PAYX

Paychex Inc.

Finance/Real Estate, TMT


Presented:06/05/2020
Price:$80.05
Cap:$28.72B
Current Price:$142.30
Cap:$51.21B

Presented

Date06/05/2020
Price$80.05
Market Cap$28.72B
Ent Value$28.05B
P/E Ratio26.07x
Book Value$7.69
Div Yield3.1%
Shares O/S358.72M
Ave Daily Vol3,281,725
Short Int3.91%

Current

Price$142.30
Market Cap$51.21B
Paychex, Inc. engages in the provision of human capital management solutions for payroll, human resource, insurance, and retirement for small and medium sized businesses. Its solutions include payroll services, hiring services, business insurance, time and attendance, employee benefits, finance and payments, human resources services, and startup services. The company was founded by Blase Thomas Golisano in 1971 and is headquartered in Rochester, NY.

Publicly traded companies mentioned herein: Automatic Data Processing Inc (ADP), Paychex Inc (PAYX), Paycom Software Inc (PAYC), Paylocity Holding Corp (PCTY) 

Highlights

The presenter is short shares of both Paychex (PAYX) and Automatic Data Processing (ADP) and thinks the risk/reward and entry points are favorable given recent gains. It was noted that both stocks were up on Friday morning’s better-than-expected jobs data (ADP closed up ~10%, PAYX ended the day up ~8%), but that doesn’t change the dramatic deterioration of the employment picture in the US as a result of COVID-19. In particular, it remains to be seen if SMBs will reopen and/or what percentage of small business jobs will come back. In his opinion, these stocks are “unjustifiably expensive” given a combination of SMB exposure (PAYX has relatively more, which gives him more confidence in the position), slow topline growth, and increasing competitive intensity. As such, there should be limited upside from here (i.e., bears should see either relative or absolute gains over the next 3 - 6 months).

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Idea Discussion

Commentor 1 - 2 weeks ago

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