Paychex vs Paylocity Which Is More Profitable?

Paychex and Paylocity are two leading companies in the payroll and HR services industry, each offering a wide range of solutions for businesses of all sizes. Paychex has a long-standing reputation for reliability and excellent customer service, while Paylocity is known for its innovative technology and user-friendly interface. Both companies have seen steady growth in recent years, but their stocks have performed differently. Investors may want to compare the financials and growth prospects of each before making a decision on which stock to invest in.

Paychex or Paylocity?

When comparing Paychex and Paylocity, different investors may prioritize various metrics based on their investment strategies and goals. So, ask yourself what type of investor you are. This will guide you in determining which metrics are most important for your investment decision between Paychex and Paylocity.

Dividend Investors:

Dividend investors look for stable and growing income streams, using dividend metrics to assess potential investments. A company's dividend yield essentially measures the size of its dividend relative to the total market value of the company. Paychex has a dividend yield of 2.58%, while Paylocity has a dividend yield of -%. Beyond the yield itself, considering the growth and sustainability of these dividends is also crucial. Paychex reports a 5-year dividend growth of 9.62% year and a payout ratio of 80.23%. On the other hand, Paylocity reports a 5-year dividend growth of 0.00% year and a payout ratio of 0.00%.

Value Investors:

Value investors focus on financial metrics to determine a stock's intrinsic value compared to its market value. The Price-to-Earnings (P/E) Ratio links stock price to a company's earnings per share, with Paychex P/E ratio at 31.85 and Paylocity's P/E ratio at 50.98. Another crucial valuation metric is the Price-to-Book (P/B) Ratio, which compares stock price with book value per share. Paychex P/B ratio is 13.95 while Paylocity's P/B ratio is 9.62.

Growth Investors:

Growth investors prioritize metrics indicative of a company's expansion potential. Focusing on top-line growth, Paychex has seen a 5-year revenue growth of 0.39%, while Paylocity's is 1.82%. Return on Equity (ROE) measures how effectively a company uses equity investment to generate earnings, with Paychex's ROE at 44.88% and Paylocity's ROE at 20.06%.

Retail Investors:

Retail investors often consider stock affordability and company familiarity. For example, day low prices are $150.60 for Paychex and $198.53 for Paylocity. Over the past year, Paychex's prices ranged from $114.72 to $154.98, with a yearly change of 35.09%. Paylocity's prices fluctuated between $129.94 and $223.80, with a yearly change of 72.23%. Brand recognition also plays a role, as familiarity with a company can influence investment decisions.