PAYCHEX INC (PAYX)
US7043261079 - Common Stock
PAYX gets a fundamental rating of 6 out of 10. The analysis compared the fundamentals against 81 industry peers in the Professional Services industry. Both the health and profitability get an excellent rating, making PAYX a very profitable company, without any liquidiy or solvency issues. While showing a medium growth rate, PAYX is valued expensive at the moment. These ratings could make PAYX a good candidate for quality investing.
1. Profitability
1.1 Basic Checks
PAYX had positive earnings in the past year.
In the past year PAYX had a positive cash flow from operations.
PAYX had positive earnings in each of the past 5 years.
In the past 5 years PAYX always reported a positive cash flow from operatings.
1.2 Ratios
The Return On Assets of PAYX (12.75%) is better than 88.75% of its industry peers.
With an excellent Return On Equity value of 44.32%, PAYX belongs to the best of the industry, outperforming 90.00% of the companies in the same industry.
The Return On Invested Capital of PAYX (32.42%) is better than 96.25% 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 12.24%.
The last Return On Invested Capital (32.42%) for PAYX is above the 3 year average (30.37%), which is a sign of increasing profitability.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 12.75% | ||
| ROE | 44.32% | ||
| ROIC | 32.42% |
ROA(3y)13.71%
ROA(5y)13.18%
ROE(3y)42.32%
ROE(5y)41.19%
ROIC(3y)30.37%
ROIC(5y)29.07%
1.3 Margins
The Profit Margin of PAYX (31.86%) is better than 96.25% of its industry peers.
In the last couple of years the Profit Margin of PAYX has remained more or less at the same level.
The Operating Margin of PAYX (41.16%) is better than 98.75% of its industry peers.
PAYX's Operating Margin has been stable in the last couple of years.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 41.16% | ||
| PM (TTM) | 31.86% | ||
| GM | N/A |
OM growth 3Y3.95%
OM growth 5Y1.21%
PM growth 3Y4.6%
PM growth 5Y1.11%
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.
PAYX has more shares outstanding than it did 1 year ago.
PAYX has more shares outstanding than it did 5 years ago.
PAYX has a better debt/assets ratio than last year.
2.2 Solvency
PAYX has an Altman-Z score of 4.11. This indicates that PAYX is financially healthy and has little risk of bankruptcy at the moment.
PAYX has a Altman-Z score of 4.11. This is in the better half of the industry: PAYX outperforms 77.50% of its industry peers.
PAYX has a debt to FCF ratio of 0.43. This is a very positive value and a sign of high solvency as it would only need 0.43 years to pay back of all of its debts.
With a decent Debt to FCF ratio value of 0.43, PAYX is doing good in the industry, outperforming 80.00% of the companies in the same industry.
PAYX has a Debt/Equity ratio of 0.22. This is a healthy value indicating a solid balance between debt and equity.
PAYX has a Debt to Equity ratio (0.22) which is comparable to the rest of the industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.22 | ||
| Debt/FCF | 0.43 | ||
| Altman-Z | 4.11 |
ROIC/WACC3.54
WACC9.16%
2.3 Liquidity
A Current Ratio of 1.24 indicates that PAYX should not have too much problems paying its short term obligations.
PAYX's Current ratio of 1.24 is in line compared to the rest of the industry. PAYX outperforms 45.00% of its industry peers.
PAYX has a Quick Ratio of 1.24. 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 Quick ratio, with a value of 1.24, PAYX is in line with its industry, outperforming 47.50% of the companies in the same industry.
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 | 1.24 | ||
| Quick Ratio | 1.24 |
3. Growth
3.1 Past
PAYX shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 10.92%, which is quite good.
The Earnings Per Share has been growing by 11.80% 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 5.91%.
The Revenue has been growing by 8.19% on average over the past years. This is quite good.
