Paychex (PAYX) AI Stock Analysis

• Market Cap: $52.74B
• Dividend Yield: 2.81%
• Average Volume (3M): 2.66M
• Price to Earnings (P/E): 31.7
• Beta (1Y): 0.53
• Revenue Growth: 5.56%
• EPS Growth: -1.91%
• Country: US
• Employees: 16,500
• Sector: Industrials
• Sector Strength: 94
• Industry: Staffing & Employment Services
• EPS (TTM): 1.19
• Shares Outstanding: 360,243,870
• 10 Day Avg. Volume: 2,013,548
• 30 Day Avg. Volume: 2,663,341
• PEG Ratio: -6.34
• Price to Book (P/B): 12.62
• Price to Sales (P/S): 0.00
• P/FCF Ratio: 29.41
• Enterprise Value/Market Cap: 0.97
• Enterprise Value/Revenue: 2.35
• Enterprise Value/Gross Profit: 12.63
• Enterprise Value/Ebitda: 5.21
• 1Y Price Target: $149.70
• Price Target Upside: 2.25% Upside
• Rating Consensus: Hold
• Number of Analyst Covering: 11

• Rating: 74 Outperform
• Price Target: $162.00 ▲(10.66%Upside)

Paychex's strong financial performance and positive earnings call are the key drivers of its stock score. These strengths are somewhat offset by technical indicators suggesting potential resistance and a high valuation that may limit upside potential. Nonetheless, strategic investments and successful integrations position the company well for the future, despite macroeconomic challenges.

Positive Factors

Acquisition Strategy

The recent acquisition of Paycor is a major strategic endeavor to broaden the market opportunity across customers and products.

Cost Synergy Expectations

The PYCR integration is progressing well and increased cost synergy expectations to $90M from $80M+ prior.

Financial Position

Paychex has a strong balance sheet with a net debt to equity ratio of -37.8%.

Negative Factors

Growth Concerns

Deceleration in Management Solutions raises concerns.

Market Competition

The down-market competitive landscape remains intense, with scaling private companies and public companies making more investments in the market.

Stock Valuation

The current price of the stock is higher than the target price of 135.00 USD, suggesting it may be overvalued.

Paychex Business Overview & Revenue Model

Company Description

Paychex, Inc. provides integrated human capital management solutions for human resources (HR), payroll, benefits, 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 payroll, employer compliance, HR and employee benefits administration, risk management outsourcing, and the on-site availability of a professionally trained HR representative; and retirement services administration, including 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.

How the Company Makes Money

Paychex generates revenue primarily through its payroll processing services, which include the calculation, processing, and distribution of employee paychecks, as well as tax administration and compliance services. In addition to payroll solutions, the company offers human resource services such as benefits administration, HR outsourcing, and compliance management, which are key revenue streams. Paychex also provides retirement services, including 401(k) plan administration, and insurance services, such as workers' compensation and health insurance offerings. These services are delivered through a combination of subscription-based models and per-transaction fees, allowing the company to maintain a steady stream of recurring revenue. Strategic partnerships with financial institutions and technology providers enhance Paychex's offerings, providing additional value to clients and contributing to its growth in the competitive HCM market.

Paychex Financial Statement Overview

Summary

Paychex demonstrates robust financial health with consistent revenue growth, high profitability margins, and effective cash flow management. The company's balance sheet supports future growth, despite a slight decline in net income and moderate leverage.

Income Statement

Paychex demonstrates strong financial performance with consistent revenue growth, evidenced by a 5.57% increase from 2024 to 2025. The company maintains robust profitability margins, including a Gross Profit Margin of 72.35% and a Net Profit Margin of 29.74% for 2025. The EBIT Margin remains high at 39.62%, indicating efficient operational management. However, there is a slight decline in Net Income from 2024 to 2025, which may require attention.

Balance Sheet

The balance sheet reflects a solid financial position with a Debt-to-Equity Ratio of 1.21, suggesting moderate leverage. The Return on Equity (ROE) is strong at 40.15%, showcasing effective use of equity to generate profits. The Equity Ratio stands at 24.92%, indicating a balanced capital structure. The increase in total assets from 2024 to 2025 supports potential growth opportunities.

