Paychex (PAYX)
NASDAQ:PAYX
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Paychex
(NASDAQ:PAYX)
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Rating:75Outperform
Price Target:
$105.00
▲(17.55% Upside)
Action:ReiteratedDate:03/26/26
The score is driven mainly by strong underlying financial quality (profitability and cash generation) and a positive earnings-call outlook (guidance reaffirmed, margin expansion, integration progress). This is moderated by weak technicals (below key moving averages with negative MACD) and only moderate valuation support despite the high dividend yield.
Positive Factors
Recurring subscription HCM and payroll revenue
A predominantly subscription- and service-based model for payroll and HCM creates durable, predictable recurring revenue and high client retention. Cross-sell of add‑on modules and retirement/PEO services increases lifetime value, supporting steady cash flow and resilience over multiple quarters.
Negative Factors
Elevated post-acquisition leverage
Material increase in borrowings after the Paycor acquisition raises interest and refinancing sensitivity and narrows financial flexibility. Although offset partially by cash, the higher and variable leverage profile increases risk to capital allocation choices and could constrain strategic moves if cash generation weakens.
Read all positive and negative factors
Positive Factors
Negative Factors
Recurring subscription HCM and payroll revenue
A predominantly subscription- and service-based model for payroll and HCM creates durable, predictable recurring revenue and high client retention. Cross-sell of add‑on modules and retirement/PEO services increases lifetime value, supporting steady cash flow and resilience over multiple quarters.
Read all positive factors
Paychex (PAYX) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$30.66B
Dividend Yield3.7%
Average Volume (3M)4.13M
Price to Earnings (P/E)15.0
Beta (1Y)0.41
Revenue Growth12.37%
EPS Growth-7.18%
CountryUS
Employees16,500
SectorTechnology
Sector Strength88
IndustryStaffing & Employment Services
Share Statistics
EPS (TTM)1.71
Shares Outstanding358,290,900
10 Day Avg. Volume3,475,259
30 Day Avg. Volume4,127,787
Financial Highlights & Ratios
PEG Ratio-17.88
Price to Book (P/B)13.78
Price to Sales (P/S)10.21
P/FCF Ratio32.33
Enterprise Value/Market Cap1.14
Enterprise Value/Revenue5.53
Enterprise Value/Gross Profit7.49
Enterprise Value/Ebitda12.46
Forecast
1Y Price Target
$103.38Price Target Upside15.74% Upside
Rating ConsensusHold
Number of Analyst Covering15
EPS Forecast (FY)5.5
Revenue Forecast (FY)$6.51B
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 ser...
How the Company Makes Money
Paychex generates revenue mainly by selling subscription- and service-based payroll and HCM solutions and by earning interest income on client funds it holds temporarily. (1) Service revenue: The core business is charging businesses recurring fees...
Paychex Key Performance Indicators (KPIs)
Any
Revenue by Segment
Breaks down revenue across different business lines, highlighting which segments are driving growth and profitability, and where there may be opportunities or challenges.
Breaks down revenue across different business lines, highlighting which segments are driving growth and profitability, and where there may be opportunities or challenges.
Data provided by:
The Fly
The FlyPaychex Earnings Call Summary
Earnings Call Date:Mar 25, 2026
(Q3-2026)
| % Change Since: |
Next Earnings Date:Jul 01, 2026
Earnings Call Sentiment Positive
The call presented a predominately positive operational and financial picture: strong 20% revenue growth, margin expansion, robust cash flow, progress on Paycor integration and clear momentum in PEO and AI initiatives. The primary negatives related to acquisition-driven expense and leverage, some agency drag, slower revenue conversion for large deals, and timing-driven quarter-to-quarter volatility. Overall, the positives (revenue, margins, cash generation, integration progress, AI/product traction) substantially outweigh the noted challenges.Positive Updates
Strong Top-Line Growth
Total revenue increased 20% year-over-year to $1.8 billion in Q3 FY2026, representing an acceleration in organic growth versus the first half of the year.
Negative Updates
Higher Expenses Driven by Acquisition
Total expenses increased 24% year-over-year to just over $1.0 billion, primarily driven by Paycor acquisition-related costs and integration; excluding Paycor, expenses grew in the low single digits.
Read all updates
Q3-2026 Updates
Positive
Negative
Strong Top-Line Growth
Total revenue increased 20% year-over-year to $1.8 billion in Q3 FY2026, representing an acceleration in organic growth versus the first half of the year.
