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Paychex (PAYX) Stock Analysis

Here is a fundamental analysis of Paychex (PAYX), benchmarking its profitability, financial strength, dividend and valuation against its industry group peers.

Performance

Cumulative Growth

PAYX
GSPC
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Paychex (PAYX) vs. S&P 500 (GSPC): Growth of a $10,000 investment over the past five years. Adjusted for dividends and splits.

Trailing Returns

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Trailing total returns for Paychex (PAYX) and S&P 500 (GSPC). Returns over one year are annualized.

Performance at a Glance

Paychex (PAYX) metric values compared with Commercial & Professional Services industry-group medians
MetricCurrent stock: PAYXIndustry group median
1-Year Return-31.74%-15.17%

Risk

Drawdown

PAYX
GSPC
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Paychex (PAYX) vs. S&P 500 (GSPC): Drawdown from the running peak over the past five years. Each line shows the decline from its prior peak; 0% marks a new high.

Risk at a Glance

Paychex (PAYX) metric values compared with Commercial & Professional Services industry-group medians
MetricCurrent stock: PAYXIndustry group median
1-Year Volatility26.83%38.00%
Beta0.830.84

Company Profile

Company profile fields for Paychex (PAYX)
Profile ItemPAYX
NamePaychex Inc.
Country/RegionUnited States
GICS SectorIndustrials
GICS Industry GroupCommercial & Professional Services
GICS IndustryProfessional Services
GICS Sub-IndustryHuman Resource & Employment Services
Market Capitalization36.05 billion USD
CurrencyUSD
ExchangeNasdaq
Listing DateAugust 26, 1983
Security TypeCommon Stock

Valuation

Price-to-Earnings Ratio (TTM)

Paychex (PAYX) trades at P/E ratio of 22.21, near the industry’s usual earnings multiple. The stock is not showing a clear peer discount or premium on trailing earnings.

PAYX

Commercial & Professional Services industry group

22.21

Group distribution
Max
67.87
Q3
37.72
PAYX
22.21
Median
21.61
Q1
14.71
Min
4.85
Largest peers
WCN
37.98
CTAS
37.19
WM
31.76
RSG
30.12
RELX
22.64
PAYX
22.21
ADP
21.10
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Where Paychex (PAYX) stands on P/E ratio within its Commercial & Professional Services peer group — the box is the group’s distribution and the dots its largest members.

Price-to-Sales Ratio (TTM)

Paychex (PAYX) trades at 9.09 on P/S ratio, above the industry benchmark range. The stock is being valued at an unusually rich price per dollar of trailing revenue.

PAYX

Commercial & Professional Services industry group

9.09

Group distribution
PAYX
9.09
Max
6.40
Q3
3.14
Median
1.30
Q1
0.66
Min
0.09
Largest peers
PAYX
9.09
CTAS
6.40
RELX
6.19
ADP
4.19
WCN
4.13
RSG
3.87
WM
3.47
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Where Paychex (PAYX) stands on P/S ratio within its Commercial & Professional Services peer group — the box is the group’s distribution and the dots its largest members.

Price-to-Book Ratio (MRQ)

Paychex (PAYX) trades at 8.98 on P/B ratio, in the higher book-value quartile. The market is paying a premium to book, so stronger ROE, cleaner assets, or a better growth profile need to justify it.

PAYX

Commercial & Professional Services industry group

8.98

Group distribution
PAYX
8.98
Max
8.98
Q3
5.88
Median
2.95
Q1
1.89
Min
-2.68
Largest peers
RELX
76.95
CTAS
14.73
ADP
14.27
PAYX
8.98
WM
8.81
RSG
5.40
WCN
4.84
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Where Paychex (PAYX) stands on P/B ratio within its Commercial & Professional Services peer group — the box is the group’s distribution and the dots its largest members.

Valuation at a Glance

Paychex (PAYX) metric values compared with Commercial & Professional Services industry-group medians
MetricCurrent stock: PAYXIndustry group median
Price-to-Earnings Ratio (TTM)22.2121.61
Price-to-Sales Ratio (TTM)9.091.30
Price-to-Book Ratio (MRQ)8.982.95
Free Cash Flow Yield--5.32%

Profitability

Return on Equity (TTM)

No usable ROE is available for Paychex (PAYX) this period, so the shareholder-equity return read is skipped.

PAYX

Commercial & Professional Services industry group

--

Group distribution
Max
53.04%
Q3
25.65%
Median
13.99%
Q1
2.65%
Min
-26.88%
PAYX
--
Largest peers
ADP
71.21%
RELX
70.51%
CTAS
41.30%
WM
29.94%
RSG
18.35%
WCN
13.12%
PAYX
--
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Paychex (PAYX) doesn’t report ROE this period; the box shows the Commercial & Professional Services group’s distribution and the dots its largest members.

Net Profit Margin (TTM)

Paychex (PAYX) keeps 26.63% of revenue as net profit, putting net margin in the upper peer quartile. After operating costs, interest, and taxes, more of each sales dollar reaches shareholders than it does at most industry peers.

