PAYCHEX INC (PAYX) Stock Fundamental Analysis
NASDAQ:PAYX - Nasdaq - US7043261079 - Common Stock - Currency: USD
We assign a fundamental rating of 5 out of 10 to PAYX. PAYX was compared to 81 industry peers in the Professional Services industry. While PAYX has a great profitability rating, there are some minor concerns on its financial health. PAYX is quite expensive at the moment. It does show a decent growth rate.
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.
PAYX had a positive operating cash flow in each of the past 5 years.
1.2 Ratios
With an excellent Return On Assets value of 10.01%, PAYX belongs to the best of the industry, outperforming 80.25% of the companies in the same industry.
PAYX has a Return On Equity of 40.15%. This is amongst the best in the industry. PAYX outperforms 88.89% of its industry peers.
Looking at the Return On Invested Capital, with a value of 18.44%, PAYX belongs to the top of the industry, outperforming 86.42% 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 12.53%.
The last Return On Invested Capital (18.44%) 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 | 10.01% | ||
| ROE | 40.15% | ||
| ROIC | 18.44% |
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
The Profit Margin of PAYX (29.74%) is better than 96.30% of its industry peers.
In the last couple of years the Profit Margin of PAYX has grown nicely.
PAYX has a Operating Margin of 41.81%. This is amongst the best in the industry. PAYX outperforms 98.77% of its industry peers.
In the last couple of years the Operating Margin of PAYX has grown nicely.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 41.81% | ||
| PM (TTM) | 29.74% | ||
| GM | N/A |
OM growth 3Y1.57%
OM growth 5Y2.95%
PM growth 3Y-0.51%
PM growth 5Y1.82%
GM growth 3YN/A
GM growth 5YN/A
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.
Compared to 1 year ago, PAYX has about the same amount of shares outstanding.
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
PAYX has an Altman-Z score of 3.64. This indicates that PAYX is financially healthy and has little risk of bankruptcy at the moment.
With a decent Altman-Z score value of 3.64, PAYX is doing good in the industry, outperforming 66.67% of the companies in the same industry.
PAYX has a debt to FCF ratio of 2.87. This is a good value and a sign of high solvency as PAYX would need 2.87 years to pay back of all of its debts.
PAYX's Debt to FCF ratio of 2.87 is fine compared to the rest of the industry. PAYX outperforms 64.20% of its industry peers.
PAYX has a Debt/Equity ratio of 1.11. This is a high value indicating a heavy dependency on external financing.
PAYX has a Debt to Equity ratio of 1.11. This is in the lower half of the industry: PAYX underperforms 71.60% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 1.11 | ||
| Debt/FCF | 2.87 | ||
| Altman-Z | 3.64 |
ROIC/WACC2.13
WACC8.66%
2.3 Liquidity
A Current Ratio of 1.28 indicates that PAYX should not have too much problems paying its short term obligations.
With a Current ratio value of 1.28, PAYX perfoms like the industry average, outperforming 44.44% of the companies in the same industry.
PAYX has a Quick Ratio of 1.28. This is a normal value and indicates that PAYX is financially healthy and should not expect problems in meeting its short term obligations.
The Quick ratio of PAYX (1.28) is comparable to the rest of the industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 1.28 | ||
| Quick Ratio | 1.28 |
3. Growth
3.1 Past
The Earnings Per Share has been growing slightly by 5.51% over the past year.
The Earnings Per Share has been growing by 10.74% on average over the past years. This is quite good.
Looking at the last year, PAYX shows a small growth in Revenue. The Revenue has grown by 5.56% in the last year.
The Revenue has been growing slightly by 6.64% on average over the past years.
EPS 1Y (TTM)5.51%
EPS 3Y9.82%
EPS 5Y10.74%
EPS Q2Q%6.25%
Revenue 1Y (TTM)5.56%
Revenue growth 3Y6.51%
Revenue growth 5Y6.64%
Sales Q2Q%10.21%
3.2 Future
Based on estimates for the next years, PAYX will show a small growth in Earnings Per Share. The EPS will grow by 6.18% on average per year.
