PAYX
Paychex, Inc.
$114.39
Stable Earnings Power
65%
P/Adj-EPS × Normalized Multiple
Moderate
·
Conviction
Overvalued
Trading 25.0% above fair value
You pay
$114.39
Bear
$73.22
Fair
$91.52
Bull
$109.83
Bear
$73.22
-36.0%
$5.25 × 13x P/E
Fair
$91.52
-20.0%
$5.25 × 16x P/E
Bull
$109.83
-4.0%
$5.25 × 20x P/E
Key Value Driver
Normalized P/E multiple (16x base case)
Implied Market Multiple
21.8x
Summary
Our base-case estimate uses a valuation based on adjusted earnings per share and a normalized price-to-earnings multiple. We then blend that result with the average analyst price target of $103.60 from 30 analysts, using a 30% weight on analyst consensus. That produces an estimated intrinsic value of $91.52 per share.
Warnings
The company pays out 91% of its profits as dividends. That leaves little cushion — the dividend could be cut if business slows down.
Key Risks
- Growth DCF inappropriate — terminal value assumptions dominate
- EV/EBITDA misleading for regulated businesses where capex is mandated
- Regulatory risk is a fat tail not visible in normal multiples