Brett Girard, CPA, CA, CFA Paychex PAYX-Q HOLD Nov 13, 2024

Fantastic payroll business. Main segment is small/medium size business owners. Very good business performance. Sector consolidation has provided opportunity for company. Would recommend holding - share price high. If share prices fall - good time to buy. 

It reports next week. If the Fed stops cutting rates, the street expects this stock to fall. Wait to hear what the Fed says next week. This yields 2.7%. He'd buy this at 3%.

Recent earnings were up 4%. Veritable cash cow because they bank all the payroll taxes (that customers submit to the IRS) at current interest rates. It's like free money on top of earnings. Revenue growth was double GDP. Entirely domestic, so protected from trade barriers. 

Services small companies, so if the economy does well from tax cuts, this name should continue to grow. Long-term, compounding annual returns of 14-15% -- you double your money roughly every 4-5 years. A buy and hold, not a trade.

Paychex will buy Paycor, a rival, for $4.1 billion. Pacyor will give PAYX more scale to broaden their offerings. Likes this deal.

Has done well over time, but he far prefers ADP.

It reports Wednesday. It got smoked in their last report, though Paychex will continue to do well, defying the bears.

Is a domestic US company, so it faces no tariff risk. Is Trump cuts taxes 15%, this adds 20% to growing earnings for PAYX. Margins have been growing, and they just bought a company that will accrete to earnings (they report tomorrow). Trades at a high 28x PE, but the dividend grows 10% annually. Has owned this 30 years.

Reported a great quarter on Q3 with a modest top and bottom line beat and positive conference call. Shares popped 4% today.

They announced Monday that they finished taking over rival Paycor in a sector that needs consolidation. Now, PAYX is in a much better position to take market share. They reported a good quarter last March, but that was before tariffs hit.