of 11.85%.
- The last Return On Invested Capital (19.25%) for PAYX is well below the 3 year average (28.05%), which needs to be investigated, but indicates that PAYX had better years and this may not be a problem.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 9.66% | ||
| ROE | 41.13% | ||
| ROIC | 19.25% |
ROA(3y)13.68%
ROA(5y)13.48%
ROE(3y)43.07%
ROE(5y)42.31%
ROIC(3y)28.05%
ROIC(5y)28.53%
1.3 Margins
- With an excellent Profit Margin value of 26.45%, PAYX belongs to the best of the industry, outperforming 94.25% of the companies in the same industry.
- In the last couple of years the Profit Margin of PAYX has grown nicely.
- Looking at the Operating Margin, with a value of 39.76%, PAYX belongs to the top of the industry, outperforming 98.85% of the companies in the same industry.
- PAYX's Operating Margin has improved in the last couple of years.
- PAYX has a better Gross Margin (91.14%) than 98.85% of its industry peers.
- In the last couple of years the Gross Margin of PAYX has remained more or less at the same level.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 39.76% | ||
| PM (TTM) | 26.45% | ||
| GM | 91.14% |
OM growth 3Y1.57%
OM growth 5Y2.95%
PM growth 3Y-0.51%
PM growth 5Y1.82%
GM growth 3Y-0.99%
GM growth 5Y-0.7%
2. Health
2.1 Basic Checks
- The Return on Invested Capital (ROIC) is well above the Cost of Capital (WACC), so PAYX is creating value.
- The number of shares outstanding for PAYX remains at a similar level compared to 1 year ago.
- The number of shares outstanding for PAYX has been increased compared to 5 years ago.
- The debt/assets ratio for PAYX is higher compared to a year ago.
2.2 Solvency
- An Altman-Z score of 2.97 indicates that PAYX is not a great score, but indicates only limited risk for bankruptcy at the moment.
- With a Altman-Z score value of 2.97, PAYX perfoms like the industry average, outperforming 57.47% of the companies in the same industry.
- PAYX has a debt to FCF ratio of 2.53. This is a good value and a sign of high solvency as PAYX would need 2.53 years to pay back of all of its debts.
- PAYX has a Debt to FCF ratio of 2.53. This is in the better half of the industry: PAYX outperforms 70.11% of its industry peers.
- PAYX has a Debt/Equity ratio of 1.18. This is a high value indicating a heavy dependency on external financing.
- The Debt to Equity ratio of PAYX (1.18) is worse than 70.11% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 1.18 | ||
| Debt/FCF | 2.53 | ||
| Altman-Z | 2.97 |
ROIC/WACC2.31
WACC8.33%
2.3 Liquidity
- A Current Ratio of 1.27 indicates that PAYX should not have too much problems paying its short term obligations.
- PAYX has a Current ratio of 1.27. This is comparable to the rest of the industry: PAYX outperforms 41.38% of its industry peers.
- A Quick Ratio of 1.27 indicates that PAYX should not have too much problems paying its short term obligations.
- PAYX has a Quick ratio (1.27) which is comparable to the rest of the industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 1.27 | ||
| Quick Ratio | 1.27 |
3. Growth
3.1 Past
- PAYX shows a small growth in Earnings Per Share. In the last year, the EPS has grown by 7.50%.
- The Earnings Per Share has been growing by 10.74% on average over the past years. This is quite good.
- The Revenue has grown by 12.37% in the past year. This is quite good.
- The Revenue has been growing slightly by 6.64% on average over the past years.
EPS 1Y (TTM)7.5%
EPS 3Y9.82%
EPS 5Y10.74%
EPS Q2Q%10.53%
Revenue 1Y (TTM)12.37%
Revenue growth 3Y6.51%
Revenue growth 5Y6.64%
Sales Q2Q%18.28%
3.2 Future
- Based on estimates for the next years, PAYX will show a quite strong growth in Earnings Per Share. The EPS will grow by 8.20% on average per year.
- Based on estimates for the next years, PAYX will show a quite strong growth in Revenue. The Revenue will grow by 8.20% on average per year.
EPS Next Y12.44%
EPS Next 2Y10.02%
EPS Next 3Y8.92%
EPS Next 5Y8.2%
Revenue Next Year16.92%
Revenue Next 2Y11.27%
Revenue Next 3Y9.48%
Revenue Next 5Y8.2%
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 accelerating: in the next years the growth will be better than in the last years.
4. Valuation
4.1 Price/Earnings Ratio
- With a Price/Earnings ratio of 20.66, PAYX is valued on the expensive side.
- The rest of the industry has a similar Price/Earnings ratio as PAYX.
- PAYX's Price/Earnings ratio indicates a valuation a bit cheaper than the S&P500 average which is at 27.21.
- The Price/Forward Earnings ratio is 17.69, which indicates a rather expensive current valuation of PAYX.
- Based on the Price/Forward Earnings ratio, PAYX is valued a bit cheaper than the industry average as 60.92% of the companies are valued more expensively.
- PAYX's Price/Forward Earnings ratio indicates a valuation a bit cheaper than the S&P500 average which is at 25.98.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 20.66 | ||
| Fwd PE | 17.69 |
4.2 Price Multiples
- PAYX's Enterprise Value to EBITDA is on the same level as the industry average.
- Based on the Price/Free Cash Flow ratio, PAYX is valued a bit cheaper than 71.26% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 19.56 | ||
| EV/EBITDA | 15.21 |
4.3 Compensation for Growth
- The PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates a correct valuation of the company.
- The excellent profitability rating of PAYX may justify a higher PE ratio.
PEG (NY)1.66
PEG (5Y)1.92
EPS Next 2Y10.02%
EPS Next 3Y8.92%
5. Dividend
5.1 Amount
- With a Yearly Dividend Yield of 4.03%, PAYX is a good candidate for dividend investing.
- Compared to an average industry Dividend Yield of 1.44, PAYX pays a better dividend. On top of this PAYX pays more dividend than 90.80% of the companies listed in the same industry.
- PAYX's Dividend Yield is rather good when compared to the S&P500 average which is at 1.81.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 4.03% |
5.2 History
- The dividend of PAYX is nicely growing with an annual growth rate of 10.17%!
- 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)10.17%
Div Incr Years11
Div Non Decr Years11
5.3 Sustainability
- PAYX pays out 95.21% of its income as dividend. This is not a sustainable payout ratio.
- The dividend of PAYX is growing, but the earnings are growing slower. This means the dividend growth is not sustainable.
DP95.21%
EPS Next 2Y10.02%
EPS Next 3Y8.92%
PAYCHEX INC / PAYX FAQ
Can you provide the ChartMill fundamental rating for PAYCHEX INC?
ChartMill assigns a fundamental rating of 6 / 10 to PAYX.
What is the valuation status of PAYCHEX INC (PAYX) stock?
ChartMill assigns a valuation rating of 5 / 10 to PAYCHEX INC (PAYX). This can be considered as Fairly Valued.
What is the profitability of PAYX stock?
PAYCHEX INC (PAYX) has a profitability rating of 9 / 10.
Can you provide the PE and PB ratios for PAYX stock?
The Price/Earnings (PE) ratio for PAYCHEX INC (PAYX) is 20.66 and the Price/Book (PB) ratio is 9.89.
How financially healthy is PAYCHEX INC?
The financial health rating of PAYCHEX INC (PAYX) is 4 / 10.