PAYX - Embedded Expectations Analysis - 2020 03 02
Paychex, Inc. (PAYX:USA) currently trades above recent averages relative to UAFRS-based (Uniform) Earnings, with a 26.0x Uniform P/E. At these levels, the market has bullish expectations for the firm, but management appears concerned about PEO services demand, their Oasis acquisition, and their Pay-on-Demand services.Specifically, management may be exaggerating the demand for PEO services, the quality of their Flex Assistant chat bot, and their ability to sustain PEO client growth. Moreover, they may be concerned about the progress of their Oasis acquisition integration, the impact of changes to overtime laws, and the sustainability of their ROE. Finally, they may be concerned about the launch of their Pay-on-Demand services and about their ability to continue offering flexible payment dates and digital payments into Amazon and PayPal.
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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