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Strategies & Market Trends : Young and Older Folk Portfolio

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To: Max2.0 who wrote (4970)	6/17/2024 4:01:51 PM
From: SeeksQuality	4 Recommendations Recommended By dan1944 ddbpaso suncoaster Waitress Read Replies (2) of 18328

RE: What do you think of PAYX? My honest opinion? I think PAYX tends to get overrated by DGI investors who focus too much on the dividend and too little on the earnings and outlook. Over the past decade, PAYX has grown earnings at a 10% rate, but going forward their growth is projected to decelerate to a 6% rate. Very hard to justify a 26x P/E with a 6% growth rate, and with a payout ratio around 80% in a somewhat volatile industry I wouldn't be surprised (in an adverse scenario) to see the dividend cut. Feels to me like an investment that would make a lot more sense at an 18x P/E. It is a competitive space, including PAYC and PCTY among others, both of which compete for those smaller businesses and are growing a LOT faster than PAYX. What do you see as their competitive advantage? Disclaimer: I have a small position in PAYC, which is both cheaper and growing much faster than PAYX, but can't say I'm loving it. Am down a little since purchase and increasingly uncertain that this isn't a race to the bottom. ADP has the advantage of size and market dominance.

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