PAYCHEX INC (PAYX) Stock Fundamental Analysis
NASDAQ:PAYX - Nasdaq - US7043261079 - Common Stock - Currency: USD
PAYX gets a fundamental rating of 6 out of 10. The analysis compared the fundamentals against 82 industry peers in the Professional Services industry. PAYX scores excellent points on both the profitability and health parts. This is a solid base for a good stock. PAYX is valied quite expensively at the moment, while it does show a decent growth rate.
1. Profitability
1.1 Basic Checks
PAYX had positive earnings in the past year.
In the past year PAYX had a positive cash flow from operations.
PAYX had positive earnings in each of the past 5 years.
In the past 5 years PAYX always reported a positive cash flow from operatings.
1.2 Ratios
PAYX has a Return On Assets of 16.29%. This is amongst the best in the industry. PAYX outperforms 92.41% of its industry peers.
With an excellent Return On Equity value of 43.80%, PAYX belongs to the best 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 96.20% of the companies in the same industry.
The Average Return On Invested Capital over the past 3 years for PAYX is significantly above the industry average of 13.65%.
The last Return On Invested Capital (32.75%) for PAYX is above the 3 year average (32.56%), which is a sign of increasing profitability.
| 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
With an excellent Profit Margin value of 32.02%, PAYX belongs to the best of the industry, outperforming 97.47% 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 42.01%, PAYX belongs to the top of the industry, outperforming 98.73% of the companies in the same industry.
In the last couple of years the Operating Margin of PAYX has grown nicely.
The Gross Margin of PAYX (89.52%) is better than 97.47% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 42.01% | ||
| PM (TTM) | 32.02% | ||
| GM | 89.52% |
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
With a Return on Invested Capital (ROIC) well above the Cost of Capital (WACC), PAYX is creating value.
Compared to 1 year ago, PAYX has less shares outstanding
The number of shares outstanding for PAYX has been increased compared to 5 years ago.
Compared to 1 year ago, PAYX has a worse debt to assets ratio.
2.2 Solvency
An Altman-Z score of 6.64 indicates that PAYX is not in any danger for bankruptcy at the moment.
With an excellent Altman-Z score value of 6.64, PAYX belongs to the best of the industry, outperforming 89.87% of the companies in the same industry.
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.
Looking at the Debt to FCF ratio, with a value of 0.53, PAYX belongs to the top of the industry, outperforming 83.54% of the companies in the same industry.
A Debt/Equity ratio of 0.21 indicates that PAYX is not too dependend on debt financing.
PAYX has a Debt to Equity ratio (0.21) which is comparable to the rest of the industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.21 | ||
| Debt/FCF | 0.53 | ||
| Altman-Z | 6.64 |
ROIC/WACC3.63
WACC9.03%
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.
PAYX has a Current ratio (1.39) which is in line with its industry peers.
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 in line with its industry peers.
PAYX does not score too well on the current and quick ratio evaluation. However, as it has 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
PAYX shows a small growth in Earnings Per Share. In the last year, the EPS has grown by 7.14%.
PAYX shows quite a strong growth in Earnings Per Share. Measured over the last years, the EPS has been growing by 10.69% yearly.
PAYX shows a small growth in Revenue. In the last year, the Revenue has grown by 4.18%.
PAYX shows a small growth in Revenue. Measured over the last years, the Revenue has been growing by 6.95% yearly.
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
The Earnings Per Share is expected to grow by 7.10% on average over the next years.
The Revenue is expected to grow by 5.65% on average over the next years.
EPS Next Y7.94%
EPS Next 2Y7.15%
EPS Next 3Y6.99%
EPS Next 5Y7.1%
Revenue Next Year4.57%
Revenue Next 2Y5.51%
Revenue Next 3Y5.73%
Revenue Next 5Y5.65%
3.3 Evolution
When comparing the EPS growth rate of the last years to the growth rate of the upcoming years, we see that the growth is decreasing.
The Revenue growth rate is stable: in the next years the growth will be about the same than in the last years.
4. Valuation
4.1 Price/Earnings Ratio
The Price/Earnings ratio is 30.94, which means the current valuation is very expensive for PAYX.
Based on the Price/Earnings ratio, PAYX is valued a bit more expensive than 60.76% of the companies in the same industry.
