Paychex, Inc. (PAYX) Fundamental Valuation Report

Paychex, Inc. (PAYX) Fundamental Valuation Report
Money Hand Holding Bankroll Girls February 08, 20117 by stevendepolo on 2011-02-08 20:14:44

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Valuation Summary:


Paychex $66.50 (USD) Close Price as of 12/03/2018

Based on the analysis conducted in this report, Paychex, (PAYX:NAS) is found to be  Overvalued.

Paychex, Inc. (PAYX)

Valuation Details

Paychex, Inc. (PAYX)

We have up to 6 valuation points for each company. Details are at the bottom of the report.

Discounted Cash Flow and Sensitivity Analysis for PAYX:NAS

Using a discounted cash flow model we generated an intrinsic value of $53.38 (USD) for PAYX:NAS

Sensitivity Analysis

(showing how changes in the input variables impact the DCF calculation)

Paychex, Inc. (PAYX)

Comparables Model

Using similar companies and price based ratios we generated a valuation of $61.66 (USD) for PAYX:NAS. We also generated a valuation of $50.51 (USD) using other metrics and comparables. The comparable companies were Automatic Data Processing (ADP:NAS), Equifax (EFX:NYS), Fidelity National Info (FIS:NYS), Global Payments (GPN:NYS) and TransUnion (TRU:NYS)

Paychex, Inc. (PAYX)


Using a multiples approach we generated a valuation of  $59.88 (USD) for PAYX:NAS

Paychex, Inc. (PAYX)

Adjusted Book Value versus Historical Price to Book

The average the Price to Book ratio for  PAYX:NAS for the last 10 years was  10.22
We ran the Adjusted Book Value for  PAYX:NAS and generated a book value of  $5.48 (USD) By multiplying these we get an adjusted valuation of  $55.98 (USD)

Analyst Data

Paychex, Inc. (PAYX)

Company Overview (PAYX:NAS USD)

Paychex, Inc. (PAYX)

Detailed Company Description

Paychex Inc operates in payroll outsourcing industry. The company provides integrated payroll, human resource, insurance, and benefits outsourcing solutions for small and medium-sized businesses in the United States.

Explanation of Valuation Models

We have up to 6 valuation points for each company in the database.

The Discounted Cash Flow (DCF) valuation is a cash flow model where cash flow projections are discounted back to the present to calculate value per share. DCF is a common valuation technique especially for companies undergoing irregular cash flows such as resource companies (mining, forestry, oil and gas) going though price cycles or smaller companies about to generate cash flow (junior exploration companies, junior pharma, technology firms…).

The Price Comparables valuation is the result of valuing the company we are looking at on the basis of ratios from selected comparable companies: Price to Earnings, Price to Book, Price to Sales, Price to Cash Flow, Enterprise Value (EV) to EBITDA. Each of these ratios for the selected comparable companies are averaged and multiplied by the values for the company we are interested in to calculate a value per share for our selected company.

We have included the Other Comparables as a way to value companies that cannot be valued using Earnings based ratios. This technique is very useful for companies still experiencing negative cash flows such as mining exploration firms. We use Cash/Share, Book Value/Share, MarketCap, 1 Year Return, NetPPE as the ratios here. Each of these ratios for the selected comparable companies are averaged and multiplied by the values for the company we are interested in to calculate a value per share for our selected company.

Multiples are similar to Price comparables where we look at current or historic ratios for the company in question to assess what it should be worth today based on those historic ratios. We use the same 5 ratios as in the price comparables and value the company with its historic averages.

With Adjusted Book Value (ABV) we calculate the book value per share for the company based on its balance sheet and multiply that book value per share by its historical price to book ratio to calculate a value per share.

If we have Analyst coverage for the company we use the consensus target price here.

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