Articles for Paychex

Paychex Looks Fully Valued at $30

Subscribe: RSS | Email

Monday, December 26th, 2011 by Trefis Team

Paychex (NASDAQ:PAYX) reported revenues of $545.7 million growth in the second quarter of fiscal 2012, a 7% increase over the same period last year. The revenues benefited from the inclusion of SurePayroll and ePlan Services, which were acquired in the second half of the fiscal 2011, in the financial results of the second quarter. These acquisitions contributed approximately 2% in total revenue growth for the second quarter. Paychex provides payroll services to primarily small and mid-size businesses in the US and competes with firms like ADP (NASDAQ:ADP) and CBIZ.

We currently have a near $30 Trefis price estimate for Paychex which is in line with the marke.

Read More »

Uncertainty for ADP and Paychex Rises as Small Business Loans Fall

Graph It^NEW!

Share Share retweet

Subscribe: RSS | Email

Wednesday, December 21st, 2011 by Trefis Team

The small business loans of $1 million or less have been falling in number for the past three years are having a damaging effect on small business jobs, according to data from Federal Deposit Insurance Corporation. The lack of funding seems to be taking its toll with only 7 percent of small businesses planning to create new jobs over the next three months, according to National Federation of Independent Business’ (NFIB) latest Small Business Optimism Index. This is bad news for payroll processing firms like ADP (NASDAQ:ADP) and Paychex (NASDAQ:PAYX) which rely on small business clients.

We currently have a $57.67 Trefis price estimate for ADP, about 8% above the market estimate.

Read More »

Despite Difficult Jobs Environment, Paycheck (PAYX) Has a Bright Future

Graph It^NEW!

Share Share retweet

Subscribe: RSS | Email

Thursday, December 15th, 2011 by Trefis Team

Paychex (NASDAQ:PAYX) offers payroll processing to businesses of varying sizes around the country. The company charges per employee at its client firms. At first glance, the poor workforce figures in the U.S. with 9% unemployment might indicate a difficult landscape for the company. However, Paychex has actually remained relatively healthy. In the fiscal year ending May 2011, the firm generated over $2 billion in revenue along with $500 million in net profits. The quarter ending this past September also generated surprisingly more income than analyst expectations.

The company’s current share price is hovering around the Trefis $29 target. However, continued improvement in the underlying dynamics of the business could push the stock further. In particular, Trefis projects that the fee per employee serviced will grow from $165 in 2011 to $220 in 2018. Any appreciation of this rate will put vastly improve Paychex business model and stock price.

Paychex Launches Online Mobile App for iPad as Small Business Hiring Picks Up

Graph It^NEW!

Share Share retweet

Subscribe: RSS | Email

Wednesday, December 7th, 2011 by Trefis Team

On Monday Paychex (NASDAQ:PAYX) launched the Paychex Online Mobile application for Apple iPad expanding its Software as a Service (SaaS) product offering for clients. Paychex is a leading provider of payroll, human resource, and benefits outsourcing solutions for small- to medium-sized businesses, and competes with the likes of Automatic Data Processing (NASDAQ:ADP) and CBIZ (NYSE:CBZ).

We currently have a $29.73 Trefis price estimate for Paychex, in line with current market estimate for the stock.

Business Survey Gives Cautious Read on Small Business Hiring

Graph It^NEW!

Share Share retweet

Subscribe: RSS | Email

Monday, August 8th, 2011 by Trefis Team

We recently discussed ADP’s (NASDAQ:ADP) increasing focus on small businesses that are creating the majority of the jobs in the U.S. even as economic uncertainty continues and unemployment remains a major concern. See our note titled ADP Goes for Small Businesses to Beat Dismal Jobs Reports. However, according to a recent survey performed by Paychex (NASDAQ:PAYX) subsidiary SurePayroll regarding small businesses in the New York Metropolitan area, these employers are feeling the pain from tighter budgets as evidenced by lower salaries.

We have a $56.65 Trefis price estimate for ADP, which is about 15% above the current market price.

ADP Goes for Small Businesses to Beat Dismal Jobs Reports

Graph It^NEW!

Share Share retweet

Subscribe: RSS | Email

Thursday, August 4th, 2011 by Trefis Team

ADP (NASDAQ:ADP) recently reported that job creation is slowing which could spell a troubling trend for largest payroll process in the U.S.; however recent moves to focus more on small businesses that are creating the most jobs support the company’s outlook. ADP reported the number of jobs created dropped to 114,000 in July from 145,000 in June. In addition, the month of July also saw over 66,000 job cuts according to consulting firm Challenger, Gray & Christmas Inc. ADP competes with Paychex (NASDAQ:PAYX) and start-ups like Workday.

We have recently revised our Trefis price estimate for ADP to $56.65, which is about ~15% above the market price based on the Q4’11 earnings and the firm’s reported forecasts for 2012.

Paychex Gains from ePlan Deal but Stock Price Still Too Rich

Graph It^NEW!

Share Share retweet

Subscribe: RSS | Email

Friday, May 20th, 2011 by Trefis Team

Paychex (NASDAQ:PAYX) recently acquired online 401(k) administrator ePlan Services which serves nearly 4,000 401(k) plans in all 50 states, though the terms of the deal were not disclosed. This purchase will help Paychex expand its reach in the fee-based retirement services market where it competes primarily with ADP (NASDAQ:ADP) and provides payroll processing and other HR services related to insurance, retirement and health benefits.

Paychex Needs a Push in Checks per Client to Justify Stock Price

Graph It^NEW!

Share Share retweet

Subscribe: RSS | Email

Monday, April 4th, 2011 by Trefis Team

In its Q3’11 recent earnings release, Paychex (NASDAQ:PAYX) reported a 2.8% growth in checks per client over the same period last year. Checks per client, which represents the number of checks issued by Paychex divided by the client base, is a meaningful measure of the current state of the economy. Compared to competitor ADP (NASDAQ:ADP), a significant percentage of Paychex’s client base consists of small and medium sized businesses (with fewer than 50 employees).

Small Business Employment Struggles Could Outweigh Positive Earnings for Paychex

Graph It^NEW!

Share Share retweet

Subscribe: RSS | Email

Thursday, January 6th, 2011 by Trefis Team

Paychex (NASDAQ:PAYX) competes primarily with ADP (NASDAQ:ADP) in the payroll processing market. Its profitability is strongly tied to the success of small businesses, which constitute the majority of its client base. We estimate that the payroll processing business generates nearly 70% of the $28.33 Trefis price estimate for Paychex’s stock. Our price estimate is roughly 10% below market price.

Paychex reported strong results for its fiscal Q2 2011 (ended November 30) and saw improvement in two key profit drivers – checks per client and revenue per check (Paychex fee per employee for clients). Underlying the encouraging results is an increase in average employees per payroll client by 2.5% year-over-year for fiscal Q2 2011 (up 1.8% through the first half of fiscal 2011). We note that the increase in revenue per check is consistent with a price increase implemented by Paychex in May 2010 and also reflects positive results due to decreases in discounting.

Payroll Processing 83% of ADP’s Stock

Graph It^NEW!

Share Share retweet

Subscribe: RSS | Email

Friday, May 21st, 2010 by Trefis Team

Automatic Data Processing (NASDAQ:ADP), which competes with Paychex (NASDAQ:PAYX), reported a decline in its payroll revenues from large businesses for 2009 due to the economic environment in the US. We expect ADP’s payroll revenue declines to continue in 2010 for ADP.