PAYX's Price/Earnings ratio indicates a similar valuation than the S&P500 average which is at 29.63.
With a Price/Forward Earnings ratio of 27.41, PAYX can be considered very expensive at the moment.
PAYX's Price/Forward Earnings ratio is in line with the industry average.
PAYX is valuated rather expensively when we compare the Price/Forward Earnings ratio to 22.68, which is the current average of the S&P500 Index.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 30.94 | ||
| Fwd PE | 27.41 |
4.2 Price Multiples
Based on the Enterprise Value to EBITDA ratio, PAYX is valued a bit more expensive than the industry average as 63.29% of the companies are valued more cheaply.
PAYX's Price/Free Cash Flow is on the same level as the industry average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 34.61 | ||
| EV/EBITDA | 22.09 |
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.
PAYX has an outstanding profitability rating, which may justify a higher PE ratio.
PEG (NY)3.9
PEG (5Y)2.89
EPS Next 2Y7.15%
EPS Next 3Y6.99%
5. Dividend
5.1 Amount
PAYX has a Yearly Dividend Yield of 2.61%.
Compared to an average industry Dividend Yield of 1.93, PAYX pays a better dividend. On top of this PAYX pays more dividend than 92.41% of the companies listed in the same industry.
PAYX's Dividend Yield is comparable with the S&P500 average which is at 2.29.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.61% |
5.2 History
On average, the dividend of PAYX grows each year by 9.63%, which is quite nice.
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
PAYX pays out 80.23% of its income as dividend. 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 2Y7.15%
EPS Next 3Y6.99%
148.51
-1.75 (-1.16%)
Chartmill FA Rating
GICS SectorIndustrials
GICS IndustryGroupCommercial & Professional Services
GICS IndustryProfessional Services
Earnings (Last)
Earnings (Next)
Inst Owners81.48%
Inst Owner Change2.32%
Ins Owners10.58%
Ins Owner Change-1.48%
Market Cap53.47B
Analysts53.91
Price Target143.1 (-3.64%)
Short Float %4.47%
Short Ratio7.33
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.61% |
Yearly Dividend3.65
Dividend Growth(5Y)9.63%
DP80.23%
Div Incr Years11
Div Non Decr Years11
Ex-Date
Surprises & Revisions
EPS beat(2)0
Avg EPS beat(2)-0.5%
Min EPS beat(2)-0.58%
Max EPS beat(2)-0.41%
EPS beat(4)1
Avg EPS beat(4)-0.5%
Min EPS beat(4)-1.12%
Max EPS beat(4)0.13%
EPS beat(8)2
Avg EPS beat(8)-0.51%
EPS beat(12)5
Avg EPS beat(12)0.82%
EPS beat(16)9
Avg EPS beat(16)2.37%
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)1.02%
PT rev (3m)3.69%
EPS NQ rev (1m)0.05%
EPS NQ rev (3m)1.76%
EPS NY rev (1m)0.14%
EPS NY rev (3m)0.17%
Revenue NQ rev (1m)-0.45%
Revenue NQ rev (3m)-0.26%
Revenue NY rev (1m)0.04%
Revenue NY rev (3m)-0.04%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 30.94 | ||
| Fwd PE | 27.41 | ||
| P/S | 9.96 | ||
| P/FCF | 34.61 | ||
| P/OCF | 30.83 | ||
| P/B | 13.62 | ||
| P/tB | 28.65 | ||
| EV/EBITDA | 22.09 |
EPS(TTM)4.8
EY3.23%
EPS(NY)5.42
Fwd EY3.65%
FCF(TTM)4.29
FCFY2.89%
OCF(TTM)4.82
OCFY3.24%
SpS14.91
BVpS10.9
TBVpS5.18
PEG (NY)3.9
PEG (5Y)2.89
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 | 89.52% | ||
| 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 | 6.64 |
F-Score8
WACC9.03%
ROIC/WACC3.63
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 Y7.94%
EPS Next 2Y7.15%
EPS Next 3Y6.99%
EPS Next 5Y7.1%
Revenue 1Y (TTM)4.18%
Revenue growth 3Y9.17%
Revenue growth 5Y6.95%
Sales Q2Q%4.69%
Revenue Next Year4.57%
Revenue Next 2Y5.51%
Revenue Next 3Y5.73%
Revenue Next 5Y5.65%
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%