The Revenue is expected to grow by 5.75% on average over the next years.
EPS Next Y8.32%
EPS Next 2Y7.82%
EPS Next 3Y5.6%
EPS Next 5Y6.18%
Revenue Next Year10.52%
Revenue Next 2Y8.15%
Revenue Next 3Y5.82%
Revenue Next 5Y5.75%
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
Based on the Price/Earnings ratio of 29.21, the valuation of PAYX can be described as expensive.
PAYX's Price/Earnings is on the same level as the industry average.
PAYX is valuated at similar levels of the S&P average when we compare the Price/Earnings ratio to 27.15, which is the current average of the S&P500 Index.
PAYX is valuated quite expensively with a Price/Forward Earnings ratio of 26.97.
Compared to the rest of the industry, the Price/Forward Earnings ratio of PAYX is on the same level as its industry peers.
When comparing the Price/Forward Earnings ratio of PAYX to the average of the S&P500 Index (21.60), we can say PAYX is valued slightly more expensively.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 29.21 | ||
| Fwd PE | 26.97 |
4.2 Price Multiples
PAYX's Enterprise Value to EBITDA ratio is in line with the industry average.
Compared to the rest of the industry, the Price/Free Cash Flow ratio of PAYX is on the same level as its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 30.29 | ||
| EV/EBITDA | 21.7 |
4.3 Compensation for Growth
The high PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates an expensive valuation of the company.
The excellent profitability rating of PAYX may justify a higher PE ratio.
PEG (NY)3.51
PEG (5Y)2.72
EPS Next 2Y7.82%
EPS Next 3Y5.6%
5. Dividend
5.1 Amount
PAYX has a Yearly Dividend Yield of 3.00%. Purely for dividend investing, there may be better candidates out there.
PAYX's Dividend Yield is rather good when compared to the industry average which is at 2.12. PAYX pays more dividend than 92.59% of the companies in the same industry.
Compared to an average S&P500 Dividend Yield of 2.42, PAYX pays a bit more dividend than the S&P500 average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 3% |
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 87.40% 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.
DP87.4%
EPS Next 2Y7.82%
EPS Next 3Y5.6%
145.46
+1.52 (+1.06%)
Chartmill FA Rating
GICS SectorIndustrials
GICS IndustryGroupCommercial & Professional Services
GICS IndustryProfessional Services
Earnings (Last)
Earnings (Next)
Inst Owners81.48%
Inst Owner Change0.46%
Ins Owners10.61%
Ins Owner Change-0.11%
Market Cap52.39B
Analysts53.64
Price Target154.05 (5.91%)
Short Float %3.86%
Short Ratio6.57
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 3% |
Yearly Dividend4.02
Dividend Growth(5Y)10.17%
DP87.4%
Div Incr Years11
Div Non Decr Years11
Ex-Date
Surprises & Revisions
EPS beat(2)0
Avg EPS beat(2)-2.03%
Min EPS beat(2)-2.78%
