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RISK CONCERN
Investment Strategy, Risk Analysis, and Insights by Chartered Professionals
Paychex, Inc. (XNAS:PAYX) In-Depth Stock/Fundamental/Options Analysis Today
Primary Facts
PAYX
Name:
PAYCHEX, INC. (XNAS:PAYX)
Sector:
355.20M
Industry:
Staffing & Employment Services
CEO:
Mr. Martin Mucci
Total Employees:
16,000
Our Technological Advancement Rating
Our Rating:
B
Technological advancement compared to industry is 17.12% higher
ANALYSIS OF ALL CRITICAL FACTORS & RISKS RELATED TO THE STOCK & FUNDAMENTAL/LONG-TERM ANALYSIS OF PAYCHEX, INC.(PAYX) AS PER DATA ANALYSIS OF LAST 3 YEARS AND COMPARISON WITH COMPETITORS/PEERS, AND STAFFING & EMPLOYMENT SERVICES INDUSTRY. DATE: 07/09/2022
Primary Targets/Price Insights
Previous Close ($) :
120.9
One Month Price Target:
$121.57
Six Month Price Target :
$124.94
Likely Price in One Year's Time:
Ticker:
$128.98
Likely Trading Range Today Under (Normal Volatility)
$120.55
Price Upper limit ($) :
$121.44
Price Lower limit ($) :
Crash Risk Prep/Key Price Levels (High Volatility/Risk)
Price, as per data analysis, isn't likely to fall below:
Today:
$115.59
This week:
$109.03
This month :
$97.17
Other Primary facts
Market Cap:
43.81B
Market Cap Classification:
Large Cap
Number of Shares
IPO Date:
360.29M
Best/Worst Daily Performance (Last 3+ Years)
Highest Daily Appreciation:
18.2%
-19.48%
Worst Daily Decline:
Our Options Trading Entry Points
Iron Condor entry points for options expiring in 1 week's time
Low risk (<2%) entry points
Buy Call:
Sell Call:
Buy Put:
Sell Put:
$145.51
$134.11
$96.29
$107.69
Medium risk (<10%) entry points
Buy Call
Sell Call
$130.40
Buy Put:
Sell Put:
$127.97
$111.37
$113.83
These entry points can be used for other strategies, such as butterflies, straddles, etc.
Risk-Adjusted returns (Sharpe Ratio) of
PAYX
Sharpe Ratio:
3.11%
Comparison:
PAYX, is amongst the top 20% stocks with highest risk-adjusted returns
Sharpe ratio is 83.71% higher than the industry
& ratio is 36.30% higher than the market/S&P 500 average
Average Returns/Yield of
PAYX
Daily returns:
0.08%
Weekly returns:
0.38%
Monthly returns:
1.53%
Yearly returns:
14.00%
Comparison of returns:
Average annual returns/yield (last 3 years) is 31.01% above industry average
Classification:
PAYX, is amongst the top 40% highest yielding stocks in terms of daily returns
Results of T-Test of Returns:
0.62
Statistical test of Returns:
PAYX has yielded returns statistically similar to the market
Volatility (measured by Standard Deviation)
Daily Volatility:
2.17%
Weekly Volatility:
4.86%
Monthly Volatility:
9.72%
Yearly Volatility:
33.68%
Volitlilty of last five days (Measured by Standard Deviation)
Average Volatility of this Week:
1.57%
Volatility in last five trading days has been -27.97% below long-term volatility
Value at Risk Analysis (VaR)
Daily VaR:
-4.39%
Weekly VaR:
-9.81%
Monthly VaR:
-19.63%
How Much Can the price of
PAYX
Decline in a Recession?
Likely price decline in a recession:
Base case (decline):
-16%
Worst case (decline):
-67.99%
This translates to price declining to:
$100.98
This translates to price declining to:
$38.70
Severe Crash Probability
Risk of crash in next 6/12 months: High (50-70%)
What is Value at Risk (VaR)?
