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$33.71 0.02 (0.06%)
7/23/2008 4:00 PM

Paychex, Inc. (PAYX)

CAPS Rating:
****

The Company is a provider of payroll, human resource, and employee benefits outsourcing solutions for small- to medium-sized businesses.

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Avatar LifeDaddy (51.34) Submitted: 12/27/06 3:07 PM : Outperform Start Price: $38.17 PAYX Score: -1.41

This company is just too large for its competitors to make any inroads into their business. And the costs for clients to switch is just too great, so Paychex will keep almost all of their clients.

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Avatar FutureMonkey (73.40) Submitted: 1/03/07 9:54 AM

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I like the fact that Paychex retains 80% of its clients year to year and gets 60% of new business from referrals from clients.

But that 20% turnover scares me for one simple reason. THe majority of that 20% is from small businesses going out of business. Since the # of employee's / average client business is 17, I fear that Paychex is vulnerable to an economic downturn that results in more small businesses going under. Additionally if minimum wage goes up margins on small businesses get squeezed.

Not sure if that is a reason to avoid PAYX, but is something to keep an eye on.

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