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. PAYX gets an excellent profitability rating and is at the same time showing great financial health properties. PAYX is valied quite expensively at the moment, while it does show a decent growth rate.
1. Profitability
1.1 Basic Checks
In the past year PAYX was profitable.
PAYX had a positive operating cash flow in the past year.
Each year in the past 5 years PAYX has been profitable.
Each year in the past 5 years PAYX had a positive operating cash flow.
1.2 Ratios
PAYX's Return On Assets of 15.51% is amongst the best of the industry. PAYX outperforms 91.46% of its industry peers.
Looking at the Return On Equity, with a value of 42.27%, PAYX belongs to the top of the industry, outperforming 89.02% of the companies in the same industry.
PAYX has a better Return On Invested Capital (32.39%) than 97.56% of its industry peers.
Measured over the past 3 years, the Average Return On Invested Capital for PAYX is significantly above the industry average of 12.98%.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 15.51% | ||
| ROE | 42.27% | ||
| ROIC | 32.39% |
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 Profit Margin of 31.99%. This is amongst the best in the industry. PAYX outperforms 97.56% of its industry peers.
In the last couple of years the Profit Margin of PAYX has grown nicely.
PAYX's Operating Margin of 42.55% is amongst the best of the industry. PAYX outperforms 98.78% of its industry peers.
PAYX's Operating Margin has improved in the last couple of years.
PAYX has a better Gross Margin (90.47%) than 96.34% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 42.55% | ||
| PM (TTM) | 31.99% | ||
| GM | 90.47% |
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
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 less shares outstanding
Compared to 5 years ago, PAYX has more shares outstanding
The debt/assets ratio for PAYX is higher compared to a year ago.
2.2 Solvency
An Altman-Z score of 6.50 indicates that PAYX is not in any danger for bankruptcy at the moment.
PAYX's Altman-Z score of 6.50 is amongst the best of the industry. PAYX outperforms 90.24% of its industry peers.
PAYX has a debt to FCF ratio of 0.52. This is a very positive value and a sign of high solvency as it would only need 0.52 years to pay back of all of its debts.
PAYX has a Debt to FCF ratio of 0.52. This is amongst the best in the industry. PAYX outperforms 84.15% of its industry peers.
A Debt/Equity ratio of 0.20 indicates that PAYX is not too dependend on debt financing.
PAYX has a Debt to Equity ratio of 0.20. This is in the better half of the industry: PAYX outperforms 60.98% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.2 | ||
| Debt/FCF | 0.52 | ||
| Altman-Z | 6.5 |
ROIC/WACC3.59
WACC9.02%
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 of 1.39. This is comparable to the rest of the industry: PAYX outperforms 52.44% of its industry peers.
A Quick Ratio of 1.39 indicates that PAYX should not have too much problems paying its short term obligations.
PAYX has a Quick ratio of 1.39. This is comparable to the rest of the industry: PAYX outperforms 54.88% of 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
The Earnings Per Share has been growing slightly by 7.44% over the past year.
The Earnings Per Share has been growing by 10.69% 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 4.35%.
Measured over the past years, PAYX shows a small growth in Revenue. The Revenue has been growing by 6.95% on average per year.
EPS 1Y (TTM)7.44%
EPS 3Y15.79%
EPS 5Y10.69%
EPS Q2Q%7.97%
Revenue 1Y (TTM)4.35%
Revenue growth 3Y9.17%
Revenue growth 5Y6.95%
Sales Q2Q%4.84%
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 5.92% on average per year.
The Revenue is expected to grow by 5.61% on average over the next years.
EPS Next Y7.58%
EPS Next 2Y6.96%
EPS Next 3Y7.03%
EPS Next 5Y5.92%
Revenue Next Year4.5%
Revenue Next 2Y6.28%
Revenue Next 3Y6.36%
Revenue Next 5Y5.61%
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 32.11, PAYX can be considered very expensive at the moment.
Based on the Price/Earnings ratio, PAYX is valued a bit more expensive than 62.20% of the companies in the same industry.
Compared to an average S&P500 Price/Earnings ratio of 26.60, PAYX is valued a bit more expensive.
With a Price/Forward Earnings ratio of 29.20, PAYX can be considered very expensive at the moment.
PAYX's Price/Forward Earnings ratio is in line with the industry average.
The average S&P500 Price/Forward Earnings ratio is at 22.43. PAYX is valued slightly more expensive when compared to this.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 32.11 | ||
| Fwd PE | 29.2 |
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 60.98% 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 | 36 | ||
| EV/EBITDA | 22.52 |
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)4.24
PEG (5Y)3
EPS Next 2Y6.96%
EPS Next 3Y7.03%
5. Dividend
5.1 Amount
PAYX has a Yearly Dividend Yield of 2.80%.
Compared to an average industry Dividend Yield of 1.98, PAYX pays a better dividend. On top of this PAYX pays more dividend than 91.46% of the companies listed in the same industry.
