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Paychex Inc PAYX

Morningstar Rating
$119.14 −2.00 (1.65%)
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Company Report

Paychex Earnings: Operating Efficiency Shines Through Amid Moderating Employment and Wage Growth

Wide-moat Paychex reported reasonable third-quarter fiscal 2024 results despite headwinds from an earlier-than-expected winding down of the pandemic-era high-margin employee retention tax credit, or ERTC, services. As we anticipated, Paychex reported moderating employment and wage growth among small business customers, but the firm continues to enjoy the benefits of its strong retention rates and operational efficiency. Following the result, we maintain our $120 fair value estimate and our long-term outlook. At current prices, Paychex's shares screen as fairly valued.

Price vs Fair Value

PAYX is trading at a 1% discount.
Price
$119.14
Fair Value
$475.00
Uncertainty
High
1-Star Price
$762.00
5-Star Price
$26.00
Economic Moat
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Capital Allocation
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Bulls Say, Bears Say

Bulls

Paychex is well placed to benefit from increased regulatory complexity under a U.S. Democratic administration.

Bears

Paychex faces increasing competitive pressure from nimble upstarts, legacy peers, and accounting software providers encroaching on the full-service market. This dynamic will likely lead to greater pricing pressure for Paychex and continued elevated investment in software development.

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News

Trading Information

Previous Close Price
$121.14
Day Range
$119.07121.49
52-Week Range
$104.09129.70
Bid/Ask
$119.38 / $126.70
Market Cap
$42.89 Bil
Volume/Avg
27 / 1.9 Mil

Key Statistics

Price/Earnings (Normalized)
26.53
Price/Sales
8.42
Dividend Yield (Trailing)
2.94%
Dividend Yield (Forward)
2.94%
Total Yield
2.99%

Company Profile

Paychex is a leading provider of payroll, human capital management, and insurance solutions servicing small and midsize clients primarily in the United States. The company, established in 1979, services over 740,000 clients and pays over 1 in 12 U.S. private-sector workers. Alongside its traditional payroll services, Paychex offers HCM solutions such as benefits administration and time and attendance software, as well as human resources outsourcing and insurance agency services.
Sector
Industrials
Industry
Staffing & Employment Services
Stock Style Box
Mid Core
Total Number of Employees
16,600

Competitors

Valuation

Metric
PAYX
PCTY
PAYC
Price/Earnings (Normalized)
26.5326.3724.44
Price/Book Value
11.648.958.25
Price/Sales
8.426.896.51
Price/Cash Flow
20.7521.1018.66
Price/Earnings
PAYX
PCTY
PAYC

Financial Strength

Metric
PAYX
PCTY
PAYC
Quick Ratio
0.430.120.13
Current Ratio
1.241.111.11
Interest Coverage
57.72246.15
Quick Ratio
PAYX
PCTY
PAYC

Profitability

Metric
PAYX
PCTY
PAYC
Return on Assets (Normalized)
14.17%6.84%11.15%
Return on Equity (Normalized)
46.62%32.78%33.81%
Return on Invested Capital (Normalized)
36.73%30.28%33.33%
Return on Assets
PAYX
PCTY
PAYC
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