PAYCHEX INC (PAYX)
US7043261079 - Common Stock
We assign a fundamental rating of 6 out of 10 to PAYX. PAYX was compared to 81 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. While showing a medium growth rate, PAYX is valued expensive at the moment.
1. Profitability
1.1 Basic Checks
In the past year PAYX was profitable.
PAYX had a positive operating cash flow in the past year.
In the past 5 years PAYX has always been profitable.
In the past 5 years PAYX always reported a positive cash flow from operatings.
1.2 Ratios
PAYX's Return On Assets of 16.19% is amongst the best of the industry. PAYX outperforms 94.81% of its industry peers.
The Return On Equity of PAYX (44.11%) is better than 89.61% of its industry peers.
Looking at the Return On Invested Capital, with a value of 32.78%, PAYX belongs to the top of the industry, outperforming 100.00% 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 12.35%.
The last Return On Invested Capital (32.78%) for PAYX is above the 3 year average (32.56%), which is a sign of increasing profitability.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 16.19% | ||
| ROE | 44.11% | ||
| ROIC | 32.78% |
ROA(3y)15.17%
ROA(5y)14.05%
ROE(3y)44.73%
ROE(5y)42.18%
ROIC(3y)32.56%
ROIC(5y)30.21%
1.3 Margins
PAYX has a better Profit Margin (31.98%) than 96.10% of its industry peers.
PAYX's Profit Margin has improved in the last couple of years.
PAYX has a Operating Margin of 41.88%. This is amongst the best in the industry. PAYX outperforms 98.70% of its industry peers.
PAYX's Operating Margin has improved in the last couple of years.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 41.88% | ||
| PM (TTM) | 31.98% | ||
| 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.
The number of shares outstanding for PAYX has been reduced compared to 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
An Altman-Z score of 6.34 indicates that PAYX is not in any danger for bankruptcy at the moment.
Looking at the Altman-Z score, with a value of 6.34, PAYX belongs to the top of the industry, outperforming 88.31% of the companies in the same industry.
PAYX has a debt to FCF ratio of 0.51. This is a very positive value and a sign of high solvency as it would only need 0.51 years to pay back of all of its debts.
With an excellent Debt to FCF ratio value of 0.51, PAYX belongs to the best of the industry, outperforming 83.12% 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's Debt to Equity ratio of 0.21 is in line compared to the rest of the industry. PAYX outperforms 59.74% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.21 | ||
| Debt/FCF | 0.51 | ||
| Altman-Z | 6.34 |
ROIC/WACC3.66
WACC8.96%
2.3 Liquidity
A Current Ratio of 1.38 indicates that PAYX should not have too much problems paying its short term obligations.
PAYX has a Current ratio (1.38) which is comparable to the rest of the industry.
A Quick Ratio of 1.38 indicates that PAYX should not have too much problems paying its short term obligations.
PAYX has a Quick ratio of 1.38. This is comparable to the rest of the industry: PAYX outperforms 49.35% of its industry peers.
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 | 1.38 | ||
| Quick Ratio | 1.38 |
3. Growth
3.1 Past
PAYX shows a small growth in Earnings Per Share. In the last year, the EPS has grown by 7.97%.
Measured over the past years, PAYX shows a quite strong growth in Earnings Per Share. The EPS has been growing by 10.69% on average per year.
PAYX shows a small growth in Revenue. In the last year, the Revenue has grown by 4.40%.
The Revenue has been growing slightly by 6.95% on average over the past years.
EPS 1Y (TTM)7.97%
EPS 3Y15.79%
EPS 5Y10.69%
EPS Q2Q%1.75%
Revenue 1Y (TTM)4.4%
Revenue growth 3Y9.17%
Revenue growth 5Y6.95%
Sales Q2Q%2.53%
3.2 Future
PAYX is expected to show a small growth in Earnings Per Share. In the coming years, the EPS will grow by 7.42% yearly.
PAYX is expected to show a small growth in Revenue. In the coming years, the Revenue will grow by 6.02% yearly.
EPS Next Y7.76%
EPS Next 2Y6.9%
EPS Next 3Y6.66%
EPS Next 5Y7.42%
Revenue Next Year4.61%
Revenue Next 2Y5.04%
Revenue Next 3Y5.27%
Revenue Next 5Y6.02%
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.
When comparing the Revenue growth rate of the last years to the growth rate of the upcoming years, we see that the growth is stable.
4. Valuation
4.1 Price/Earnings Ratio
With a Price/Earnings ratio of 30.40, PAYX can be considered very expensive at the moment.
PAYX's Price/Earnings ratio is a bit more expensive when compared to the industry. PAYX is more expensive than 61.04% of the companies in the same industry.
The average S&P500 Price/Earnings ratio is at 28.96. PAYX is around the same levels.
With a Price/Forward Earnings ratio of 26.72, PAYX can be considered very expensive at the moment.
Based on the Price/Forward Earnings ratio, PAYX is valued a bit more expensive than the industry average as 63.64% of the companies are valued more cheaply.
