As of today (2023-06-07), Paychex's intrinsic value calculated from the Discounted Dividend model is $65.57.
Note: Discounted Dividend model is only suitable for companies who have a consistant distribution history with more than 5 years. If the company's dividends does not remain steady over a long period, results may not be accurate due to the low consistency. The model is also only suitable for predictable companies (Business Predictability Rank higher than 1-Star). If the company's Predictability Rank is 1-Star or Not Rated, the data will not be stored into our database.
The historical rank and industry rank for Paychex's Intrinsic Value: DCF (Dividends Based) or its related term are showing as below:
PAYX'
s Price-to-DCF (Dividends Based) Range Over the Past 10 Years
Min: 0.8 Med: 2.3 Max: 18.22
Current: 1.69
During the past 13 years, the highest Price-to-Intrinsic-Value-DCF (Dividends Based) Ratio of Paychex was 18.22. The lowest was 0.80. And the median was 2.30.
PAYX's Price-to-DCF (Dividends Based) is ranked better than 57.45% of 141
companies
in the Business Services industry
Industry Median: 1.92
vs PAYX: 1.69
Paychex Intrinsic Value: DCF (Dividends Based) Historical Data
The historical data trend for Paychex's Intrinsic Value: DCF (Dividends Based) 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
Intrinsic Value: DCF (Dividends Based)
44.91
50.14
90.11
68.67
60.39
Paychex Quarterly Data
May18
Aug18
Nov18
Feb19
May19
Aug19
Nov19
Feb20
May20
Aug20
Nov20
Feb21
May21
Aug21
Nov21
Feb22
May22
Aug22
Nov22
Feb23
Intrinsic Value: DCF (Dividends Based)
71.94
60.39
52.68
55.05
57.41
Competitive Comparison
For the Staffing & Employment Services subindustry, Paychex's Intrinsic Value: DCF (Dividends Based), along with its competitors' market caps and Intrinsic Value: DCF (Dividends Based) 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 Intrinsic Value: DCF (Dividends Based) Distribution
For the Business Services industry and Industrials sector, Paychex's Intrinsic Value: DCF (Dividends Based) distribution charts can be found below:
* The bar in red indicates where Paychex's Intrinsic Value: DCF (Dividends Based) falls in comparison to its industry or sector. The grey bar indicates the Intrinsic Value: DCF (Dividends Based)'s extreme value range as defined by GuruFocus.
This is the intrinsic value calculated from the Discounted Dividend Model with default parameters. H-Model formula is applied here, in which dividends are used in the calculation with two stage of dividend growth. The calculation for H-Model DDM valuation shows as below.
The H-model formula consists of two parts. The first component of the equation adds the value from the high growth rate period, which is called growth stage. The second component of the formula considers the value of the stock based on the long-term growth rate, which is called the terminal stage. It ignores the high growth rate period. In the growth stage, the dividends of company grows at a faster rate. As it cannot grow at that rate forever, a lower rate is used for the terminal stage.
GuruFocus DDM calculator is a two-stage model. The default values are defined as:
1. Discount Rate: d = 10% A reasonable discount rate assumption should be at least the long term average return of the stock market, which can be estimated from risk free rate plus risk premium of stock market. We used the 10-Year Treasury Constant Maturity Rate as the risk free rate and rounded up to the nearest integer, then added a risk premium of 6% to get the estimated discount rate. Some investors use their expected rate of return, which is also reasonable. A typical discount rate can be anywhere between 6% - 20%.
2. Dividend Growth Rate in the growth stage: g1 = 8.10% Growth Rate in the growth stage = average dividend growth rate in the past 5 years. If it is higher than 20%, we use 20%. If it is less than 5%, we use 5% instead. =>
Average Dividend Growth Rate in the past 5 years was 8.10% which is less than 20% and higher than 5% => Growth Rate: 8.10%
3. Years of Growth Stage: y1 = 10
4. Terminal Growth Rate: g2 = 4%
5. Dividends per Share: dividends per share = $3.160. GuruFocus DCF calculator applies H-Model to the calculation here, using dividends per share TTM as the default.
All of the default settings can be changed in the DCF calculator and the results are calculated automatically.
Paychex's Intrinsic Value: DCF (Dividends Based) for today is calculated as:
* 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.
What you need to know about Discounted Dividends model:
1. The Discounted Dividends model evaluates a company based on its future dividends distribution power
2. Dividend growth is taken into account; therefore a company with a higher dividend growth rate is worth more if everything else is the same.
3. Since we are projecting future growth, it is assumed that the company will grow at the same rate as it did during the past 5 years. Therefore this model works better for the companies with consistently steady dividends distributed.
4. The Discounted Dividends model works poorly for inconsistent dividends distributor like high growth companies.
5. Your expected return from the investment is a reasonable discount rate assumption.
6. A larger margin of safety should be required for companies with less dividends distributed.
Paychex Intrinsic Value: DCF (Dividends Based) Related Terms
Thank you for viewing the detailed overview of Paychex's Intrinsic Value: DCF (Dividends Based) provided by GuruFocus.com. Please click on the following links to see related term pages.
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.
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