PAYX

Commercial & Professional Services industry group

26.63%

Group distribution
PAYX
26.63%
Max
26.63%
Q3
11.56%
Median
6.26%
Q1
1.18%
Min
-13.34%
Largest peers
PAYX
26.63%
RELX
21.53%
ADP
20.12%
CTAS
17.57%
RSG
12.99%
WM
10.99%
WCN
10.97%
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Where Paychex (PAYX) stands on net margin within its Commercial & Professional Services peer group — the box is the group’s distribution and the dots its largest members.

Operating Profit Margin (TTM)

Paychex (PAYX) turns 44.38% of revenue into operating profit on operating margin, above the industry benchmark range. Core operations are retaining an unusually large share before interest and taxes, which points to pricing power or tight cost control if the margin is sustainable.

PAYX

Commercial & Professional Services industry group

44.38%

Group distribution
PAYX
44.38%
Max
37.53%
Q3
17.67%
Median
9.37%
Q1
3.13%
Min
-4.52%
Largest peers
PAYX
44.38%
RELX
31.41%
ADP
30.18%
CTAS
23.22%
RSG
20.20%
WCN
18.75%
WM
17.52%
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Where Paychex (PAYX) stands on operating margin within its Commercial & Professional Services peer group — the box is the group’s distribution and the dots its largest members.

Profitability at a Glance

Paychex (PAYX) metric values compared with Commercial & Professional Services industry-group medians
MetricCurrent stock: PAYXIndustry group median
Return on Equity (TTM)--13.99%
Return on Assets (TTM)--5.24%
Net Profit Margin (TTM)26.63%6.26%
Operating Profit Margin (TTM)44.38%9.37%
Gross Profit Margin (TTM)67.20%36.48%

Financial Strength

Current Ratio (MRQ)

Paychex (PAYX) has current ratio of 1.15, in the healthier middle range for its industry. The short-term asset cushion looks balanced relative to peers rather than stretched thin.

PAYX

Commercial & Professional Services industry group

1.15

Group distribution
Max
3.17
Q3
2.01
Median
1.51
PAYX
1.15
Q1
1.13
Min
0.45
Largest peers
CTAS
1.98
PAYX
1.15
ADP
1.04
WM
0.93
WCN
0.69
RSG
0.67
RELX
0.49
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Where Paychex (PAYX) stands on current ratio within its Commercial & Professional Services peer group — the box is the group’s distribution and the dots its largest members.

Debt-to-Equity Ratio (MRQ)

Paychex (PAYX) has debt-to-equity ratio of 1.25, roughly in line with the peer group’s normal leverage range. Its mix of debt and equity looks typical for the industry.

PAYX

Commercial & Professional Services industry group

1.25

Group distribution
Max
2.61
Q3
1.39
PAYX
1.25
Median
0.94
Q1
0.45
Min
0.01
Largest peers
RELX
3.04
WM
2.28
PAYX
1.25
RSG
1.18
WCN
1.17
ADP
0.69
CTAS
0.61
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Where Paychex (PAYX) stands on debt-to-equity ratio within its Commercial & Professional Services peer group — the box is the group’s distribution and the dots its largest members.

Financial Strength at a Glance

Paychex (PAYX) metric values compared with Commercial & Professional Services industry-group medians
MetricCurrent stock: PAYXIndustry group median
Current Ratio (MRQ)1.151.51
Debt-to-Equity Ratio (MRQ)1.250.94
Net Debt / EBITDA2.012.67

Dividends

Dividend Yield (TTM)

Paychex (PAYX) has dividend yield of 4.73%, in the upper peer-yield quartile while still inside the industry range. The dividend offers more cash income per dollar of share price than most peers, though payout coverage still matters.

PAYX

Commercial & Professional Services industry group

4.73%

Group distribution
Max
5.49%
PAYX
4.73%
Q3
2.30%
Median
0.97%
Q1
0.00%
Min
0.00%
Largest peers
PAYX
4.73%
ADP
3.01%
RELX
2.73%
WM
1.61%
RSG
1.19%
CTAS
1.02%
WCN
0.90%
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Where Paychex (PAYX) stands on dividend yield within its Commercial & Professional Services peer group — the box is the group’s distribution and the dots its largest members.

Dividend Payout Ratio (TTM)

Paychex (PAYX) has payout ratio of 95.36%, above the peer distribution for its industry. The dividend consumes more reported earnings than peers normally do, leaving unusually thin earnings cover.

PAYX

Commercial & Professional Services industry group

95.36%

Group distribution
PAYX
95.36%
Max
79.70%
Q3
36.60%
Median
16.11%
Q1
0.00%
Min
0.00%
Largest peers
PAYX
95.36%
ADP
60.45%
RELX
57.42%
WM
49.49%
CTAS
36.71%
RSG
35.22%
WCN
32.44%
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Where Paychex (PAYX) stands on payout ratio within its Commercial & Professional Services peer group — the box is the group’s distribution and the dots its largest members.

Dividends at a Glance

Paychex (PAYX) metric values compared with Commercial & Professional Services industry-group medians
MetricCurrent stock: PAYXIndustry group median
Dividend Yield (TTM)4.73%0.97%
Dividend Payout Ratio (TTM)95.36%16.11%