January 8, 2019

PAYX – Market expectations are for Uniform ROA to expand to record highs, but management appears concerned about growth, their value proposition, and client retention


  • Paychex, Inc. (PAYX:USA) currently trades near recent averages relative toUAFRS-based (Uniform) Earnings, with a 21.3x Uniform P/E. At these levels, the market has bullish expectations for the firm, but management appears concerned about growth, their value proposition, and client retention
  • Specifically, management appears concerned about client retention, and may be exaggerating the value proposition of their HR dashboard. Moreover, they may have concerns about their ability to meet EPS expectations, and sustain performance in terms of interest on funds held for clients. Finally, they may be concerned about their ability to meet expectations for total revenue growth, and effectively integrate Oasis
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