At US$74.77, Is It Time To Put Paychex, Inc. (NASDAQ:PAYX) On Your Watch List?
Today we're going to take a look at the well-established Paychex, Inc. (NASDAQ:PAYX). The company's stock received a lot of attention from a substantial price movement on the NASDAQGS over the last few months, increasing to US$90.23 at one point, and dropping to the lows of US$72.46. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether Paychex's current trading price of US$74.77 reflective of the actual value of the large-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Paychex’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.
View our latest analysis for Paychex
What's the opportunity in Paychex?
The stock seems fairly valued at the moment according to my valuation model. It’s trading around 6.5% below my intrinsic value, which means if you buy Paychex today, you’d be paying a fair price for it. And if you believe that the stock is really worth $79.99, then there isn’t much room for the share price grow beyond what it’s currently trading. Furthermore, Paychex’s low beta implies that the stock is less volatile than the wider market.
What does the future of Paychex look like?
Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company's future expectations. Paychex’s earnings growth are expected to be in the teens in the upcoming years, indicating a solid future ahead. This should lead to robust cash flows, feeding into a higher share value.
What this means for you:
Are you a shareholder? It seems like the market has already priced in PAYX’s positive outlook, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the track record of its management team. Have these factors changed since the last time you looked at the stock? Will you have enough confidence to invest in the company should the price drop below its fair value?
Are you a potential investor? If you’ve been keeping an eye on PAYX, now may not be the most advantageous time to buy, given it is trading around its fair value. However, the optimistic prospect is encouraging for the company, which means it’s worth diving deeper into other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.
Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on Paychex. You can find everything you need to know about Paychex in the latest infographic research report. If you are no longer interested in Paychex, you can use our free platform to see my list of over 50 other stocks with a high growth potential.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.
