PAYX At Price Support Zone, Right Time To Buy?
Paychex (PAYX) should be on your watchlist. Here is why – it is currently trading in the support zone ($133.77 – $147.85), levels from which it has bounced meaningfully before. In the last 10 years, the stock received buying interest at this level 2 times and subsequently went on to generate 16.1% in average peak returns.
| Peak Return | Days to Peak Return | |
|---|---|---|
| 12/18/2024 | 14.8% | 105 |
| 4/8/2025 | 17.5% | 59 |
But is the price action enough alone? It certainly helps if the fundamentals check out. For PAYX Read Buy or Sell PAYX Stock to see how convincing this buy opportunity might be.
Here are some quick data points:
- Revenue Growth: 5.6% LTM and 6.5% last 3 year average.
- Cash Generation: Nearly 30.7% free cash flow margin and 39.6% operating margin LTM.
- Recent Revenue Shocks: The minimum annual revenue growth in last 3 years for PAYX was 5.4%.
- Valuation: PAYX trades at a PE multiple of 30.6
- Opportunity vs S&P: Compared to S&P, you get higher valuation, higher revenue growth, and better margins
Paychex provides integrated human capital management solutions including HR, payroll, benefits, and insurance services for small to medium-sized businesses in the US and Europe.
| PAYX | S&P Median | |
|---|---|---|
| Sector | Industrials | – |
| Industry | Human Resource & Employment Services | – |
| PE Ratio | 30.6 | 24.0 |
|
|
||
| LTM* Revenue Growth | 5.6% | 5.1% |
| 3Y Average Annual Revenue Growth | 6.5% | 5.2% |
| Min Annual Revenue Growth Last 3Y | 5.4% | -0.3% |
|
|
||
| LTM* Operating Margin | 39.6% | 18.7% |
| 3Y Average Operating Margin | 40.5% | 17.8% |
| LTM* Free Cash Flow Margin | 30.7% | 13.0% |
*LTM: Last Twelve Months
That is one way to look at stocks. Trefis High Quality Portfolio evaluates much more, and is designed to reduce stock-specific risk while giving upside exposure
What Is Stock-Specific Risk If The Market Crashes?
That said, PAYX isn’t immune to big drops. It fell about 51% in the Dot-Com crash and 53% in the Global Financial Crisis. Even more recent shocks like Covid and the inflation spike drove declines of 44% and 23%, respectively. The 2018 correction wasn’t as harsh but still hit around 17%. Solid fundamentals matter, but when the market turns, PAYX can take a serious hit.
But the risk is not limited to major market crashes. Stocks fall even when markets are in good shape – think events like earnings, business updates, outlook changes. Read PAYX Dip Buyer Analyses to see how the stock has recovered from sharp dips in the past.
The Trefis High Quality (HQ) Portfolio, with a collection of 30 stocks, has a track record of comfortably outperforming its benchmark that includes all 3 – the S&P 500, S&P mid-cap, and Russell 2000 indices. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride, as evident in HQ Portfolio performance metrics.