Linked here is a PDF copy of my analysis of Paychex, Inc. (PAYX). Last week I initiated a position in this stock. Below are some highlights from the above linked analysis:
Company Description: Paychex, Inc. provides payroll and integrated human resource and employee benefits outsourcing solutions for small- to medium-sized businesses in the United States.
Fair Value: I consider four calculations of fair value, see page 2 of the linked PDF for a detailed description: 1.) Avg. High Yield Price, 2.) 20-Year DCF Price, 3.) Avg. P/E Price and 4.) Graham Number. PAYX is trading at a discount to three of the four valuations above. If you average the middle two valuations, it is trading at a 17.1% discount. PAYX gets a Star for being fair valued.
Dividend Analytical Data: In this section I consider five factors, see page 2 of the linked PDF for a detailed description: 1.) Rolling 4-yr Div. > 15%, 2.) Dividend Growth Rate, 3.) Years of Div. Growth, 4.) 1-Yr. > 5-Yr Growth and 5.) Payout 15% of avg. PAYX earned Stars in 1.), 2.) and 4.) above.
Dividend Income vs. MMA: Why would you assume the equity risk and invest in a dividend stock if you could earn a better return in a much less risky money market account (MMA)? This section compares the earning ability of the dividend stock with a high yield MMA. Two items are considered in this section, see page 2 of the linked PDF for a detailed description: 1.) NPV MMA Diff. and 2.) Years to >MMA. PAYX earned a Star for 1.) above.
Conclusion: PAYX earned one Star in the Fair Value section, three Stars in the Dividend Analytical Data section and one Star in the Dividend Income vs. MMA section for a total of Five Stars which rates it as a 5-Star Strong Buy.
Disclaimer: As always this is only my opinion and you should not rely on it. Before buying or selling any stock you should do your own research and reach your own conclusion. See my Disclaimer for more information.
Full Disclosure: At the time of this writing, I own shares of PAYX.
What are your thoughts on PAYX?
Popular Posts - Last 7 days
I know very little about hockey, but I have always loved this quote: I skate to where the puck is going to be, not where it has been. &quo...
Linked here is a detailed quantitative analysis of Omega Healthcare Investors, Inc. (OHI). Below are some highlights from the above linked ...
Linked here is a detailed quantitative analysis of United Technologies Corp. (UTX). Below are some highlights from the above linked analysi...
Any income investor will tell you that it is important for a company to sustain its dividend . However, as an investor in dividend growth st...
Each Sunday I highlight any notable articles that I came across over the past week. Though I may not always agree with each of the articles ...
Presented below are are my Dividend Growth Stocks portfolio holdings. This is not a recommendation to buy these securities. I have classifi...
The Fable of Two Mules Once there were two heavily-laden mules making a long journey together. One was carrying a load of salt and the othe...
Like many that came before me, I am on a journey to construct a portfolio that will provide me... Dividends 4 Life
Monday, October 31, 2011 will mark my fourth full year of writing as Dividends4Life . It is hard to believe another year has passed. Like th...
Has someone near and dear to you responded with a 'I was only trying to help' after royally messing something up? Have you ever tink...