Paychex Story

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PAYX -- USA Stock  

USD 82.84  2.19  2.58%

As many rational traders are trying to avoid industrials space, it makes sense to break down Paychex a little further and understand how it stands against Verisk Analytics and other similar entities. We are going to inspect some of the competitive aspects of both Paychex and Verisk.
Published over two weeks ago
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Will Verisk Analytics (NASDAQ:VRSK) and Paychex (NASDAQ:PAYX) deliver in November?
By analyzing existing technical indicators between Paychex and Verisk, you can compare the effects of market volatilities on both companies' prices and check if they can diversify away market risk if combined in one of your portfolios. You can also utilize pair trading strategies for matching a long position in Verisk with a short position in Paychex. Check out our pair correlation module for more information.

Let's begin by analyzing the assets. The asset utilization indicator refers to the revenue earned for every dollar of assets a company currently reports. Paychex has an asset utilization ratio of 62.73 percent. This suggests that the company is making $0.63 for each dollar of assets. An increasing asset utilization means that Paychex is more efficient with each dollar of assets it utilizes for everyday operations.
Out of tens of thousands of stocks, funds, and ETFs that trade on global exchanges each represent an individual company which you can analyze using comparative analysis. To determine which one of the two companies, such as Paychex or Verisk is a better fit for your portfolio, analyzing a few basic fundamental indicators is a good first step.

UNDERSTANDING Paychex dividends

A dividend is the distribution of a portion of Paychex earnings, decided and managed by the company's board of directors and paid to a class of its shareholders. Note, announcements of dividend payouts are generally accompanied by a proportional increase or decrease in a company's stock price. Paychex dividend payments follow a chronological order of events, and the associated dates are important to determine the shareholders who qualify for receiving the dividend payment. Paychex one year expected dividend income is about $1.61 per share.
Dividend Yield is likely to rise to 0.0272 in 2020, whereas Payment of Dividends and Other Cash Distributions is likely to drop (802.9 M) in 2020.
Last ReportedProjected for 2020
Payment of Dividends and Other Cash Distributions-744.1 M-802.9 M
Dividend Yield 0.0243  0.0272 
Dividends per Basic Common Share 2.64  2.31 
Investing in dividend-paying stocks, such as Paychex is one of the few strategies that are good for long-term investment. Ex-dividend dates are significant because investors in Paychex must own a stock before its ex-dividend date to receive its next dividend. This type of analysis is very useful when you want to generate a past dividend schedule and payout information for Paychex. Then that information in the form of graph and calendar can be used to fully explain how Du Pont dividends can provide a real clue to its valuation.

How important is Paychex's Liquidity

Paychex financial leverage refers to using borrowed capital as a funding source to finance Paychex ongoing operations. It is usually used to expand the firm's asset base and generate returns on borrowed capital. Paychex financial leverage is typically calculated by taking the company's all interest-bearing debt and dividing it by total capital. So the higher the debt-to-capital ratio (i.e., financial leverage), the riskier the company. Please check the breakdown between Paychex's total debt and its cash.

What do experts say?

Stock analysis is a method for investors and traders to make buying and selling decisions. By studying and evaluating past and current data, investors and traders attempt to gain an edge in the markets by making informed decisions. It is good to see analyst projects for Paychex, but it might be worth checking our own buy vs. sell analysis

Correlation Between Paychex and Verisk Analytics

In general, stock analysis is a method for investors and traders to make individual buying and selling decisions. Stock correlation analysis is also essential because it can help investors realize that they may not be as diversified as they think. Risk management strategies are usually required to make sure all portfolios are properly aligned against their risk tolerance level. You can consider holding Paychex together with similar or unrelated positions with a negative correlation. For example, you can also add Verisk Analytics to your portfolio. If Verisk Analytics is not perfectly correlated to Paychex it will diversify some of the market risks out of the positively correlated stocks in your portfolio. However, the disadvantage of this sort of hedging is that it can potentially affect your investment returns throughout market cycles. When Paychex for example, for example, performs excellent and delivers stable returns, the negatively correlated position you locked in as a hedge may drag your returns down. Please check pair correlation details between PAYX and VRSK for more information.

Note

Are you currently holding both Paychex and Verisk Analytics in your portfolio? Please note if you are using this as a pair-trade strategy between Paychex and Verisk Analytics, watch out for correlation discrepancy over time. Relying on the historical price correlations and assuming that it will not change may lead to short-term losses.

Paychex exotic insider transaction detected

Legal trades by Paychex insiders are very common, as founders, directors, or employees of any publicly traded firm often have stock or stock options. These trades are made public in the United States through the filing of Form 4 of the Securities and Exchange Commission. Below entry was recorded recently and is publicly available as an insider trade:
Paychex insider trading alert for general transaction of stock option by Stephanie Schaeffer, CLO Secretary, on 22nd of October 2020. This event was filed by Paychex Inc with SEC on 2020-10-22. Statement of changes in beneficial ownership - SEC Form 4 [view details]   
Note, although insider trading is legal, in the United States, Canada, Australia, and Germany, for mandatory reporting purposes, corporate insiders are defined as a company's officers, directors, and any beneficial owners of more than 10% of a class of the company's equity securities.

What is the case for Paychex Investors

Revenue is income that a firm generates from business activities such us rendering services or selling goods to customers. It is a crucial part of a business and an essential item when evaluating a company's financial statements. Revenues from a firm's primary business operations can be reported on the income statement as sales revenue, net sales, or simply sales, depending on the industry in which a given company operates.
Revenue is typically recorded when cash or cash equivalents are exchanged for services or goods and can include product or services discounts, promotions, as well as early payments on invoices or services rendered in advance.

Revenue Breakdown

Let me now analyze Paychex revenue. Based on the latest financial disclosure, Paychex reported 4.04 B of revenue. This is 15.47% higher than that of the Industrials sector and significantly higher than that of the Staffing & Employment Services industry. The revenue for all United States stocks is 57.18% higher than that of Paychex. As for Verisk Analytics we see revenue of 2.7 B, which is much higher than that of the Staffing & Employment Services

Paychex4.04 Billion
Sector0.0
Verisk2.7 Billion
B
Paychex
Sector
2.7 B
Verisk

Possible November recoup of Paychex?

Current Total Risk Alpha is up to -0.04. Price may slide again. Paychex has relatively low volatility with skewness of -0.51 and kurtosis of 1.43. However, we advise all investors to independently investigate Paychex to ensure all accessible information is consistent with the expectations about its upside potential and future expected returns.

While other companies under the staffing & employment services industry are still a bit expensive, Paychex may offer a potential longer-term growth to investors. All things considered, as of the 5th of October 2020, we see that Paychex slowly supersedes the market. The company is overvalued with very small odds of distress within the next 24 months. Our actual 30 days buy-hold-sell recommendation on the company is Hold.

About Contributor

This story should be regarded as informational only and should not be considered a solicitation to sell or buy any financial products. Macroaxis does not express any opinion as to the present or future value of any investments referred to in this post. This post may not be reproduced without the consent of Macroaxis LLC. Macroaxis LLC and Raphi Shpitalnik do not own shares of Paychex. Please refer to our Terms of Use for any information regarding our disclosure principles.

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