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Paychex (NAS:PAYX) Owner Earnings per Share (TTM)

: 3.33 (As of Feb. 2023)
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In 1986 Berkshire Hathaway Shareholder Letter, Warren Buffett defined owner earnings as follows:

"These represent (a) reported earnings plus (b) depreciation, depletion, amortization, and certain other non-cash charges...less (c) the average annual amount of capitalized expenditures for plant and equipment, etc. that the business requires to fully maintain its long-term competitive position and its unit volume (If the business requires additional working capital to maintain its competitive position and unit volume, the increment also should be included in (c))...Our owner-earnings equation does not yield the deceptively precise figures provided by GAAP, since (c) must be a guess - and one sometimes very difficult to make. Despite this problem, we consider the owner earnings figure, not the GAAP figure, to be the relevant item for valuation purposes - both for investors in buying stocks and for managers in buying entire businesses...All of this points up the absurdity of the 'cash flow' numbers that are often set forth in Wall Street reports. These numbers routinely include (a) plus (b) - but do not subtract (c)."

Paychex's Owner Earnings per Share (TTM) ended in Feb. 2023 was $3.33. It's Price-to-Owner-Earnings ratio for today is 33.53.


The historical rank and industry rank for Paychex's Owner Earnings per Share (TTM) or its related term are showing as below:

PAYX' s Price-to-Owner-Earnings Range Over the Past 10 Years
Min: 19.16   Med: 28.52   Max: 50.74
Current: 33.52


During the past 13 years, the highest Price-to-Owner-Earnings ratio of Paychex was 50.74. The lowest was 19.16. And the median was 28.52.


PAYX's Price-to-Owner-Earnings is ranked worse than
78.49% of 516 companies
in the Business Services industry
Industry Median: 13.99 vs PAYX: 33.52

Paychex's Earnings per Share (Diluted) for the three months ended in Feb. 2023 was $1.29. Its Earnings per Share (Diluted) for the trailing twelve months (TTM) ended in Feb. 2023 was $4.15. It's PE Ratio ratio for today is 26.90.

Paychex's EPS without NRI for the three months ended in Feb. 2023 was $1.29. Its EPS without NRI for the trailing twelve months (TTM) ended in Feb. 2023 was $4.15. It's PE Ratio without NRI ratio for today is 26.90.


Paychex Owner Earnings per Share (TTM) Historical Data

The historical data trend for Paychex's Owner Earnings per Share (TTM) can be seen below:

* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD.
* For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.

* Premium members only.

Paychex Annual Data
Trend May13 May14 May15 May16 May17 May18 May19 May20 May21 May22
Owner Earnings per Share (TTM)
Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only 2.47 2.46 2.96 2.40 3.04

Paychex Quarterly Data
May18 Aug18 Nov18 Feb19 May19 Aug19 Nov19 Feb20 May20 Aug20 Nov20 Feb21 May21 Aug21 Nov21 Feb22 May22 Aug22 Nov22 Feb23
Owner Earnings per Share (TTM) Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only 3.23 3.04 2.95 3.39 3.33

Competitive Comparison

For the Staffing & Employment Services subindustry, Paychex's Owner Earnings per Share (TTM), along with its competitors' market caps and Owner Earnings per Share (TTM) data, can be viewed below:

* Competitive companies are chosen from companies within the same industry, with headquarter located in same country, with closest market capitalization; x-axis shows the market cap, and y-axis shows the term value; the bigger the dot, the larger the market cap. Note that "N/A" values will not show up in the chart.

   

Paychex Owner Earnings per Share (TTM) Distribution

For the Business Services industry and Industrials sector, Paychex's Owner Earnings per Share (TTM) distribution charts can be found below:

* The bar in red indicates where Paychex's Owner Earnings per Share (TTM) falls in comparison to its industry or sector. The grey bar indicates the Owner Earnings per Share (TTM)'s extreme value range as defined by GuruFocus.



