PAYX - Embedded Expectations Analysis - 2018 11 05
Paychex, Inc. (PAYX:USA) currently trades near recent averages relative to UAFRS-based (Uniform) Earnings, with a 20.9x Uniform P/E. At these levels, the market has bullish expectations for the firm, but management has concerns about their ability to expand their margins and to develop new products in the near future, and about the potential of new product enhancementsSpecifically, management may lack confidence in their ability to sustain their client retention rates and maintain better than anticipated margins. Additionally, they may have concerns about the new enhancements to their HR Product Suite, particularly their new Paychex Flex Assistant, and their ability to move to the front of the low-end of the DIY/SaaS portion of the market. Finally, they may be exaggerating the PEO services momentum attributable to changes in the insurance industry, and may lack confidence in their ability to deliver new innovative ideas over the next few quarters
Paychex is a provider of integrated human capital management (HCM) solutions for payroll, benefits, human resource (HR), and insurance services for small- to medium-sized businesses. The company's portfolio of HCM and employee benefit-related services include: payroll processing services; payroll tax administration services; employee payment services; regulatory compliance services (new-hire reporting and garnishment processing); HR Solutions Administrative Services Organization; retirement services administration; HR administration services, including time and attendance; other HR services and products; business services; Professional Employer Organization services; and insurance services.
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