Max EPS beat(2)-1.27%
EPS beat(4)0
Avg EPS beat(4)-1.26%
Min EPS beat(4)-2.78%
Max EPS beat(4)-0.41%
EPS beat(8)1
Avg EPS beat(8)-0.98%
EPS beat(12)4
Avg EPS beat(12)-0.14%
EPS beat(16)7
Avg EPS beat(16)1.66%
Revenue beat(2)1
Avg Revenue beat(2)-1.04%
Min Revenue beat(2)-2.46%
Max Revenue beat(2)0.37%
Revenue beat(4)1
Avg Revenue beat(4)-1.37%
Min Revenue beat(4)-2.46%
Max Revenue beat(4)0.37%
Revenue beat(8)1
Avg Revenue beat(8)-1.97%
Revenue beat(12)1
Avg Revenue beat(12)-1.67%
Revenue beat(16)5
Avg Revenue beat(16)-0.75%
PT rev (1m)3.43%
PT rev (3m)7.43%
EPS NQ rev (1m)-0.31%
EPS NQ rev (3m)0.11%
EPS NY rev (1m)-0.11%
EPS NY rev (3m)-0.45%
Revenue NQ rev (1m)3.75%
Revenue NQ rev (3m)4.76%
Revenue NY rev (1m)2.65%
Revenue NY rev (3m)4.16%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 29.21 | ||
| Fwd PE | 26.97 | ||
| P/S | 9.4 | ||
| P/FCF | 30.29 | ||
| P/OCF | 26.85 | ||
| P/B | 12.69 | ||
| P/tB | N/A | ||
| EV/EBITDA | 21.7 |
EPS(TTM)4.98
EY3.42%
EPS(NY)5.39
Fwd EY3.71%
FCF(TTM)4.8
FCFY3.3%
OCF(TTM)5.42
OCFY3.72%
SpS15.47
BVpS11.46
TBVpS-6.48
PEG (NY)3.51
PEG (5Y)2.72
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 10.01% | ||
| ROE | 40.15% | ||
| ROCE | 24.24% | ||
| ROIC | 18.44% | ||
| ROICexc | 22.29% | ||
| ROICexgc | 118.16% | ||
| OM | 41.81% | ||
| PM (TTM) | 29.74% | ||
| GM | N/A | ||
| FCFM | 31.04% |
ROA(3y)13.68%
ROA(5y)13.48%
ROE(3y)43.07%
ROE(5y)42.31%
ROIC(3y)28.05%
ROIC(5y)28.53%
ROICexc(3y)39.45%
ROICexc(5y)39.54%
ROICexgc(3y)122.07%
ROICexgc(5y)118.33%
ROCE(3y)36.92%
ROCE(5y)37.54%
ROICexcg growth 3Y-2.65%
ROICexcg growth 5Y2.68%
ROICexc growth 3Y-20.58%
ROICexc growth 5Y-8.53%
OM growth 3Y1.57%
OM growth 5Y2.95%
PM growth 3Y-0.51%
PM growth 5Y1.82%
GM growth 3YN/A
GM growth 5YN/A
F-Score4
Asset Turnover0.34
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 1.11 | ||
| Debt/FCF | 2.87 | ||
| Debt/EBITDA | 1.8 | ||
| Cap/Depr | 105.78% | ||
| Cap/Sales | 3.98% | ||
| Interest Coverage | 250 | ||
| Cash Conversion | 76.85% | ||
| Profit Quality | 104.36% | ||
| Current Ratio | 1.28 | ||
| Quick Ratio | 1.28 | ||
| Altman-Z | 3.64 |
F-Score4
WACC8.66%
ROIC/WACC2.13
Cap/Depr(3y)100.38%
Cap/Depr(5y)88.13%
Cap/Sales(3y)3.56%
Cap/Sales(5y)3.37%
Profit Quality(3y)101.67%
Profit Quality(5y)102.47%
High Growth Momentum
Growth
EPS 1Y (TTM)5.51%
EPS 3Y9.82%
EPS 5Y10.74%
EPS Q2Q%6.25%
EPS Next Y8.32%
EPS Next 2Y7.82%
EPS Next 3Y5.6%
EPS Next 5Y6.18%
Revenue 1Y (TTM)5.56%
Revenue growth 3Y6.51%
Revenue growth 5Y6.64%
Sales Q2Q%10.21%
Revenue Next Year10.52%
Revenue Next 2Y8.15%
Revenue Next 3Y5.82%
Revenue Next 5Y5.75%
EBIT growth 1Y5.23%
EBIT growth 3Y8.18%
EBIT growth 5Y9.79%
EBIT Next Year14.73%
EBIT Next 3Y8.82%
EBIT Next 5Y8.06%
FCF growth 1Y1.37%
FCF growth 3Y6.17%
FCF growth 5Y5.81%
OCF growth 1Y2.81%
OCF growth 3Y7.07%
OCF growth 5Y6.25%