Definitive Analysis
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Definitive Analysis

Financial Statements

Ticker

Industry

Sector

Paychex, Inc. (PAYX)

Company Dividend Discount ModelIndustry: Staffing & Employment ServicesSector: Industrials

Valuation Snapshot

Stable Growth$125.60 - $445.30$208.18
Multi-Stage$85.81 - $93.49$89.58
Blended Fair Value$148.88
Current Price$139.46
Upside6.75%
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 Rate8.50%8.50%8.50%
Growth Rate5.50%6.50%7.50%
Fair Value$125.60$208.18$445.30
Upside / Downside-9.94%49.27%219.30%

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 Rate8.50%8.50%8.50%
Growth Rate5.50%6.50%7.50%
Year 1 PV (M)1,437.021,450.651,464.27
Year 2 PV (M)1,391.321,417.821,444.57
Year 3 PV (M)1,347.051,385.721,425.12
Year 4 PV (M)1,304.161,354.321,405.90
Year 5 PV (M)1,262.611,323.601,386.92
PV of Terminal Value (M)24,322.2825,497.0626,716.80
Equity Value (M)31,064.4632,429.1633,843.58
Shares Outstanding (M)362.00362.00362.00
Fair Value$85.81$89.58$93.49
Upside / Downside-38.47%-35.76%-32.96%

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