Is The Market Pricing Paychex Fairly?
Paychex, Inc (NASDAQ: PAYX) engages in the provision of human capital management solutions for payroll, human resource, insurance, and retirement for small and medium sized businesses. During the latest quarter, net sales of the company increased by 9% y-o-y to $862.8 million, driven by growth across all major human capital management (“HCM”) product lines and professional employer organization (“PEO”) services. In particular, the company’s comprehensive human resource (“HR”) outsourcing solutions, retirement services, insurance services, and time and attendance solutions performed well. The service delivery also remained strong as the company continued to experience favorable client retention results. The benefits of tax reform and the enhanced product solutions continued to strengthen the company’s market-leading position. The acquisitions of HROI, PEO, and Lessor Group in FY2018 also contributed to the total revenue growth for the company and the management remains enthusiastic about the further growth opportunities these are likely to offer.
Looking ahead, Paychex will grow stronger as growth prospects in International markets remain strong. The company’s operations in new geographies benefited post acquisition of the Lessor Group as the company continues to expand. Total revenue for Paychex is comprised of service revenue and interest on funds held for clients.
Detailed steps to arrive at our price estimate are outlined in our interactive dashboard Is Paychex Inc. Fairly Priced. You can modify the key value drivers to see how they impact the company’s revenues, bottom line, and valuation.
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