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Paychex, Inc. (PAYX)

Company Dividend Discount ModelIndustry: Staffing & Employment ServicesSector: Industrials

Valuation Snapshot

Stable Growth$105.09 - $280.55$161.01
Multi-Stage$77.45 - $84.31$80.82
Blended Fair Value$120.92
Current Price$139.46
Upside-13.30%
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 Rate9.08%9.08%9.08%
Growth Rate5.50%6.50%7.50%
Fair Value$105.09$161.01$280.55
Upside / Downside-24.64%15.45%101.17%

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 Rate9.08%9.08%9.08%
Growth Rate5.50%6.50%7.50%
Year 1 PV (M)1,429.321,442.871,456.42
Year 2 PV (M)1,376.451,402.671,429.13
Year 3 PV (M)1,325.511,363.561,402.33
Year 4 PV (M)1,276.431,325.521,376.01
Year 5 PV (M)1,229.141,288.511,350.15
PV of Terminal Value (M)21,401.0422,434.7223,507.96
Equity Value (M)28,037.8929,257.8430,522.00
Shares Outstanding (M)362.00362.00362.00
Fair Value$77.45$80.82$84.31
Upside / Downside-44.46%-42.05%-39.54%

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