PAYX
Paychex, Inc.
$111.63
Stable Earnings Power
65%
P/Adj-EPS × Normalized Multiple
Moderate
·
Conviction
Overvalued
Trading 38.8% above fair value
You pay
$111.63
Bear
$64.34
Fair
$80.42
Bull
$96.50
Bear
$64.34
-42.4%
$4.89 × 13x P/E
Fair
$80.42
-28.0%
$4.89 × 16x P/E
Bull
$96.50
-13.6%
$4.89 × 20x P/E
Adjust Assumptions
16.4x
4.89$
Key Value Driver
Normalized P/E multiple (16x base case)
Implied Market Multiple
22.8x
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (31 analysts)
$111.00
Divergence from AlphaVal
28%
Summary
Applying a 16x P/E to adjusted EPS of $4.89, the base-case value is $80.42 per share.
Warnings
The company pays out 95% of its profits as dividends. That leaves little cushion — the dividend could be cut if business slows down.
Wall Street's average price target is $111.00 (from 31 analysts). Our estimate is 28% below the consensus -- consider that gap carefully.
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