PAYX's Dividend Yield is comparable with the S&P500 average which is at 2.36.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.8% |
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
81.15% 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.
DP81.15%
EPS Next 2Y6.96%
EPS Next 3Y7.03%
157.67
-0.52 (-0.33%)
Chartmill FA Rating
GICS SectorIndustrials
GICS IndustryGroupCommercial & Professional Services
GICS IndustryProfessional Services
Earnings (Last)
Earnings (Next)
Inst Owners81.48%
Inst Owner Change0.42%
Ins Owners10.58%
Ins Owner Change-0.11%
Market Cap56.79B
Analysts53.91
Price Target148.95 (-5.53%)
Short Float %4.35%
Short Ratio5.87
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.8% |
Yearly Dividend3.65
Dividend Growth(5Y)9.63%
DP81.15%
Div Incr Years11
Div Non Decr Years11
Ex-Date
Surprises & Revisions
EPS beat(2)0
Avg EPS beat(2)-0.93%
Min EPS beat(2)-1.27%
Max EPS beat(2)-0.58%
EPS beat(4)1
Avg EPS beat(4)-0.53%
Min EPS beat(4)-1.27%
Max EPS beat(4)0.13%
EPS beat(8)1
Avg EPS beat(8)-0.88%
EPS beat(12)4
Avg EPS beat(12)0.08%
EPS beat(16)8
Avg EPS beat(16)2.17%
Revenue beat(2)0
Avg Revenue beat(2)-2.05%
Min Revenue beat(2)-2.46%
Max Revenue beat(2)-1.65%
Revenue beat(4)0
Avg Revenue beat(4)-1.97%
Min Revenue beat(4)-2.46%
Max Revenue beat(4)-1.65%
Revenue beat(8)0
Avg Revenue beat(8)-2.19%
Revenue beat(12)1
Avg Revenue beat(12)-1.6%
Revenue beat(16)5
Avg Revenue beat(16)-0.59%
PT rev (1m)-0.04%
PT rev (3m)5.46%
EPS NQ rev (1m)0%
EPS NQ rev (3m)-0.34%
EPS NY rev (1m)0%
EPS NY rev (3m)-0.33%
Revenue NQ rev (1m)0%
Revenue NQ rev (3m)0.14%
Revenue NY rev (1m)-0.25%
Revenue NY rev (3m)-0.07%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 32.11 | ||
| Fwd PE | 29.2 | ||
| P/S | 10.44 | ||
| P/FCF | 36 | ||
| P/OCF | 31.93 | ||
| P/B | 13.8 | ||
| P/tB | 27.53 | ||
| EV/EBITDA | 22.52 |
EPS(TTM)4.91
EY3.11%
EPS(NY)5.4
Fwd EY3.42%
FCF(TTM)4.38
FCFY2.78%
OCF(TTM)4.94
OCFY3.13%
SpS15.1
BVpS11.43
TBVpS5.73
PEG (NY)4.24
PEG (5Y)3
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 15.51% | ||
| ROE | 42.27% | ||
| ROCE | 42.69% | ||
| ROIC | 32.39% | ||
| ROICexc | 45.9% | ||
| ROICexgc | 98.7% | ||
| OM | 42.55% | ||
| PM (TTM) | 31.99% | ||
| GM | 90.47% | ||
| FCFM | 29% |
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 Turnover0.48
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.2 | ||
| Debt/FCF | 0.52 | ||
| Debt/EBITDA | 0.33 | ||
| Cap/Depr | 118.77% | ||
| Cap/Sales | 3.7% | ||
| Interest Coverage | 250 | ||
| Cash Conversion | 71.61% | ||
| Profit Quality | 90.67% | ||
| Current Ratio | 1.39 | ||
| Quick Ratio | 1.39 | ||
| Altman-Z | 6.5 |
F-Score8
WACC9.02%
ROIC/WACC3.59
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)7.44%
EPS 3Y15.79%
EPS 5Y10.69%
EPS Q2Q%7.97%
EPS Next Y7.58%
EPS Next 2Y6.96%
EPS Next 3Y7.03%
EPS Next 5Y5.92%
Revenue 1Y (TTM)4.35%
Revenue growth 3Y9.17%
Revenue growth 5Y6.95%
Sales Q2Q%4.84%
Revenue Next Year4.5%
Revenue Next 2Y6.28%
Revenue Next 3Y6.36%
Revenue Next 5Y5.61%
EBIT growth 1Y7.88%
EBIT growth 3Y14.03%
EBIT growth 5Y10.05%
EBIT Next Year13.96%
EBIT Next 3Y9.25%
EBIT Next 5Y7.97%
FCF growth 1Y6.23%
FCF growth 3Y14.49%
FCF growth 5Y8.35%
OCF growth 1Y9.31%
OCF growth 3Y14.62%
OCF growth 5Y8.34%