Cash Flow

Paychex's cash flow metrics are robust, with positive Free Cash Flow of $1.76 billion in 2025. The Free Cash Flow to Net Income Ratio is 1.06, indicating good conversion of profits into cash. The Operating Cash Flow to Net Income Ratio is 1.18, reflecting healthy cash generation capabilities. Despite a significant increase in financing cash flow, the company's overall cash flow generation remains strong.

Breakdown	Jun 2025	Jun 2024	Jun 2023	Jun 2022	Jun 2021
Income Statement
Total Revenue	5.57B	5.28B	5.01B	4.61B	4.06B
Gross Profit	4.03B	3.80B	3.55B	3.26B	2.79B
EBITDA	2.49B	2.43B	2.21B	2.03B	1.65B
Net Income	1.66B	1.69B	1.56B	1.39B	1.10B
Balance Sheet
Total Assets	16.56B	10.38B	10.55B	9.64B	9.23B
Cash, Cash Equivalents and Short-Term Investments	1.71B	1.50B	1.60B	1.22B	1.03B
Total Debt	5.00B	885.50M	886.00M	906.30M	926.00M
Total Liabilities	12.44B	6.58B	7.05B	6.55B	6.28B
Stockholders Equity	4.13B	3.80B	3.49B	3.09B	2.95B
Cash Flow
Free Cash Flow	1.76B	1.74B	1.56B	1.37B	1.15B
Operating Cash Flow	1.95B	1.90B	1.70B	1.51B	1.26B
Investing Cash Flow	-3.68B	-260.90M	218.50M	-1.42B	-460.60M
Financing Cash Flow	2.56B	-1.87B	-711.40M	-979.30M	-636.40M

Paychex Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 146.40
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Positive
• MACD: Negative
• RSI: Neutral
• STOCH: Negative

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For PAYX, the sentiment is Positive. The current price of 146.4 is above the 20-day moving average (MA) of 143.58, below the 50-day MA of 149.60, and above the 200-day MA of 144.08, indicating a neutral trend. The MACD of -1.23 indicates Negative momentum. The RSI at 52.68 is Neutral, neither overbought nor oversold. The STOCH value of 87.24 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for PAYX.

Paychex Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
KFY	78 Outperform	$3.82B	16.10	13.49%	2.31%	-1.23%	44.06%
ADP	77 Outperform	$124.31B	31.14	76.29%	1.97%	6.82%	9.03%
PAYX	74 Outperform	$52.74B	31.72	41.80%	2.81%	5.56%	-1.91%
TNET	66 Neutral	$3.18B	19.69	162.14%	1.60%	1.50%	-44.95%
Sector *	65 Neutral	$11.06B	15.73	5.16%	1.93%	3.12%	-25.59%
RHI	61 Neutral	$4.07B	24.22	12.75%	5.62%	-6.95%	-41.84%
NSP	57 Neutral	$2.24B	36.11	48.65%	4.04%	1.90%	-60.33%

Paychex Corporate Events

Paychex Announces Executive Retirements and Board Reduction

On July 8, 2025, Paychex announced the immediate retirement of two senior executives, Mark Bottini and Michael Gioja, who will both serve as special advisors to ensure a smooth transition. Additionally, the company’s Board of Directors decided to reduce its size from 11 to 10 members following the departure of B. Thomas Golisano on July 9, 2025.

The most recent analyst rating on (PAYX) stock is a Sell with a $128.00 price target. To see the full list of analyst forecasts on Paychex stock, see the PAYX Stock Forecast page.

Paychex Founder B. Thomas Golisano to Step Down

On May 15, 2025, Paychex, Inc. announced that its founder, B. Thomas Golisano, will step down from the Board of Directors after the company’s July 2025 meeting. Golisano, who founded Paychex in 1971, has been instrumental in its growth into a technology-driven HR and payroll services company with a market capitalization exceeding $50 billion. His departure marks the end of an era for the company, which has seen significant advancements under his leadership. The announcement also highlighted Golisano’s philanthropic efforts, including nearly a half-billion dollars in awards to non-profit organizations. The company’s current Chairman, Martin Mucci, and other executives expressed gratitude for Golisano’s contributions, emphasizing his impact on the company’s success and community involvement.

The most recent analyst rating on (PAYX) stock is a Hold with a $130.00 price target. To see the full list of analyst forecasts on Paychex stock, see the PAYX Stock Forecast page.