What moat does Paychex have?

The advantage is the payroll already set up at a company that has no department to rebuild it. The change is a project, and at a small company it sometimes happens anyway. It is not closed loyalty. The moat narrows if the customer shuts down, or if rates fall and the float stops adding.

How do you read the Paychex radar?

Health separates the payroll fee from the float result. Looking fine in a year of high rates can be the float, not the trade. Quality is the service margin of the small firm, which is read in the accounts. Growth follows employment at those firms, which is more volatile than ADP's. P/E valuation is read against rates. Shareholder return is the dividend, crossed with the cash left when the rate falls.

Which multiples matter for Paychex?

The P/E of a year of high rates is not normal earnings. The fee is what remains. Do not use ADP's multiple as if the customer were the same size, or a subscription-software multiple. A dash means the PAYX cache is cold.

What does this Paychex analysis leave out?

Not advice on PAYX. Vaultflake does not calculate a margin or split the float from the fee. This is not a yield. Read the filings. A past dividend is not a right. The table is a snapshot, not a target price.

Paychex (PAYX) analysis

Paychex, Inc.

Sector:Technology · Payroll for Smaller Firms

Country:United States

Profile and moat

Paychex runs payroll, human resources and benefits for small and mid-sized companies in the United States. It is not ADP: the weight there is the larger company. Here the customer is smaller, fails more often and switches provider more easily.

Part of the financial result is withholding money held before it is remitted to the tax authority. That float earns when rates are high and earns less when they fall. It is not cost-free cash. The operating margin is in the accounts. This report does not state 40% and does not say the balance sheet is net cash.

The dividend has to fit in the fees and in that float. This report does not compare it with a technology yield.

Sustainable Competitive Advantage

Paychex (PAYX) analysis

Paychex, Inc.

Sector:Technology · Payroll for Smaller Firms

Country:United States

Profile and moat

The dividend has to fit in the fees and in that float. This report does not compare it with a technology yield.

Sustainable Competitive Advantage

Paychex (PAYX) analysis

Profile and moat

Paychex (PAYX) analysis

Profile and moat

Radar axes

Limits of this report

Questions from this report

What moat does Paychex have?

How do you read the Paychex radar?

Which multiples matter for Paychex?

What does this Paychex analysis leave out?

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