Compared to an average S&P500 Price/Forward Earnings ratio of 23.82, PAYX is valued at the same level.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 30.4 | ||
| Fwd PE | 26.72 |
4.2 Price Multiples
PAYX's Enterprise Value to EBITDA ratio is a bit more expensive when compared to the industry. PAYX is more expensive than 61.04% of the companies in the same industry.
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 | 32.54 | ||
| EV/EBITDA | 20.98 |
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)3.92
PEG (5Y)2.84
EPS Next 2Y6.9%
EPS Next 3Y6.66%
5. Dividend
5.1 Amount
PAYX has a Yearly Dividend Yield of 2.69%.
PAYX's Dividend Yield is rather good when compared to the industry average which is at 1.81. PAYX pays more dividend than 93.51% of the companies in the same industry.
PAYX's Dividend Yield is a higher than the S&P500 average which is at 2.23.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.69% |
5.2 History
The dividend of PAYX is nicely growing with an annual growth rate of 9.63%!
PAYX has been paying a dividend for at least 10 years, so it has a reliable track record.
PAYX has not decreased their dividend for at least 10 years, which is a reliable track record.
Dividend Growth(5Y)9.63%
Div Incr Years10
Div Non Decr Years10
5.3 Sustainability
79.29% of the earnings are spent on dividend by PAYX. 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.
DP79.29%
EPS Next 2Y6.9%
EPS Next 3Y6.66%
PAYCHEX INC
NASDAQ:PAYX (11/21/2024, 8:00:02 PM)
After market: 144.09 0 (0%)144.09
+2.26 (+1.59%)
Chartmill FA Rating
GICS SectorIndustrials
GICS IndustryGroupCommercial & Professional Services
GICS IndustryProfessional Services
Earnings (Last)
Earnings (Next)
Inst Owners
Inst Owner Change
Ins Owners
Ins Owner Change
Market Cap51.86B
Analysts
Price Target
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.69% |
Dividend Growth(5Y)
DP
Div Incr Years
Div Non Decr Years
Ex-Date
Surprises & Revisions
EPS beat(2)
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PT rev (1m)
PT rev (3m)
EPS NQ rev (1m)
EPS NQ rev (3m)
EPS NY rev (1m)
EPS NY rev (3m)
Revenue NQ rev (1m)
Revenue NQ rev (3m)
Revenue NY rev (1m)
Revenue NY rev (3m)
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 30.4 | ||
| Fwd PE | 26.72 | ||
| P/S | |||
| P/FCF | |||
| P/OCF | |||
| P/B | |||
| P/tB | |||
| EV/EBITDA |
EPS(TTM)
EY
EPS(NY)
Fwd EY
FCF(TTM)
FCFY
OCF(TTM)
OCFY
SpS
BVpS
TBVpS
PEG (NY)3.92
PEG (5Y)2.84
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 16.19% | ||
| ROE | 44.11% | ||
| ROCE | |||
| ROIC | |||
| ROICexc | |||
| ROICexgc | |||
| OM | 41.88% | ||
| PM (TTM) | 31.98% | ||
| GM | N/A | ||
| FCFM |
ROA(3y)
ROA(5y)
ROE(3y)
ROE(5y)
ROIC(3y)
ROIC(5y)
ROICexc(3y)
ROICexc(5y)
ROICexgc(3y)
ROICexgc(5y)
ROCE(3y)
ROCE(5y)
ROICexcg growth 3Y
ROICexcg growth 5Y
ROICexc growth 3Y
ROICexc growth 5Y
OM growth 3Y
OM growth 5Y
PM growth 3Y
PM growth 5Y
GM growth 3Y
GM growth 5Y
F-Score
Asset Turnover0.51
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.21 | ||
| Debt/FCF | |||
| Debt/EBITDA | |||
| Cap/Depr | |||
| Cap/Sales | |||
| Interest Coverage | |||
| Cash Conversion | |||
| Profit Quality | |||
| Current Ratio | 1.38 | ||
| Quick Ratio | 1.38 | ||
| Altman-Z |
F-Score
WACC
ROIC/WACC
Cap/Depr(3y)
Cap/Depr(5y)
Cap/Sales(3y)
Cap/Sales(5y)
Profit Quality(3y)
Profit Quality(5y)
High Growth Momentum
Growth
EPS 1Y (TTM)7.97%
EPS 3Y15.79%
EPS 5Y
EPS Q2Q%
EPS Next Y7.76%
EPS Next 2Y
EPS Next 3Y
EPS Next 5Y
Revenue 1Y (TTM)4.4%
Revenue growth 3Y9.17%
Revenue growth 5Y
Sales Q2Q%
Revenue Next Year
Revenue Next 2Y
Revenue Next 3Y
Revenue Next 5Y
EBIT growth 1Y
EBIT growth 3Y
EBIT growth 5Y
EBIT Next Year
EBIT Next 3Y
EBIT Next 5Y
FCF growth 1Y
FCF growth 3Y
FCF growth 5Y
OCF growth 1Y
OCF growth 3Y
OCF growth 5Y