PAYCHEX INC (PAYX) Stock Fundamental Analysis
NASDAQ:PAYX - Nasdaq - US7043261079 - Common Stock - Currency: USD
Taking everything into account, PAYX scores 6 out of 10 in our fundamental rating. PAYX was compared to 82 industry peers in the Professional Services industry. While PAYX has a great profitability rating, there are some minor concerns on its financial health. While showing a medium growth rate, PAYX is valued expensive at the moment.
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.
In the past 5 years PAYX has always been profitable.
Each year in the past 5 years PAYX had a positive operating cash flow.
1.2 Ratios
Looking at the Return On Assets, with a value of 10.01%, PAYX belongs to the top of the industry, outperforming 81.71% of the companies in the same industry.
With an excellent Return On Equity value of 40.15%, PAYX belongs to the best of the industry, outperforming 90.24% of the companies in the same industry.
PAYX has a Return On Invested Capital of 18.44%. This is amongst the best in the industry. PAYX outperforms 89.02% of its industry peers.
PAYX had an Average Return On Invested Capital over the past 3 years of 28.05%. This is significantly above the industry average of 12.49%.
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
Looking at the Profit Margin, with a value of 29.74%, PAYX belongs to the top of the industry, outperforming 96.34% of the companies in the same industry.
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 98.78% of its industry peers.
PAYX's Operating Margin has improved in the last couple of years.
Looking at the Gross Margin, with a value of 90.67%, PAYX belongs to the top of the industry, outperforming 97.56% of the companies in the same industry.
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 | 41.81% | ||
| PM (TTM) | 29.74% | ||
| GM | 90.67% |
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
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 about the same amout of shares outstanding than it did 1 year ago.
The number of shares outstanding for PAYX has been increased compared to 5 years ago.
PAYX has a worse debt/assets ratio than last year.
2.2 Solvency
PAYX has an Altman-Z score of 3.58. This indicates that PAYX is financially healthy and has little risk of bankruptcy at the moment.
PAYX has a better Altman-Z score (3.58) than 67.07% of its industry peers.
PAYX has a debt to FCF ratio of 2.96. This is a good value and a sign of high solvency as PAYX would need 2.96 years to pay back of all of its debts.
The Debt to FCF ratio of PAYX (2.96) is better than 65.85% of its industry peers.
A Debt/Equity ratio of 1.11 is on the high side and indicates that PAYX has dependencies on debt financing.
PAYX has a worse Debt to Equity ratio (1.11) than 71.95% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 1.11 | ||
| Debt/FCF | 2.96 | ||
| Altman-Z | 3.58 |
ROIC/WACC2.17
WACC8.48%
2.3 Liquidity
PAYX has a Current 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.
Looking at the Current ratio, with a value of 1.28, PAYX is in line with its industry, outperforming 41.46% of the companies in the same industry.
A Quick Ratio of 1.28 indicates that PAYX should not have too much problems paying its short term obligations.
PAYX has a Quick ratio (1.28) which is in line with its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 1.28 | ||
| Quick Ratio | 1.28 |
3. Growth
3.1 Past
PAYX shows a small growth in Earnings Per Share. In the last year, the EPS has grown by 5.51%.
The Earnings Per Share has been growing by 10.74% 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 5.56%.
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.
Based on estimates for the next years, PAYX will show a small growth in Revenue. The Revenue will grow by 5.65% on average per year.
EPS Next Y11.74%
EPS Next 2Y9.81%
EPS Next 3Y9.33%
EPS Next 5Y6.18%
Revenue Next Year17.63%
Revenue Next 2Y11.94%
Revenue Next 3Y9.37%
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.
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 28.35, PAYX can be considered very expensive at the moment.
Compared to the rest of the industry, the Price/Earnings ratio of PAYX is on the same level as its industry peers.
PAYX's Price/Earnings ratio indicates a similar valuation than the S&P500 average which is at 26.48.
PAYX is valuated quite expensively with a Price/Forward Earnings ratio of 25.37.
The rest of the industry has a similar Price/Forward Earnings ratio as PAYX.
The average S&P500 Price/Forward Earnings ratio is at 34.04. PAYX is valued slightly cheaper when compared to this.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 28.35 | ||
| Fwd PE | 25.37 |
4.2 Price Multiples
Compared to the rest of the industry, the Enterprise Value to EBITDA ratio of PAYX indicates a slightly more expensive valuation: PAYX is more expensive than 60.98% of the companies listed in the same industry.
PAYX's Price/Free Cash Flow ratio is in line with the industry average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 30.29 | ||
| EV/EBITDA | 21.22 |
4.3 Compensation for Growth
The high PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates an expensive valuation of the company.
PAYX has an outstanding profitability rating, which may justify a higher PE ratio.
