PAYCHEX INC (PAYX) Stock Fundamental Analysis
NASDAQ:PAYX - US7043261079 - Common Stock
138.72 USD
+0.07 (+0.05%)
138.72 USD
0 (0%)
We assign a fundamental rating of 6 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
In the past year PAYX was profitable.
In the past year PAYX had a positive cash flow from operations.
In the past 5 years PAYX has always been profitable.
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 81.48% of the companies in the same industry.
Looking at the Return On Equity, with a value of 40.15%, PAYX belongs to the top of the industry, outperforming 90.12% of the companies in the same industry.
The Return On Invested Capital of PAYX (18.44%) is better than 87.65% of its industry peers.
The Average Return On Invested Capital over the past 3 years for PAYX is significantly above the industry average of 12.68%.
The 3 year average ROIC (28.05%) for PAYX is well above the current ROIC(18.44%). The reason for the recent decline needs to be investigated.
| 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
PAYX has a better Profit Margin (29.74%) than 96.30% of its industry peers.
PAYX's Profit Margin has improved in the last couple of years.
PAYX's Operating Margin of 41.81% is amongst the best of the industry. PAYX outperforms 98.77% of its industry peers.
In the last couple of years the Operating Margin of PAYX has grown nicely.
PAYX has a Gross Margin of 90.67%. This is amongst the best in the industry. PAYX outperforms 97.53% 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 | 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.
The number of shares outstanding for PAYX remains at a similar level compared to 1 year ago.
Compared to 5 years ago, PAYX has more shares outstanding
PAYX has a worse debt/assets ratio than last year.
2.2 Solvency
An Altman-Z score of 3.55 indicates that PAYX is not in any danger for bankruptcy at the moment.
The Altman-Z score of PAYX (3.55) is better than 64.20% of its industry peers.
The Debt to FCF ratio of PAYX is 2.96, which is a good value as it means it would take PAYX, 2.96 years of fcf income to pay off all of its debts.
PAYX has a better Debt to FCF ratio (2.96) than 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's Debt to Equity ratio of 1.11 is on the low side compared to the rest of the industry. PAYX is outperformed by 74.07% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 1.11 | ||
| Debt/FCF | 2.96 | ||
| Altman-Z | 3.55 |
ROIC/WACC2.18
WACC8.45%
2.3 Liquidity
A Current Ratio of 1.28 indicates that PAYX should not have too much problems paying its short term obligations.
PAYX has a Current ratio (1.28) which is in line with its industry peers.
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 comparable to the rest of the industry.
| 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%.
PAYX shows quite a strong growth in Earnings Per Share. Measured over the last years, the EPS has been growing by 10.74% yearly.
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
The Earnings Per Share is expected to grow by 8.94% on average over the next years. This is quite good.
The Revenue is expected to grow by 9.05% on average over the next years. This is quite good.
EPS Next Y11.72%
EPS Next 2Y9.95%
EPS Next 3Y9.26%
EPS Next 5Y8.94%
Revenue Next Year17.7%
Revenue Next 2Y12%
Revenue Next 3Y9.57%
Revenue Next 5Y9.05%
3.3 Evolution
The EPS growth rate is stable: in the next years the growth will be about the same than in the last years.
When comparing the Revenue growth rate of the last years to the growth rate of the upcoming years, we see that the growth is accelerating.
4. Valuation
4.1 Price/Earnings Ratio
Based on the Price/Earnings ratio of 27.86, the valuation of PAYX can be described as expensive.
PAYX's Price/Earnings ratio is in line with the industry average.
PAYX's Price/Earnings ratio indicates a similar valuation than the S&P500 average which is at 27.17.
PAYX is valuated rather expensively with a Price/Forward Earnings ratio of 24.93.
PAYX's Price/Forward Earnings ratio is in line with the industry average.
PAYX is valuated at similar levels of the S&P average when we compare the Price/Forward Earnings ratio to 22.78, which is the current average of the S&P500 Index.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 27.86 | ||
| Fwd PE | 24.93 |
4.2 Price Multiples
PAYX's Enterprise Value to EBITDA is on the same level as 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 | 29.76 | ||
| EV/EBITDA | 20.96 |
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)2.38
PEG (5Y)2.59
EPS Next 2Y9.95%
EPS Next 3Y9.26%
5. Dividend
5.1 Amount
With a Yearly Dividend Yield of 3.12%, PAYX has a reasonable but not impressive dividend return.
PAYX's Dividend Yield is rather good when compared to the industry average which is at 2.25. PAYX pays more dividend than 91.36% of the companies in the same industry.
PAYX's Dividend Yield is a higher than the S&P500 average which is at 2.34.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 3.12% |
5.2 History
On average, the dividend of PAYX grows each year by 10.17%, 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)10.17%
Div Incr Years11
Div Non Decr Years11
5.3 Sustainability
87.40% of the earnings are spent on dividend by PAYX. 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 2Y9.95%
EPS Next 3Y9.26%
138.72
+0.07 (+0.05%)
Chartmill FA Rating
GICS SectorIndustrials
GICS IndustryGroupCommercial & Professional Services
GICS IndustryProfessional Services
Earnings (Last)
Earnings (Next)
Inst Owners81.69%
Inst Owner Change-1.59%
Ins Owners10.59%
Ins Owner Change0.39%
Market Cap49.97B
Analysts54.55
Price Target149.99 (8.12%)
Short Float %3.57%
Short Ratio4.61
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 3.12% |
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)-1.67%
PT rev (3m)0.7%
EPS NQ rev (1m)-0.1%
EPS NQ rev (3m)-2.32%
EPS NY rev (1m)-0.01%
EPS NY rev (3m)3.03%
Revenue NQ rev (1m)0%
Revenue NQ rev (3m)7.1%
Revenue NY rev (1m)0.06%
Revenue NY rev (3m)9.82%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 27.86 | ||
| Fwd PE | 24.93 | ||
| P/S | 8.97 | ||
| P/FCF | 29.76 | ||
| P/OCF | 26.29 | ||
| P/B | 12.11 | ||
| P/tB | N/A | ||
| EV/EBITDA | 20.96 |
EPS(TTM)4.98
EY3.59%
EPS(NY)5.56
Fwd EY4.01%
FCF(TTM)4.66
FCFY3.36%
OCF(TTM)5.28
OCFY3.8%
SpS15.47
BVpS11.46
TBVpS-6.48
PEG (NY)2.38
PEG (5Y)2.59
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 | 3.55 |
F-Score4
WACC8.45%
ROIC/WACC2.18
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 Y11.72%
EPS Next 2Y9.95%
EPS Next 3Y9.26%
EPS Next 5Y8.94%
Revenue 1Y (TTM)5.56%
Revenue growth 3Y6.51%
Revenue growth 5Y6.64%
Sales Q2Q%10.21%
Revenue Next Year17.7%
Revenue Next 2Y12%
Revenue Next 3Y9.57%
Revenue Next 5Y9.05%
EBIT growth 1Y5.23%
EBIT growth 3Y8.18%
EBIT growth 5Y9.79%
EBIT Next Year30.2%
EBIT Next 3Y15.74%
EBIT Next 5Y11.67%
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%