Critical Comparison: Franklin Covey (NYSE:FC) & Paychex (NASDAQ:PAYX)

Paychex (NASDAQ:PAYX) and Franklin Covey (NYSE:FC) are both industrials companies, but which is the superior investment? We will contrast the two businesses based on the strength of their analyst recommendations, valuation, institutional ownership, dividends, profitability, earnings and risk.

Profitability

This table compares Paychex and Franklin Covey’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Paychex	27.35%	52.78%	12.29%
Franklin Covey	0.83%	17.37%	4.04%

Earnings & Valuation

This table compares Paychex and Franklin Covey”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Paychex	$6.51 billion	6.70	$1.76 billion	$5.04	24.33
Franklin Covey	$267.07 million	0.74	$3.07 million	$0.17	102.65

Paychex has higher revenue and earnings than Franklin Covey. Paychex is trading at a lower price-to-earnings ratio than Franklin Covey, indicating that it is currently the more affordable of the two stocks.

Analyst Ratings

This is a breakdown of current recommendations and price targets for Paychex and Franklin Covey, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Paychex	2	13	2	1	2.11
Franklin Covey	1	1	2	0	2.25

Paychex currently has a consensus target price of $127.88, indicating a potential upside of 4.30%. Franklin Covey has a consensus target price of $27.50, indicating a potential upside of 57.59%. Given Franklin Covey’s stronger consensus rating and higher possible upside, analysts plainly believe Franklin Covey is more favorable than Paychex.

Risk & Volatility

Paychex has a beta of 0.81, suggesting that its share price is 19% less volatile than the S&P 500. Comparatively, Franklin Covey has a beta of 0.76, suggesting that its share price is 24% less volatile than the S&P 500.

Insider & Institutional Ownership

83.5% of Paychex shares are owned by institutional investors. Comparatively, 69.9% of Franklin Covey shares are owned by institutional investors. 0.6% of Paychex shares are owned by insiders. Comparatively, 15.2% of Franklin Covey shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Summary

Paychex beats Franklin Covey on 10 of the 14 factors compared between the two stocks.

About Paychex

Paychex, Inc., together with its subsidiaries, provides integrated human capital management solutions (HCM) for payroll, benefits, human resources (HR), and insurance services for small to medium-sized businesses in the United States, Europe, and India. It offers payroll processing services; payroll tax administration services; employee payment services; and regulatory compliance services, such as new-hire reporting and garnishment processing. The company also provides HR solutions, including integrated HCM technology solutions and HR advisory services through both virtual and on-site availability of a professionally trained HR representative, as well as HR support to non-payroll clients through its HR Partner Plus solution; and retirement services administration, such as plan implementation, ongoing compliance with government regulations, employee and employer reporting, participant and employer online access, electronic funds transfer, and other administrative services. In addition, it offers cloud-based HR administration software products for employee benefits management and administration, time and attendance, digital communication solutions, recruiting, and onboarding solutions; plan administration outsourcing and state unemployment insurance services; various business services to small to medium-sized businesses comprising payroll funding and outsourcing services, which include payroll processing, invoicing, and tax preparation; and payment processing services, financial fitness programs, and a small-business loan resource center. Further, the company provides insurance services for property and casualty coverage, such as workers’ compensation, business-owner policies, cyber security protection, and commercial auto, as well as health and benefits coverage, including health, dental, vision, and life. It markets and sells its services primarily through its direct sales force. The company was founded in 1971 and is headquartered in Rochester, New York.

About Franklin Covey

Franklin Covey Co. provides training and consulting services in the areas of execution, sales performance, productivity, customer loyalty, and educational improvement for organizations and individuals worldwide. The company operates through Direct Offices, International Licensees, and Education Practice segments. It also provides a suite of individual-effectiveness and leadership-development training and products. In addition, the company operates Strive platform, a learning deployment platform; Impact platform that helps automate implementation of learning initiatives; All Access Pass, a subscription platform that enables improved deployment of content, services, technology, and metrics to deliver behavioral impact at scale; and Leader in Me, which provides access to digital versions of student leadership guides, leadership lessons, illustrated leadership stories, and other resources. Franklin Covey Co. was incorporated in 1983 and is headquartered in Salt Lake City, Utah.