Before the Call: Checking on Paychex

With a trailing price-to-earnings multiple near 30, it's clear that investors think Paychex (Nasdaq: PAYX) has a good thing going on. The company provides payroll, employee benefits, and other services on an outsourced basis to its customers. Paychex has delivered the goods to its investors as well as its customers -- the stock has averaged 15% top-line growth over the past three years, and the company has met or beaten analysts' expectations in each of the past four quarters.

After the earnings are released, we'll have plenty of data to dig into. But before that happens, let's step back and take a look at what investors think about Paychex as a long-term investment. To gain this insight, I've tapped into Motley Fool CAPS, where more than 30,000 investors have joined together to offer their thoughts on more than 4,700 companies, Paychex among them. Here's what Fools have to say about the company.

Up or down?
So far, 323 investors have weighed in on Paychex -- and, as Mario Cantone might scream, they "love it!"

Paychex has ended up with a perfect five-star rating. More than 95% of all players who have rated the company have given it the thumbs-up. When it comes to the CAPS All-Stars -- those investors in the top 20% of all CAPS players -- the stock has done even better, with 97% of that group approving.

Among comparable companies, Paychex finds itself at the top of the heap.

Wall Street vs. Main Street
CAPS players aren't the only ones who like Paychex. Though 10 of the 21 Wall Street analysts covering Paychex said to just hold the stock, the other 11 have said investors should buy. Nobody on Wall Street right now is suggesting that you sell Paychex.

The stock has gained 5.8% over the past 12 months, and is paying out a 2.1% dividend on top of that. Though this isn't terrible, it's well off the 17.7% the S&P has gained over the same time period.

Bull pitch
CAPS player weiwentg is a big Paychex fan:

Paychex is one of my favorite stocks. I think it has an economic moat, because of its scale and the high barriers to enter the industry -- its small and medium-sized clients don't have a lot of negotiating power, or the ability to form their own payroll divisions, and switching costs are high. The business has scaled well, and operating margins went all the way up to 39% in 2006. Their returns on invested capital are also excellent. ... It's a stock you could buy and hold for a long time, but I think it's near fair value today.

Bear pitch
Though there are a few Paychex bears on CAPS, none of them have stuck their necks out to give their thoughts on why they think Paychex will underperform.

The Foolish last word
Paychex is not one of those sexy stocks on every investor's tongue, but it has been a solid company delivering good growth and returns. This week, investors will get a peek at whether the company is continuing its winning ways.

Fool contributor Matt Koppenheffer does not own shares of any of the companies mentioned. Administaff is a Motley Fool Inside Value recommendation. The Fool's disclosure policy had a page on MySpace, but became way too popular and ended up spending all of its time updating its photos.