Paychex Inc (PAYX)
Return on total capital
| May 31, 2025 | Feb 28, 2025 | Nov 30, 2024 | Aug 31, 2024 | May 31, 2024 | Feb 29, 2024 | Nov 30, 2023 | Aug 31, 2023 | May 31, 2023 | Feb 28, 2023 | Nov 30, 2022 | Aug 31, 2022 | May 31, 2022 | Feb 28, 2022 | Nov 30, 2021 | Aug 31, 2021 | May 31, 2021 | Feb 28, 2021 | Nov 30, 2020 | Aug 31, 2020 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Earnings before interest and tax (EBIT) (ttm) | US$ in thousands | 1,828,300 | 2,310,100 | 2,251,500 | 2,204,500 | 2,174,100 | 2,145,600 | 2,107,700 | 2,085,900 | 2,045,200 | 1,985,900 | 1,936,800 | 1,899,300 | 1,846,600 | 1,806,400 | 1,712,200 | 1,619,600 | 1,485,100 | 1,430,900 | 1,432,400 | 1,419,800 |
| Long-term debt | US$ in thousands | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — |
| Total stockholders’ equity | US$ in thousands | 4,128,000 | 4,116,600 | 3,925,700 | 3,850,400 | 3,801,000 | 3,747,100 | 3,524,400 | 3,587,800 | 3,493,200 | 3,401,100 | 3,205,300 | 3,137,400 | 3,085,200 | 3,286,000 | 3,119,800 | 3,043,500 | 2,948,000 | 2,976,400 | 2,889,700 | 2,778,600 |
| Return on total capital | 44.29% | 56.12% | 57.35% | 57.25% | 57.20% | 57.26% | 59.80% | 58.14% | 58.55% | 58.39% | 60.42% | 60.54% | 59.85% | 54.97% | 54.88% | 53.22% | 50.38% | 48.07% | 49.57% | 51.10% |
May 31, 2025 calculation
Return on total capital = EBIT (ttm) ÷ (Long-term debt + Total stockholders’ equity)
= $1,828,300K ÷ ($—K + $4,128,000K)
= 44.29%
The analysis of Paychex Inc.'s return on total capital over the specified period reveals several notable trends and characteristics. From August 31, 2020, through February 28, 2025, the company's return on total capital has generally remained within a high range, indicating efficient utilization of capital to generate earnings.
Initially, in August 2020, the return was recorded at 51.10%, which reflects a strong performance. This figure demonstrated relative stability with slight fluctuations over the following periods, reaching a peak of approximately 60.54% in August 2022. This upward trend suggests a period of improved efficiency and profitability, possibly driven by operational enhancements or favorable market conditions.
Throughout late 2022 and early 2023, the return fluctuated marginally, maintaining levels just below or around 58-60%. This consistency indicates sustained capacity to generate returns from comprehensive capital investment during this period.
In the subsequent periods, the return remained relatively stable, oscillating slightly, with values such as 59.80% in November 2023 and 57.26% in February 2024. These figures suggest a period of stability and efficiency in capital deployment.
However, notable change occurs in the latest data point, with the return decreasing significantly to 44.29% in May 2025. This decline reflects a substantial reduction, potentially indicating a deterioration in operational efficiency, increased capital expenditure without commensurate earnings growth, or broader industry or economic challenges impacting profitability.
Overall, while Paychex Inc. maintained high return on total capital levels for an extended period, the recent decline signifies a shift in its capital efficiency. The historical trend demonstrates strong operational capacity that has experienced a notable downturn toward the end of the analyzed period.