PAYX – Market expectations are for Uniform ROA to improve, but management may be concerned about margins, retention rates, and macroeconomic headwinds

• Paychex, Inc. (PAYX:USA) currently trades at a historical high relative to UAFRS-based (Uniform) earnings, with a 29.9x Uniform P/E. At these levels, the market has bullish expectations for the firm, but management may be concerned about margins, retention rates, and macroeconomic headwinds.
  
• Specifically, management may lack confidence in their ability to improve their adjusted operating income margin, particularly in IT and services, improve client retention rates, and efficiently manage their costs. In addition, they may have concerns about the sustainability of increases in their self-service solutions usage, the pace of the recovery of staffing, and employee retention and hiring headwinds among clients. Furthermore, they may be concerned about the impact of macroeconomic headwinds on client behavior, and they may lack confidence in their capability to get more productive leads through effective SEM and SEO spending.