Read all positive updates
Company Guidance
Paychex reaffirmed its fiscal 2026 outlook except it raised its expectation for interest on funds held for clients to $200–$210 million; for Q4 it now expects roughly 12% revenue growth with an adjusted operating margin of 41%–42%. Management said organic growth has accelerated into the back half (closer to ~6% on a back‑half basis, implying roughly ~5% organic for the full year), and reiterated confidence in margin expansion driven by AI and Paycor synergies while maintaining a $1.0 billion share‑repurchase authorization.Paychex Financial Statement Overview
Summary
Income Statement
87
Very Positive
Balance Sheet
78
Positive
Cash Flow
84
Very Positive
| Breakdown | TTM | May 2025 | May 2024 | May 2023 | May 2022 | May 2021 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 6.33B | 5.57B | 5.28B | 5.01B | 4.61B | 4.06B |
| Gross Profit | 4.68B | 4.03B | 3.80B | 3.55B | 3.26B | 2.79B |
| EBITDA | 2.81B | 2.49B | 2.43B | 2.21B | 2.03B | 1.65B |
| Net Income | 1.64B | 1.66B | 1.69B | 1.56B | 1.39B | 1.10B |
Balance Sheet | ||||||
| Total Assets | 17.51B | 16.56B | 10.38B | 10.55B | 9.64B | 9.23B |
| Cash, Cash Equivalents and Short-Term Investments | 1.83B | 1.66B | 1.50B | 1.60B | 1.22B | 1.03B |
| Total Debt | 5.01B | 5.02B | 866.30M | 865.70M | 881.20M | 897.10M |
| Total Liabilities | 13.50B | 12.44B | 6.58B | 7.05B | 6.55B | 6.28B |
| Stockholders Equity | 4.01B | 4.13B | 3.80B | 3.49B | 3.09B | 2.95B |
Cash Flow | ||||||
| Free Cash Flow | 2.15B | 1.76B | 1.74B | 1.56B | 1.37B | 1.15B |
| Operating Cash Flow | 2.38B | 1.95B | 1.90B | 1.70B | 1.51B | 1.26B |
| Investing Cash Flow | -4.32B | -3.68B | -260.90M | 218.50M | -1.42B | -460.60M |
| Financing Cash Flow | 2.47B | 2.56B | -1.87B | -711.40M | -979.30M | -636.40M |
Paychex Technical Analysis
Negative
89.32
Price Trends
93.74
Negative
101.92
Negative
116.12
Negative
Market Momentum
-1.70
Positive
43.52
Neutral
19.13
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For PAYX, the sentiment is Negative. The current price of 89.32 is below the 20-day moving average (MA) of 91.36, below the 50-day MA of 93.74, and below the 200-day MA of 116.12, indicating a bearish trend. The MACD of -1.70 indicates Positive momentum. The RSI at 43.52 is Neutral, neither overbought nor oversold. The STOCH value of 19.13 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for PAYX.
Paychex Risk Analysis
Paychex disclosed 22 risk factors in its most recent earnings report. Paychex reported the most risks in the "Finance & Corporate" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Paychex Peers Comparison
UnderperformOutperform
Sector (61)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
76 Outperform | $76.02B | 24.45 | 68.28% | 2.46% | 7.07% | 8.32% | |
75 Outperform | $30.66B | 15.02 | 40.94% | 3.70% | 12.37% | -7.18% | |
61 Neutral | $37.18B | 12.37 | -10.20% | 1.83% | 8.50% | -7.62% | |
51 Neutral | $1.25B | 11.44 | -0.65% | 4.96% | -2.44% | -156.01% | |
51 Neutral | $1.64B | 18.31 | 185.63% | 1.81% | 0.99% | -47.02% | |
45 Neutral | $944.34M | -210.19 | -7.69% | 6.37% | 3.19% | -86.21% | |
44 Neutral | $168.83M | -10.62 | 57.25% | ― | -10.14% | -1381.34% |
* Technology Sector Average
PAYX
Paychex
89.32
-53.27
-37.36%
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195.38
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-32.80%
NSP
Insperity
27.85
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MAN
ManpowerGroup
29.19
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-39.49%
TNET
TriNet Group
37.31
-39.84
-51.64%
ZIP
ZipRecruiter
2.27
-3.15
-58.12%
Paychex Corporate Events
Business Operations and StrategyPrivate Placements and Financing
Paychex Expands Revolving Credit Capacity and Extends Maturities
Positive
Jan 26, 2026
On January 23, 2026, Paychex of New York LLC and its parent, Paychex, Inc., amended and extended their 2017 unsecured revolving credit facility, increasing the total borrowing capacity from $750 million to $1.0 billion, lengthening the maturity to...
Business Operations and StrategyExecutive/Board ChangesStock Buyback
Paychex adds director and launches $1 billion buyback
Positive
Jan 20, 2026
On January 16 and January 20, 2026, Paychex, Inc. expanded its Board of Directors to 11 members and appointed veteran finance executive J. Michael Hansen as an independent director, while also authorizing a new $1 billion share repurchase program ...
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.