Paychex Inc.PAYX

Morningstar Rating

Stock Research and Analysis

by Vishnu Lekraj

Paychex was formed through the consolidation of 17 payroll processing companies in 1979 and has been one of the most successful human resources outsourcing firms in the United States. The minimal amount of capital required for operations and the firm's Read more

Bulls Say

High customer switching costs has allowed Paychex to annually raise prices at a rate above that of inflation.

The firm's focus on small to medium-size businesses gives it greater pricing power.

Paychex and its main rival, ADP, make up about 40% of the payroll outsourcing industry, and this allows for significant growth opportunities.

The firm services 1 in 10 401(k) record-keeping plans in the United States. Read more

Bears Say

Interest income from client temporary funds is depressed because of the current interest rate environment.

The firm's co-employment service line has exposed it to a greater amount of employee compliance and regulatory risk.

The recent push into other noncore HR services could distract management and waste resources. Read more

Strategy

Paychex is trying to branch out into other HR service offerings outside of the core payroll business. Combined revenue from the retirement, comprehensive HR outsourcing, and workers' compensation lines Read more

Management

Stewardship at Paychex is excellent. We like that the CEO and chairman roles are separate, with founder and former CEO B. Thomas Golisano serving as chairman. His 10% equity stake is beneficial to shareholders, in our opinion, because a substantial Read more

Profile

Paychex competes in the payroll outsourcing industry. It is the second-largest player in terms of revenues and focuses on providing this service to small and medium-size Read more

First Name

Last Name

Email Address

Zip Code

Create Password

Verify Password

(6-15 characters; case sensitive)

What is your occupation or job title?

Select...

Your registration indicates agreement to the terms of use.

Daily Dividend Reports: PEP, ADP, L, AVP, PKY
Watch more