Risk Fundamentals
PAYX is a 38.53% riskier investment compared to the market/S&P 500 & is 18.68% riskier than Nasdaq (IXIC)
Risk (measured by volatility) is -24.17% below industry average
Overall, it is amongst the top 50% most risky stocks
Beta Examination of
PAYX
Beta in relation to market/S&P 500--0.99
Expected beta in 1 year's time:
0.808
Expected beta in 3 year's time:
1.142
Unlevered (debt free) Beta:
0.813
Beta in relation to Nasdaq (XNAS):
0.854
Beta in relation to all global stocks::
0.851
Beta Comparison & Analysis
Beta of competitors/peers::
1.14
Beta is -12.76% lower than peers
Average Industry Beta:
1.192
Beta is -16.60% below industry average
Sustainable Growth Rate Analysis
Sustainable growth rate for this stock/firm:
10.87%
Sustainable growth rate is -34.24% below industry average
Alpha provided | Alpha Analysis
Alpha provided:
0.084
Alpha is 212.71% above industry average alpha yield
Alpha is 533% higher than market/& is unsustainably high
Analysis of Cost of Capital of
PAYX
Equity cost of capital:
0.100
Equity cost of capital is -11.98% below industry mean WACC
Unlevered (without debt) cost of capital:
8.14%
Before-tax cost of debt:
2.03%
After-tax cost of debt:
1.60%
Overall debt rating:
Highest AAA investment grade
Weighted average cost of capital (WACC):
1.60%
WACC is -7.16% below industry mean WACC
Key Per-Share Metrics & Analysis
Revenue per share:
$12.80
Revenue growth rate per share of (3Y):
14.31
Annual revenue growth rate is 78.99% above the industry average
EPS:
$3.84
Expected Annual growth rate of EPS (3Y):
9.20%
Expected future EPS growth rate is 16.06% higher than the Staffing & Employment Services industry
Free cash flow (FCF) per share:
$3.88
Balance sheet equity growth per share: 22.54%
Equity growth rate per share is 803.53% higher than the industry
Debt per share
$2.47
EBITDA per share
$5.51
Valuation Analysis Today of
PAYX
P/E Ratio:
31.52
P/E Ratio of Competitors/Peers:
28.83
P/E ratio is 9.34% higher than main peers & is 72.42% higher than the industry
Stock price/value with industry average P/E ratio: $70.20
PAYX is 72.22% overvalued if valued using industry average P/E ratio
Share value as per dividend discount (DDM) model: $53.86
Present value of the expected future dividends only: $38.66
P/S (Price to Sales ratio):
9.45
Price to sales ratio is 257.51% above the industry mean
P/B (Price to book value ratio):
14.31
Price to free cash flow: 31.15
Price to free cash flow ratio is -62.17% lower than the industry
Net income growth rate (3Y):
17.25%
Net income growth rate is 355.71% higher than the average industry net income growth rate
Dividend Analysis
Dividend payout rate: 17.10%
Dividend yeild: 2.29%
Previous Dividend: $0.79
Previous adjusted dividend: $0.79
Previous Dividend: $2.77
Expected next dividend best case: $0.83
Expected next dividend worst case: $0.75
Average dividend payment (long-term): $0.65
Average dividend increase/decrease (growth rate) % per period: 2.61%
Expected next dividend payment date: 24/08/2022
Expected next dividend record date: 08/10/2022
Expected next dividend declaration date: 28/07/2022
Previous dividend payment date: 26/05/2022
Previous dividend record date: 05/12/2022
Previous dividend declaration date: 29/04/2022
Dividend History:
2022-05-11--$0.79
2021-10-29--$0.66
2021-05-11--$0.66
2022-01-28--$0.66
2021-07-30--$0.66
2021-01-29--$0.62
Dividend growth rate is -117.73% lower than the industry average
In-depth Debt & Leverage Analysis
Debt to equity ratio:
29.24%
Net debt to equity ratio:
-6.73%
Debt to assets ratio:
9.50%
Net debt to assets ratio:
-2.19%
Debt-to-asset ratio is -85.89% below industry average
Ability to repay debt:
Interest coverage ratio:
109.04
Interest coverage ratio is 273.61% more than industry average
Looking forward:
Debt growth rate:
-0.19%
Annual debt growth is -100% lower than industry average debt growth rate
Debt repayment rate in last quarter: 0.00%
Analysis of Key Statistics
Correlation of price movement with the market:
0.818
Statistical significance of correlation:
PAYX has a statistically significant correlation with the market
Average Correlation of the industry with the market:
0.529
Stock price is 54.82% more correlated with the market, compared to the industry average correlation
R Squared (percentage of price movement explained by movement of the market):
0.529
Correlation of price movement with Nasdaq (^IXIC):
0.046
Covariance of price movement with the market:
0.058
Kurtosis
19.346
Returns have severe fat-tails (leptokurtic), i.e., returns considerably higher or lower than the mean returns are considerably more likely, compared to assets with normally distributed returns
Skewness of returns:
-0.398
Returns are, approximately, symmetrical
