Paychex Inc
provides computerized payroll-accounting services, salary deposit services,
automatic payroll tax payment and tax return filing services and human resource
products and services to approximately 564,000 small and medium sized
businesses. The company has earned a
25%+ return on equity over the last 10 years and has grown profits and
dividends 9-15% in the same time period.
While the weak employment environment resulted in a slight faltering in
earnings in 2009-2010, PAYX has returned to
a growth path as a result of:
(1) rising
number of checks processed as well as an increase in revenue per check,
(2) acquisitions,
(3) increasing
demand for health and benefits offerings,
(4) an
aggressive cost control effort,
(5) an R&D
effort designed to expand product offerings.
Negatives:
(1) a weak
economy negatively impacts the growth of its client base,
(2) low interest
rates are impacting ‘interest on funds held for clients’.
Statistical Summary
Stock Dividend Payout # Increases
Yield Growth Rate Ratio
Since 2003
Debt/ EPS Down Net Value Line
Equity ROE Since 2003 Margin Rating
*over one half of the companies
in PAYX ’s industry don’t pay a dividend
Chart
Note:
PAYX stock made great progress off its March
2009 low, quickly surpassing the downtrend off its August 2007 high (straight
red line) and the November 2008 trading high (green line). Long term the stock is in a trading
range (blue line at bottom is the lower
boundary). Intermediate term it is in
an uptrend (purple lines).
Short term it is in an uptrend (brown line). The wiggly red line is the 50 day moving
average. The Dividend Growth Portfolio
owns a full position in PAYX . The upper boundary of its Buy
Value Range Sell
Half Range
9/13
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