Paychex Owner Earnings per Share (TTM) Calculation

In 1986 Berkshire Hathaway Shareholder Letter, Warren Buffett defined owner earnings as follows:

"These represent (a) reported earnings plus (b) depreciation, depletion, amortization, and certain other non-cash charges...less (c) the average annual amount of capitalized expenditures for plant and equipment, etc. that the business requires to fully maintain its long-term competitive position and its unit volume. (If the business requires additional working capital to maintain its competitive position and unit volume, the increment also should be included in (c))...Our owner-earnings equation does not yield the deceptively precise figures provided by GAAP, since (c) must be a guess - and one sometimes very difficult to make. Despite this problem, we consider the owner earnings figure, not the GAAP figure, to be the relevant item for valuation purposes - both for investors in buying stocks and for managers in buying entire businesses...All of this points up the absurdity of the 'cash flow' numbers that are often set forth in Wall Street reports. These numbers routinely include (a) plus (b) - but do not subtract (c)."

To make it simple, then you will have:

Owner Earnings per Share (TTM) = (Net Income + Depreciation, Depletion and Amortization + Change In Deferred Tax - 5Y Average of Maintenance Capital Expenditure + Change In Working Capital) / Shares Outstanding (Diluted Average)

Paychex's Owner Earnings per Share (TTM) Calculation:

TTM / Last Quarter Average of Last 20 Quarters
Net Income 1,503
Depreciation, Depletion and Amortization 182
Change In Deferred Tax -27
5Y Average of Maintenance Capital Expenditure 101
Change In Working Capital -350
Shares Outstanding (Diluted Average) 362

1. Start with "Net Income" from income statement. Paychex's Net Income for the trailing twelve months (TTM) ended in Feb. 2023 was $1,503 Mil.

2. "Depreciation, Depletion and Amortization" is from cashflow statement. Paychex's Depreciation, Depletion and Amortization for the trailing twelve months (TTM) ended in Feb. 2023 was $182 Mil. This needs to be added back because company does not actually need to pay cash for it. It is a non-cash item.

3. Other non-cash charges usually include "Stock Based Compensation" and "Change In Deferred Tax":
However, to be conservative, GuruFocus will not add Stock Based Compensation back to net income. Paychex's Change In Deferred Tax for the trailing twelve months (TTM) ended in Feb. 2023 was $-27 Mil.

4. Average maintenance capital expenditure over a business/industry cycle: 5-Year Average Maintenance Capital Expenditure = $101 Mil

It is usually best to take a long-term average of maintenance capital expenditure. Ideally this would be as long as 10 years and include at least one economic downturn. However, since many companies do not have as long as 10-year history, here GuruFocus uses the latest 5 years data to do the calculation. To smooth out unusual years but reflect recent developments, we take an average of the 5 year maintenance capital expenditure.

The following shows how to get maintenance capital expenditure.

First, calculate the revenue change regarding to the previous year. If the revenue decreased from the previous year, then the Maintenance Capital Expenditure = Capital Expenditure (positive).
Second, if the revenue increased from the previous year, then calculate the percentage of Net PPE as of corresponding Revenue.
Growth Capital Expenditure = Percentage of Property, Plant and Equipment as of corresponding Revenue * Revenue Increase
Third, calculate Capital Expenditure (positive) - Growth Capital Expenditure.
If [Capital Expenditure (positive) - Growth Capital Expenditure] was negative, then the Maintenance Capital Expenditure = Capital Expenditure (positive).
If [Capital Expenditure (positive) - Growth Capital Expenditure] was positive, then the Maintenance Capital Expenditure = Capital Expenditure (positive) - Growth Capital Expenditure.
Fourth, get the average of the 5 years maintenance capital expenditure.

Paychex's 5-Year Average Maintenance Capital Expenditure = $101 Mil

5. "Change In Working Capital" is from cashflow statement. Paychex's Change In Working Capital for the trailing twelve months (TTM) ended in Feb. 2023 was $-350 Mil.
Note: GuruFocus' Change in Working Capital is provided by Morningstar. It is calculated by adding the items under "Change in operating assets and liabilities" (may refer to a different name for different company) section in Cash Flow Statement from original financial report. And sometimes it includes non-current parts of assets and liabilities.