Fundamental Analysis & Dupont Analysis of
PAYX
Gross Profit Margin Ratio:
282%
Operating Profit Margin Ratio:
39.90%
Operating profit margin is 468.14% higher than the industry
Net Profit Margin Ratio:
282%
Effective Tax Rate:
23.65%
Effective tax rate is -7.78% lower than the industry
Dupont Method
Net Profit Margin
Return on Equity Ratio (ROE):
×
ROA
=
×
45.76%
Return on equity (ROE) is 92.47% higher than the industry
Financial Leverage
Asset Turnover Ratio (ROA):
14.87%
Return on assets (ROA) is 109.13% higher than the industry
Financial Leverage:
1.1x
Current Ratio:
1.27
Current ratio is -24.38% below industry average
Cash Conversion Cycle (days):
-22.2
Cash conversion cycle is -250.71% below industry average
The remaining useful life of property plant & equipment is: 2.6 years
Stock based compensation to net income ratio:
0.89%
In-depth Efficiency Analysis
Revenue generated per employee:
288.2K
Each employee generates -43% less revenue than industry average revenue per employee
EBITDA generated per employee:
124.0K
Each employee generates 220% more EBITDA than industry average revenue per employee
Profit generated per employee:
87.0K
Each employee generates 331% more net income/profit than industry average revenue per employee
Free cash flow (FCF) generated per employee:
22.2K
Each employee generates -287% less free cash flow than industry average revenue per employee
Assets/Capital per employee
190.6K
Each employee generates -287% less free cash flow than industry average revenue per employee
Research & Development (R&D) Analysis
-
-
Competitors/Peer firms of
PAYX
CINTAS CORPORATION (XNAS:CTAS)
OLD DOMINION FREIGHT LINE, INC. (XNAS:ODFL)
Fastenal Company (XNAS:FAST)
PACCAR INC (XNAS:PCAR)
COPART, INC. (XNAS:CPRT)
RYANAIR HOLDINGS PUBLIC LIMITED COMPANY (XNAS:RYAAY)
EXPEDITORS INTERNATIONAL OF WASHINGTON, INC (XNAS:EXPD)
J. B. HUNT TRANSPORT SERVICES, INC. (XNAS:JBHT)
BNGOW
Current Analyst Ratings
Strong buy�8%
Buy�0%
Hold�58%
Sell�4%
Strong sell�8%
Overall analyst sentiment is: Hold
Income Statement
Period:
TTM
Date:
5/31/22
Revenue:
4.61B
Cost of Revenue:
Gross Profit:
R&D Expense
General & Admin Expenses:
Selling, General & Admin Expenses
Sales and Marketing Expenses
Other Expenses :
Operating Expenses :
Cost & Expenses :
Interest Income:
Interest Expenses:
Depreciation & Amortization:
EBITDA:
Operating Income:
Other Income Expenses:
Income Before Tax:
Income Tax Expense:
Net Income:
Balance Sheet
Date:
Calendar Year:
Period:
Cash & Cash Equivalents:
Short Term Investments:
Cash & Short Term Investments:
Net Receivables:
Inventory:
Other Current Assets:
Total Current Assets:
PP&E:
Goodwill:
Intangible Assets:
Long Term Investments:
Tax Assets:
Other Non-Current Assets:
Total Non-Current Assets:
Other Assets:
Total Assets:
Accounts Payable:
Short Term Debt:
Tax Payables:
Deferred Revenue:
Other Current Liabilities:
Total Current Liabilities:
Long Term Debt:
Other Non-Current Liabilities:
Total Non Current Liabilities:
Other Liabilities:
Total Liabilities:
Common Stock:
Retained Earnings:
Accumulated Other Comprehensive Loss:
Other Total Stockholders' Equity:
Total Stockholders' Equity:
Total Liabilities and Stockholders' Equity:
Total Investments:
Total Debt:
Net Debt:
1.36B
3.26B
-
-
1.42B
-
- 600.00K
1.41B
700.00K
18.20M
142.40M
1.98B
1.84B
1.39B
1.82B
431.30M
1.39B
Statement of Cash Flow
Date:
Period:
45.70M
Differed Income Tax :
11.50M
Stock Based Compensation :
12.40M
Change in Working Capital :
- 70900.00K
Accounts Receivables:
- 30400.00K
Other Working Capital:
- 37700.00K
Other Non-Cash Items:
53.30M
Net Cash Provided by Operating Activities:
385.60M
Investments in PP&E:
- 30400.00K
Net Acquisitions:
-
Purchases of Investments:
- 247500.00K
Sales/Maturities of Investments:
Other Investing Activities:
Net Cash Used for Investing Activities:
Debt Repayment:
Common Stock Issued:
Common Stock Repurchased:
Dividend Paid:
Other Financing Activities:
Net Cash Used Provided by Financing Activities:
Effect of FOREX on Changes in Cash:
Net Changes in Cash:
Cash at End of Period:
Cash at Beginning of Period:
Operating Cash Flow:
Capital Expenditure:
Free Cash Flow (FCF):
8/31/21
2022
Q1
1.10B
39.60M
1.14B
1.08B
-
4.09B
6.32B
499.60M
1.82B
260.00M
7.10M
-
466.60M
3.05B
-
9.37B
79.00M
7.10M
40.90M
38.60M
4.83B
4.96B
890.00M
250.20M
1.37B
-
6.32B
3.60M
1.51B
45.1M
1.48B
August 31, 2021 at 6:00:00 AM
2.77B
3.04B
9.37B
46.70M
897.10M
- 204900.0K
256.90M
- 1300.00K
- 22300.00K
-
-
-
- 238100.00K
26.40M
- 211700.00K
-
151.60M
1.97B
1.82B
385.60M
- 30400.00K
355.20M
Our Proprietary Portfolio Rating
Our Rating:
B
Price Forecast/Expected Price in Next 5 Years of
PAYX
2023
2024
2025
2026
2027
$143.87
$153.49
$163.75
$174.69
$186.37