PEG (NY)2.42
PEG (5Y)2.64
EPS Next 2Y9.81%
EPS Next 3Y9.33%
5. Dividend
5.1 Amount
PAYX has a Yearly Dividend Yield of 3.07%. 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 2.23. PAYX pays more dividend than 91.46% of the companies in the same industry.
Compared to an average S&P500 Dividend Yield of 2.40, PAYX pays a bit more dividend than the S&P500 average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 3.07% |
5.2 History
The dividend of PAYX is nicely growing with an annual growth rate of 10.17%!
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)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.
PAYX's earnings are growing slower than its dividend. This means the dividend growth is not sustainable.
DP87.4%
EPS Next 2Y9.81%
EPS Next 3Y9.33%
141.19
+0.67 (+0.48%)
Chartmill FA Rating
GICS SectorIndustrials
GICS IndustryGroupCommercial & Professional Services
GICS IndustryProfessional Services
Earnings (Last)
Earnings (Next)
Inst Owners81.69%
Inst Owner Change-0.55%
Ins Owners10.59%
Ins Owner Change0.39%
Market Cap50.86B
Analysts54.55
Price Target152.79 (8.22%)
Short Float %3.61%
Short Ratio5.23
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 3.07% |
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)-1.61%
Min EPS beat(2)-1.94%
Max EPS beat(2)-1.27%
EPS beat(4)0
Avg EPS beat(4)-1.05%
Min EPS beat(4)-1.94%
Max EPS beat(4)-0.41%
EPS beat(8)1
Avg EPS beat(8)-0.87%
EPS beat(12)4
Avg EPS beat(12)-0.07%
EPS beat(16)7
Avg EPS beat(16)1.71%
Revenue beat(2)0
Avg Revenue beat(2)-2.48%
Min Revenue beat(2)-2.51%
Max Revenue beat(2)-2.46%
Revenue beat(4)0
Avg Revenue beat(4)-2.09%
Min Revenue beat(4)-2.51%
Max Revenue beat(4)-1.65%
Revenue beat(8)0
Avg Revenue beat(8)-2.33%
Revenue beat(12)0
Avg Revenue beat(12)-1.91%
Revenue beat(16)4
Avg Revenue beat(16)-0.93%
PT rev (1m)-0.98%
PT rev (3m)2.41%
EPS NQ rev (1m)-1.37%
EPS NQ rev (3m)-2.22%
EPS NY rev (1m)3.15%
EPS NY rev (3m)3.07%
Revenue NQ rev (1m)-0.51%
Revenue NQ rev (3m)7.1%
Revenue NY rev (1m)6.92%
Revenue NY rev (3m)9.75%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 28.35 | ||
| Fwd PE | 25.37 | ||
| P/S | 9.13 | ||
| P/FCF | 30.29 | ||
| P/OCF | 26.76 | ||
| P/B | 12.32 | ||
| P/tB | N/A | ||
| EV/EBITDA | 21.22 |
EPS(TTM)4.98
EY3.53%
EPS(NY)5.56
Fwd EY3.94%
FCF(TTM)4.66
FCFY3.3%
OCF(TTM)5.28
OCFY3.74%
SpS15.47
BVpS11.46
TBVpS-6.48
PEG (NY)2.42
PEG (5Y)2.64
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 | 90.67% | ||
| FCFM | 30.14% |
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 3Y-0.99%
GM growth 5Y-0.7%
F-Score4
Asset Turnover0.34
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 1.11 | ||
| Debt/FCF | 2.96 | ||
| Debt/EBITDA | 1.8 | ||
| Cap/Depr | 105.78% | ||
| Cap/Sales | 3.98% | ||
| Interest Coverage | 62.11 | ||
| Cash Conversion | 74.87% | ||
| Profit Quality | 101.33% | ||
| Current Ratio | 1.28 | ||
| Quick Ratio | 1.28 | ||
| Altman-Z | 3.58 |
F-Score4
WACC8.48%
ROIC/WACC2.17
Cap/Depr(3y)100.38%
Cap/Depr(5y)88.13%
Cap/Sales(3y)3.56%
Cap/Sales(5y)3.37%
Profit Quality(3y)100.66%
Profit Quality(5y)101.87%
High Growth Momentum
Growth
EPS 1Y (TTM)5.51%
EPS 3Y9.82%
EPS 5Y10.74%
EPS Q2Q%6.25%
EPS Next Y11.74%
EPS Next 2Y9.81%
EPS Next 3Y9.33%
EPS Next 5Y6.18%
Revenue 1Y (TTM)5.56%
Revenue growth 3Y6.51%
Revenue growth 5Y6.64%
Sales Q2Q%10.21%
Revenue Next Year17.63%
Revenue Next 2Y11.94%
Revenue Next 3Y9.37%
Revenue Next 5Y5.65%
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 1Y-1.58%
FCF growth 3Y5.13%
FCF growth 5Y5.19%
OCF growth 1Y0.17%
OCF growth 3Y6.14%
OCF growth 5Y5.7%