Paychex (PAYX) AI Stock Analysis

• Market Cap: $55.94B
• Dividend Yield: 2.56%
• Average Volume (3M): 1.46M
• Price to Earnings (P/E): 32.3
• Beta (1Y): 0.59
• Revenue Growth: 4.35%
• EPS Growth: 4.86%
• Country: US
• Employees: 16,500
• Sector: Industrials
• Sector Strength: 90
• Industry: Staffing & Employment Services
• EPS (TTM): 1.49
• Shares Outstanding: 360,190,670
• 10 Day Avg. Volume: 1,424,060
• 30 Day Avg. Volume: 1,463,124
• PEG Ratio: 2.77
• Price to Book (P/B): 11.76
• Price to Sales (P/S): 0.00
• P/FCF Ratio: 26.44
• Enterprise Value/Market Cap: 0.76
• Enterprise Value/Revenue: 2.00
• Enterprise Value/Gross Profit: 10.90
• Enterprise Value/Ebitda: 4.43
• 1Y Price Target: $169.14
• Price Target Upside: 8.90% Upside
• Rating Consensus: Hold
• Number of Analyst Covering: 9

• Rating: 80 Outperform
• Price Target: ―

Paychex earns a solid score of 80, driven by strong financial performance and a positive earnings call that highlighted strategic growth initiatives. Despite a high valuation caution, the company's robust profitability and strategic acquisitions support a positive outlook. Technical indicators suggest moderate momentum, warranting some caution.

Positive Factors

Market Positioning

PAYX is perceived as a relative shelter amid elevated market volatility.

Strategic Acquisition

The strategic rationale for acquiring Paycor is sound, especially in terms of the cross-sell opportunity across both client bases and what it could unlock for Paychex’s competitive positioning in the middle market.

Synergy Expectations

Positive commentary about synergy and accretion expectations for its recently announced Paycor acquisition contributed to a positive reaction in shares.

Negative Factors

Economic Conditions

Recent deterioration in small business confidence metrics amid a suddenly shakier macro backdrop could be a source of risk.

Integration Risk

The acquisition introduces some additional complexity, such as integration risk, to an otherwise clean, execution-centric story.

Valuation Concerns

Shares are expensive against current backdrop.

Paychex Business Overview & Revenue Model

Company Description

Paychex, Inc. is a leading provider of integrated human capital management solutions for payroll, human resources, retirement, and insurance services for small- to medium-sized businesses. Founded in 1971 and headquartered in Rochester, New York, Paychex serves over 730,000 clients across more than 100 locations in the United States and Europe. The company is focused on providing comprehensive, technology-driven solutions that simplify the complexities of managing a business and its workforce.

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 strong financial health characterized by steady revenue growth, robust profitability, and a solid balance sheet. The company effectively manages its cash flows, supporting business operations and shareholder value. While the company maintains low leverage, continuing to enhance its equity base could further strengthen its financial resilience.

Income Statement

Paychex demonstrates strong income statement performance with consistent revenue growth and solid profitability. TTM revenue of $5.44 billion shows a growth rate of 3.06% from the previous year, indicating steady expansion. The gross profit margin of 72.03% and net profit margin of 31.99% highlight efficient operations and cost management. EBIT and EBITDA margins of 41.52% and 44.49%, respectively, further support the company's healthy profitability stance.

Balance Sheet

The balance sheet is solid, showcasing financial stability with a low debt-to-equity ratio of 0.02, reflecting minimal reliance on debt. A return on equity of 42.28% in TTM indicates effective use of equity capital. The equity ratio of 36.68% suggests a stable capital structure, though a slightly higher equity ratio could enhance long-term resilience.

Cash Flow

Cash flow analysis reveals strong cash generation capabilities with an operating cash flow to net income ratio of 1.02 and a free cash flow to net income ratio of 0.92. Despite a decrease in operating cash flow from the previous year, robust free cash flow of $1.60 billion supports strategic investments and shareholder returns.

Breakdown
TTM	Jun 2024	Jun 2023	Jun 2022	Jun 2021	Jun 2020
Income Statement		Total Revenue
5.44B	5.28B	5.01B	4.61B	4.06B	4.04B
	Gross Profit
3.92B	3.80B	3.55B	3.26B	2.79B	2.76B
	EBIT
2.26B	2.17B	2.03B	1.84B	1.46B	1.46B
	EBITDA
2.48B	2.43B	2.21B	2.03B	1.65B	1.67B
	Net Income Common Stockholders
1.74B	1.69B	1.56B	1.39B	1.10B	1.10B
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
1.73B	1.50B	1.60B	1.22B	1.03B	932.40M
	Total Assets
13.02B	10.38B	10.55B	9.64B	9.23B	8.55B
	Total Debt
868.80M	885.50M	865.70M	881.20M	897.10M	898.80M
	Net Debt
-824.80M	-583.40M	-356.30M	511.20M	-98.10M	-6.40M
	Total Liabilities
9.28B	6.58B	7.05B	6.55B	6.28B	5.77B
	Stockholders Equity
3.75B	3.80B	3.49B	3.09B	2.95B	2.78B
Cash Flow		Free Cash Flow
1.60B	1.74B	1.56B	1.37B	1.15B	1.31B
	Operating Cash Flow
1.78B	1.90B	1.70B	1.51B	1.26B	1.44B
	Investing Cash Flow
-424.80M	-260.90M	218.50M	-1.42B	-460.60M	771.90M
	Financing Cash Flow
-3.49B	-1.87B	-711.40M	-979.30M	-636.40M	-1.49B

Paychex Technical Analysis

• Technical Analysis Sentiment: Neutral
• Last Price: 155.31
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Positive
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For PAYX, the sentiment is Neutral. The current price of 155.31 is below the 20-day moving average (MA) of 156.79, above the 50-day MA of 150.40, and above the 200-day MA of 142.72, indicating a neutral trend. The MACD of 2.17 indicates Positive momentum. The RSI at 51.27 is Neutral, neither overbought nor oversold. The STOCH value of 38.84 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for PAYX.

Paychex Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
PAYX	80 Outperform	$55.94B	32.30	44.25%	2.56%	4.35%	4.86%
ADP	80 Outperform	$127.67B	32.20	76.29%	1.85%	6.82%	9.03%
KFY	77 Outperform	$3.62B	15.08	13.92%	2.28%	-3.27%	62.57%
TNET	69 Neutral	$3.96B	24.42	162.14%	1.24%	1.50%	-44.95%
Sector *	66 Neutral	$4.49B	12.34	5.40%	248.65%	4.13%	-12.33%
RHI	62 Neutral	$4.57B	22.35	14.49%	5.03%	-7.81%	-40.22%
NSP	53 Neutral	$2.35B	37.86	48.65%	3.82%	1.90%	-60.33%

Paychex Corporate Events

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.