+ Watch PAYX
on My Watchlist
Paychex provides payroll, human resource, and employee benefits outsourcing for small and medium-sized businesses.
I expect PAYX to outperform the S&P 500 on a total return basis over the next 5 years. From a capital appreciation standpoint, PAYX and the market appear to be even. Both have a P/FV ratio that is between 1.00 to 1.02 at current levels. However, I expect PAYX to return 17% on average per year over the next 5 years as compared to 9.7% for the overall market. I make the following assumptions about PAYX's value and return: Current EPS is $1.80. Fair PE is 26. WACC is 10.8%. Fair PE implies a 13.9% CAGR during stage 1 of my 3-stage DCF model. Using these inputs PAYX's FV is about $47. Its current price is $47.19. The sum of PAYX's current dividend yield (3.2%), CAGR (13.9%) and change in PE Multiple (-0.1%) yields an ROI of 17%. Not bad. This is an example of a fairly valued firm with the potential (at least according to the PE placed on it by investors) of generating outsized returns, owing to its highly fortified economic castle and wide moat.
1. Technology providers will erode market share in service biz2. Increasing trend towards global operations erodes competitive advantage3. payout ratio of 85% dramatically limits options for company to reinvest earnings
No debt, well managed and growing steadily with conservative management.
Companies are hiring employees and this directly affect revenue without increasing operations cost
Payx has all good numbers, its in a rough business that might be the reason it performs almost the same as the s&p.
For reference point and to allow for comments by others. As of the end of March, 2013.ROE 35.53%Trailing PE 24.69PB 8.60Div yield 3.50%As of Feb, 28
Used to own this stock and it continually performed well.
Nasdaq in maximums.
As the economy improves, so will payx numbers.
High growth potential
At 32 dollars a share and a 4% dividend, besides the fact that it appears the 95 % of fools vote it will outperform st spy, and it appears from the graph that 95% of the time it does just that
Good Dividend stock with no debt.
more employment = WIN
dividend & positive employment outlook make this a good pick, imo
might be an outperformer someday.... but thats not today sorry
Solid business Wide moat/durable competetive advantage(s)Persistent/predictble FCFs, returns on capital and profit marginsStrong balance sheet (cash, no debt, Current Ratio, etc)Managers are competent stewards of owner capitalCurrently trading well above FVFair value = 25.85Low-Moderate FV uncertaintyBuy with 20% MOS below 20.90Sell above 30.80
No debt, declining cost of sales, insider ownership, and a quality product.
Results will Beat expectations.Fcst will be better then Expectation
Nice dividend with founder still serving as Chairman of Board and great long term record and some good potential growth businesses. Earnings growth will have significant leverage when grwoth in economy resumes while downside in earnings is limited due to nature of pretty consistent and reliable business. Potential risks from on-line services but seems to holding its own and continuing to innovate into this area.
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