DCF Tool

PAYX

Paychex Inc. – Payroll Services
Paychex, Inc. is a leading provider of integrated human capital management solutions for human resources, payroll, benefits, and insurance services. By combining its innovative software-as-a-service technology and mobility platform with dedicated, personal service, Paychex empowers small- and medium-sized business owners to focus on the growth and management of their business. Backed by more than 45 years of industry expertise, Paychex served more than 680,000 payroll clients as of May 31, 2020 across more than 100 locations in the U.S. and Europe, and pays one out of every 12 American private sector employees.
Analysis Results
Intrinsic Value $162.71
Latest Price $108.17
Relative Value 34% undervalued
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Cash Flow (Billions)
Analysis Parameters
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Analysis Details
Growth Rate Projection

An exponential growth model was fit to the past cash flow data, giving more weight to more recent years. This model determined a growth rate estimate of 9.6%.

Weighted Average Cost of Capital (WACC)

The calculated WACC is 3.8%. This value is used as the default discount rate.

Value of Future Flows

Assuming a growth rate of 9.6%, the cash flows for the next 5 years are projected.

The present value of each year's flow is adjusted to present value using the discount rate.

Year Future flow (billion) Present value (billion)
2023 1.47 1.42
2024 1.61 1.49
2025 1.76 1.58
2026 1.93 1.66
2027 2.12 1.76
Terminal Value

Assuming the company was sold after the projection period at an exit multiple of 30, the terminal value of the company would be 63.5 billion. This corresponds to a present value of 50.8 billion.

Intrinsic Value Per Share

The total present value of the projected cash flows is 7.91 billion. Adding in the terminal value gives a total present value of 58.7 billion.

There are presently 361.0 million outstanding shares, so the intrinsic value per share is 162.71.

Financial Statements

The following data was to determine the past cash flows.

Current Assets 6,581,600,000
Current Cash 1,223,900,000
Current Liabilities 5,269,200,000
Current Debt 8,700,000
Non-Cash Working Capital (NCWC) 97,200,000
Change in NCWC -109,600,000
EBIT 1,840,000,000
Tax Provision 431,800,000
Depreciation and Amortization 191,800,000
Capital Expenditure -143,200,000
Unlevered Free Cash Flow 1,343,555,519
Current Assets 6,169,500,000
Current Cash 1,031,900,000
Current Liabilities 4,938,200,000
Current Debt 7,400,000
Non-Cash Working Capital (NCWC) 206,800,000
Change in NCWC 96,400,000
EBIT 1,460,700,000
Tax Provision 336,700,000
Depreciation and Amortization 192,000,000
Capital Expenditure -123,300,000
Unlevered Free Cash Flow 1,282,878,726
Current Assets 5,464,600,000
Current Cash 932,400,000
Current Liabilities 4,426,900,000
Current Debt 5,100,000
Non-Cash Working Capital (NCWC) 110,400,000
Change in NCWC -9,700,000
EBIT 1,460,500,000
Tax Provision 339,000,000
Depreciation and Amortization 209,700
Capital Expenditure -136,800,000
Unlevered Free Cash Flow 969,689,833
Current Assets 5,677,700,000
Current Cash 712,600,000
Current Liabilities 4,845,000,000
Current Debt 0
Non-Cash Working Capital (NCWC) 120,100,000
Change in NCWC 47,100,000
EBIT 1,371,300,000
Tax Provision 333,600,000
Depreciation and Amortization 181,500,000
Capital Expenditure -129,100,000
Unlevered Free Cash Flow 1,136,395,263
Current Assets 5,784,400,000
Current Cash 424,200,000
Current Liabilities 5,287,200,000
Current Debt 0
Non-Cash Working Capital (NCWC) 73,000,000
Change in NCWC -150,500,000
EBIT 1,288,100,000
Tax Provision 362,400,000
Depreciation and Amortization 138,000,000
Capital Expenditure -193,800,000
Unlevered Free Cash Flow 721,636,864
Current Assets 5,272,000,000
Current Cash 323,400,000
Current Liabilities 4,725,100,000
Current Debt 0
Non-Cash Working Capital (NCWC) 223,500,000
Change in NCWC 77,900,000
EBIT 1,237,400,000
Tax Provision 427,500,000
Depreciation and Amortization 126,900,000
Capital Expenditure -102,900,000
Unlevered Free Cash Flow 914,341,372
Current Assets 4,863,600,000
Current Cash 352,100,000
Current Liabilities 4,365,900,000
Current Debt 0
Non-Cash Working Capital (NCWC) 145,600,000
Change in NCWC 152,000,000
EBIT 1,143,800,000
Tax Provision 394,300,000
Depreciation and Amortization 115,100,000
Capital Expenditure -106,700,000
Unlevered Free Cash Flow 912,400,555
Current Assets 5,103,200,000
Current Cash 536,600,000
Current Liabilities 4,573,000,000
Current Debt 0
Non-Cash Working Capital (NCWC) -6,400,000
Change in NCWC -27,700,000
EBIT 1,052,900,000
Tax Provision 385,100,000
Depreciation and Amortization 106,600,000
Capital Expenditure -102,800,000
Unlevered Free Cash Flow 646,479,443
Current Assets 5,011,400,000
Current Cash 551,200,000
Current Liabilities 4,438,900,000
Current Debt 0
Non-Cash Working Capital (NCWC) 21,300,000
Change in NCWC -37,600,000
EBIT 982,300,000
Tax Provision 360,600,000
Depreciation and Amortization 105,000,000
Capital Expenditure -95,400,000
Unlevered Free Cash Flow 595,816,668
Current Assets 4,832,600,000
Current Cash 505,500,000
Current Liabilities 4,268,200,000
Current Debt 0
Non-Cash Working Capital (NCWC) 58,900,000
Change in NCWC 45,000,000
EBIT 904,800,000
Tax Provision 342,400,000
Depreciation and Amortization 98,200,000
Capital Expenditure -103,800,000
Unlevered Free Cash Flow 604,279,526
Current Assets 5,075,900,000
Current Cash 316,300,000
Current Liabilities 4,745,700,000
Current Debt 0
Non-Cash Working Capital (NCWC) 13,900,000
Change in NCWC 8,300,000
EBIT 853,900,000
Tax Provision 312,300,000
Depreciation and Amortization 97,800,000
Capital Expenditure -90,900,000
Unlevered Free Cash Flow 559,123,282

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