PAYCHEX INC (PAYX) Stock Fundamental Analysis
USA - NASDAQ:PAYX - US7043261079 - Common Stock
130 USD
-1.11 (-0.85%)
130 USD
0 (0%)
Overall PAYX gets a fundamental rating of 6 out of 10. We evaluated PAYX against 82 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
PAYX has a better Return On Assets (10.01%) than 80.49% of its industry peers.
Looking at the Return On Equity, with a value of 40.15%, PAYX belongs to the top of the industry, outperforming 90.24% of the companies in the same industry.
PAYX has a better Return On Invested Capital (18.44%) than 87.80% of its industry peers.
The Average Return On Invested Capital over the past 3 years for PAYX is significantly above the industry average of 12.76%.
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
With an excellent Profit Margin value of 29.74%, PAYX belongs to the best of the industry, outperforming 96.34% of the companies in the same industry.
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 98.78% of its industry peers.
PAYX's Operating Margin has improved in the last couple of years.
The Gross Margin of PAYX (90.67%) is better than 97.56% of its industry peers.
PAYX's Gross Margin has been stable in the last couple of years.
| 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
With a Return on Invested Capital (ROIC) well above the Cost of Capital (WACC), PAYX is creating value.
Compared to 1 year ago, PAYX has about the same amount of shares outstanding.
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 3.39 indicates that PAYX is not in any danger for bankruptcy at the moment.
The Altman-Z score of PAYX (3.39) is better than 62.20% 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's Debt to FCF ratio of 2.96 is fine compared to the rest of the industry. PAYX outperforms 63.41% 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.
The Debt to Equity ratio of PAYX (1.11) is worse than 71.95% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 1.11 | ||
| Debt/FCF | 2.96 | ||
| Altman-Z | 3.39 |
ROIC/WACC2.21
WACC8.33%
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.
PAYX's Current ratio of 1.28 is in line compared to the rest of the industry. PAYX outperforms 42.68% of its industry peers.
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.
PAYX's Quick ratio of 1.28 is in line compared to the rest of the industry. PAYX outperforms 42.68% of 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%.
Measured over the past years, PAYX shows a quite strong growth in Earnings Per Share. The EPS has been growing by 10.74% on average per year.
PAYX shows a small growth in Revenue. In the last year, the Revenue has grown by 5.56%.
Measured over the past years, PAYX shows a small growth in Revenue. The Revenue has been growing by 6.64% on average per year.
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 quite strong growth in Earnings Per Share. The EPS will grow by 8.94% on average per year.
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 3Y9.63%
EPS Next 5Y8.94%
Revenue Next Year17.68%
Revenue Next 2Y11.9%
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.
The Revenue growth rate is accelerating: in the next years the growth will be better than in the last years.
4. Valuation
4.1 Price/Earnings Ratio
PAYX is valuated quite expensively with a Price/Earnings ratio of 26.10.
PAYX's Price/Earnings is on the same level as the industry average.
PAYX's Price/Earnings ratio indicates a similar valuation than the S&P500 average which is at 27.38.
Based on the Price/Forward Earnings ratio of 23.37, the valuation of PAYX can be described as rather expensive.
PAYX's Price/Forward Earnings ratio is in line with the industry average.
The average S&P500 Price/Forward Earnings ratio is at 22.86. PAYX is around the same levels.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 26.1 | ||
| Fwd PE | 23.37 |
4.2 Price Multiples
Compared to the rest of the industry, the Enterprise Value to EBITDA ratio of PAYX is on the same level as its industry peers.
The rest of the industry has a similar Price/Free Cash Flow ratio as PAYX.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 27.84 | ||
| EV/EBITDA | 19.69 |
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)2.23
PEG (5Y)2.43
EPS Next 2Y9.95%
EPS Next 3Y9.63%
5. Dividend
5.1 Amount
PAYX has a Yearly Dividend Yield of 3.29%. Purely for dividend investing, there may be better candidates out there.
Compared to an average industry Dividend Yield of 3.06, PAYX pays a better dividend. On top of this PAYX pays more dividend than 90.24% of the companies listed in the same industry.
PAYX's Dividend Yield is a higher than the S&P500 average which is at 2.38.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 3.29% |
5.2 History
On average, the dividend of PAYX grows each year by 10.17%, which is quite nice.
PAYX has been paying a dividend for at least 10 years, so it has 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.
The dividend of PAYX is growing, but the earnings are growing slower. This means the dividend growth is not sustainable.
DP87.4%
EPS Next 2Y9.95%
EPS Next 3Y9.63%
130
-1.11 (-0.85%)
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 Cap46.75B
Analysts54.29
Price Target149.16 (14.74%)
Short Float %3.94%
Short Ratio6.04
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 3.29% |
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)-2.38%
PT rev (3m)-3.17%
EPS NQ rev (1m)-0.51%
EPS NQ rev (3m)-2.52%
EPS NY rev (1m)0%
EPS NY rev (3m)3.14%
Revenue NQ rev (1m)0%
Revenue NQ rev (3m)3.22%
Revenue NY rev (1m)-0.01%
Revenue NY rev (3m)6.97%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 26.1 | ||
| Fwd PE | 23.37 | ||
| P/S | 8.39 | ||
| P/FCF | 27.84 | ||
| P/OCF | 24.59 | ||
| P/B | 11.32 | ||
| P/tB | N/A | ||
| EV/EBITDA | 19.69 |
EPS(TTM)4.98
EY3.83%
EPS(NY)5.56
Fwd EY4.28%
FCF(TTM)4.67
FCFY3.59%
OCF(TTM)5.29
OCFY4.07%
SpS15.49
BVpS11.48
TBVpS-6.49
PEG (NY)2.23
PEG (5Y)2.43
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 | 3.39 |
F-Score4
WACC8.33%
ROIC/WACC2.21
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 3Y9.63%
EPS Next 5Y8.94%
Revenue 1Y (TTM)5.56%
Revenue growth 3Y6.51%
Revenue growth 5Y6.64%
Sales Q2Q%10.21%
Revenue Next Year17.68%
Revenue Next 2Y11.9%
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 3Y15.54%
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%