6. Paychex's Shares Outstanding (Diluted Average) for the months ended in Feb. 2023 was 362.300 Mil.

Paychex's Onwer Earnings Per Share for Feb. 2023 is calculated as:

Owner Earnings per Share (TTM)
=( Net Income+Depreciation, Depletion and Amortization+Change In Deferred Tax
=( 1503.3 +181.6+-26.6
-5Y Avg of Maintenance CAPEX+Change In Working Capital )/Shares Outstanding (Diluted Average)
-100.97275980458+-350.2)/362.300
=3.33

Price-to-Owner-Earnings=Current Price/Owner Earnings per Share (TTM)
=111.65/3.33
=33.53

* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD.
* For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.


Be Aware

Assumption: Companies usually do not report maintenance capital expenditures and growth capital expenditures separately. Here we use estimated numbers and average them over 5 years. The method to estimate maintenance capital expenditures can be found in above part 4.

Note: GuruFocus' Change In Working Capital is provided by Morningstar. It is calculated by adding the items under "Change in operating assets and liabilities" (may refer to a different name for different company) section in Cash Flow Statement from original financial report. And it includes non-current parts of assets and liabilities.


Paychex Owner Earnings per Share (TTM) Related Terms

Thank you for viewing the detailed overview of Paychex's Owner Earnings per Share (TTM) provided by GuruFocus.com. Please click on the following links to see related term pages.


Paychex (NAS:PAYX) Business Description

Paychex logo
Industry
Traded in Other Exchanges
Address
911 Panorama Trail South, Rochester, NY, USA, 14625-2396
Paychex is a leading provider of payroll, human capital management, and insurance solutions servicing small and midsize clients primarily in the United States. The company, established in 1979, services over 730,000 clients and pays over 1 in 12 U.S. private-sector workers. Alongside its traditional payroll services, Paychex offers HCM solutions such as benefits administration and time and attendance software, as well as human resources outsourcing and insurance agency services.
Executives
Kevin A Price director 911 PANORAMA TRAIL SOUTH, ROCHESTER NY 14625
Karen E. Saunders-mcclendon officer: VP, Chief Human Resources Offi 911 PANORAMA TRAIL SOUTH, ROCHESTER NY 14625
Robert L. Schrader officer: VP/Controller 911 PANORAMA TRAIL SOUTH, ROCHESTER NY 14625
Kara Wilson director C/O SUCCESSFACTORS, INC., 1500 FASHION ISLAND BLVD., SUITE 300, SAN MATEO CA 94404
Tom Bonadio director 1021 HOWARD AVE, SAN CARLOS CA 94070
John B Gibson officer: Sr. VP, Service CONVERGYS CORPORATION, 201 EAST FOURTH STREET, CINCINNATI OH 45202
Mark Anthony Bottini officer: Sr. VP of Sales 911 PANORAMA TRAIL SOUTH, ROCHESTER NY 14625
Kevin N Hill officer: Vice President 50 WREN FIELD LN, PITTSFORD NY 114534
Michael E Gioja officer: Sr. Vice President 911 PANORAMA TRAIL SOUTH, ROCHESTER NY 14625
Rebecca F Bernson officer: Sr. Vice President, Sales 911 PANORAMA TRAIL SOUTH, ROCHESTER NY 14625
Efrain Rivera officer: Sr. Vice President, CFO 911 PANORAMA TRAIL SOUTH, ROCHESTER NY 14625
Laurie L. Zaucha officer: Vice President 400 WILLOWBROOK OFFICE PARK, FAIRPORT NY 14450
Joseph Doody director CASELLA WASTE SYSTEMS INC, 25 GREENS HILL LANE PO BOX 866, RUTLAND VT 05701
Delbert M Humenik officer: Sr. Vice President 911 PANORAMA TRAIL SOUTH, ROCHESTER NY 14625
Jennifer R. Vossler officer: VP/Controller 911 PANORAMA TRAIL SOUTH, ROCHESTER NY 14625

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