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Paychex, Inc. (PAYX)

Company Dividend Discount ModelIndustry: Staffing & Employment ServicesSector: Industrials

Valuation Snapshot

Stable Growth$104.57 - $277.39$159.89
Multi-Stage$77.22 - $84.06$80.58
Blended Fair Value$120.24
Current Price$139.46
Upside-13.78%
DecisionDon't Buy

Dividend History & Growth Metrics (10Y)

Metric5Y CAGR10Y CAGR2025202420232022202120202019201820172016
DPS10.25%10.13%4.003.633.252.762.512.462.282.041.831.68
YoY Growth--10.13%11.94%17.55%10.00%2.17%7.57%11.78%11.69%9.20%9.91%
Dividend Yield--2.87%2.77%2.66%2.24%2.19%3.21%2.80%2.79%3.21%2.76%

Stable Growth Model (Adjusted)

(USD in Millions except Per Share Data)
Net Income To Common (M)1,613.70
(-) Cash Dividends Paid (M)1,484.20
(=) Cash Retained (M)129.50
MetricLOWBASEHIGH
Required Retention Ratio20.0%12.5%7.5%
(=) Cash Required (M)322.74201.71121.03
Cash Retained (M)129.50129.50129.50
(-) Cash Required (M)-322.74-201.71-121.03
(=) Excess Retained (M)-193.24-72.218.47
(/) Shares Outstanding (M)362.00362.00362.00
(=) Excess Retained per Share-0.53-0.200.02
LTM Dividend per Share4.104.104.10
(+) Excess Retained per Share-0.53-0.200.02
(=) Adjusted Dividend3.573.904.12
WACC / Discount Rate9.10%9.10%9.10%
Growth Rate5.50%6.50%7.50%
Fair Value$104.57$159.89$277.39
Upside / Downside-25.02%14.65%98.90%

Multi-Stage Model: Projections

(USD in Millions)
MetricTTMDec-27Dec-28Dec-29Dec-30Dec-31Terminal
Net Income (M)1,613.701,718.591,830.301,949.272,075.972,210.912,277.24
Payout Ratio91.97%91.58%91.18%90.79%90.39%90.00%92.50%
Projected Dividends (M)1,484.201,573.881,668.961,769.741,876.571,989.822,106.44

Multi-Stage Valuation

MetricLOWBASEHIGH
WACC / Discount Rate9.10%9.10%9.10%
Growth Rate5.50%6.50%7.50%
Year 1 PV (M)1,429.091,442.631,456.18
Year 2 PV (M)1,376.001,402.211,428.66
Year 3 PV (M)1,324.851,362.881,401.64
Year 4 PV (M)1,275.591,324.641,375.10
Year 5 PV (M)1,228.131,287.451,349.04
PV of Terminal Value (M)21,320.2722,350.0523,419.24
Equity Value (M)27,953.9229,169.8630,429.85
Shares Outstanding (M)362.00362.00362.00
Fair Value$77.22$80.58$84.06
Upside / Downside-44.63%-42.22%-39.72%

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