EPS 1Y (TTM)10.92%
EPS 3Y12.7%
EPS 5Y11.8%
EPS growth Q2Q6.98%
Revenue 1Y (TTM)5.91%
Revenue growth 3Y7.41%
Revenue growth 5Y8.19%
Revenue growth Q2Q4.22%
3.2 Future
PAYX is expected to show quite a strong growth in Earnings Per Share. In the coming years, the EPS will grow by 8.50% yearly.
Based on estimates for the next years, PAYX will show a small growth in Revenue. The Revenue will grow by 6.51% on average per year.
EPS Next Y12.13%
EPS Next 2Y8.95%
EPS Next 3Y8.1%
EPS Next 5Y8.5%
Revenue Next Year5.63%
Revenue Next 2Y5.43%
Revenue Next 3Y5.56%
Revenue Next 5Y6.51%
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 decreasing.
4. Valuation
4.1 Price/Earnings Ratio
With a Price/Earnings ratio of 26.18, PAYX can be considered very expensive at the moment.
PAYX's Price/Earnings ratio is in line with the industry average.
The average S&P500 Price/Earnings ratio is at 28.06. PAYX is around the same levels.
PAYX is valuated rather expensively with a Price/Forward Earnings ratio of 23.54.
The rest of the industry has a similar Price/Forward Earnings ratio as PAYX.
PAYX is valuated at similar levels of the S&P average when we compare the Price/Forward Earnings ratio to 20.72, which is the current average of the S&P500 Index.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 26.18 | ||
| Fwd PE | 23.54 |
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 | 22.73 | ||
| EV/EBITDA | 17.96 |
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.
PAYX has an outstanding profitability rating, which may justify a higher PE ratio.
PEG (NY)2.16
PEG (5Y)2.22
EPS Next 2Y8.95%
EPS Next 3Y8.1%
5. Dividend
5.1 Amount
PAYX has a Yearly Dividend Yield of 2.92%. Purely for dividend investing, there may be better candidates out there.
Compared to an average industry Dividend Yield of 2.07, PAYX pays a better dividend. On top of this PAYX pays more dividend than 93.75% of the companies listed in the same industry.
PAYX's Dividend Yield is a higher than the S&P500 average which is at 2.41.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.92% |
5.2 History
On average, the dividend of PAYX grows each year by 9.61%, 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 in the past 5 years, so it has a somewhat stable track record.
Dividend Growth(5Y)9.61%
Div Incr Years6
Div Non Decr Years6
5.3 Sustainability
77.27% 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.
DP77.27%
EPS Next 2Y8.95%
EPS Next 3Y8.1%
PAYCHEX INC
NASDAQ:PAYX (5/3/2024, 11:08:37 AM)
119.62
+1.17 (+0.99%)
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 Cap43.06B
Analysts
Price Target
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.92% |
Dividend Growth(5Y)
DP
Div Incr Years
Div Non Decr Years
Ex-Date
Surprises & Revisions
EPS beat(2)
Avg EPS beat(2)
Min EPS beat(2)
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EPS beat(8)
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EPS beat(16)
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Revenue 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 | 26.18 | ||
| Fwd PE | 23.54 | ||
| 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)2.16
PEG (5Y)2.22
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 12.75% | ||
| ROE | 44.32% | ||
| ROCE | |||
| ROIC | |||
| ROICexc | |||
| ROICexgc | |||
| OM | 41.16% | ||
| PM (TTM) | 31.86% | ||
| 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 Turnover0.4
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.22 | ||
| Debt/FCF | |||
| Debt/EBITDA | |||
| Cap/Depr | |||
| Cap/Sales | |||
| Interest Coverage | |||
| Cash Conversion | |||
| Profit Quality | |||
| Current Ratio | 1.24 | ||
| Quick Ratio | 1.24 | ||
| 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)
Growth
EPS 1Y (TTM)10.92%
EPS 3Y12.7%
EPS 5Y
EPS growth Q2Q
EPS Next Y12.13%
EPS Next 2Y
EPS Next 3Y
EPS Next 5Y
Revenue 1Y (TTM)5.91%
Revenue growth 3Y7.41%
Revenue growth 5Y
Revenue growth 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