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Paychex
(NASDAQ:PAYX)
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Rating:75Outperform
Price Target:
$131.00
▲(15.37% Upside)
Action:Reiterated
Date:06/25/26
PAYX scores well primarily on financial performance—strong margins and consistently high free-cash-flow conversion—supported by a shareholder-friendly dividend and reasonable P/E. Offsetting factors are mixed technical trends (below key short/long-term averages) and a more conservative FY27 outlook that signals slower growth amid interest-income and macro headwinds.
Positive Factors
Recurring, high-margin HCM revenue mix
Paychex's core payroll and HCM services are delivered as recurring, per-employee and per-period fees to SMBs, creating high revenue visibility and client stickiness. This durable business model supports predictable cash flows and ongoing cross-sell opportunities into benefits, PEO and advisory services, underpinning long-term margin stability.
Negative Factors
Interest-on-funds revenue sensitivity
Interest-on-funds is a meaningful non-service revenue component and is rate-sensitive; management expects a y/y decline as prior Fed cuts and one-time gains lap out. That persistent headwind can structurally reduce revenue and EPS growth unless fully offset by higher service revenue or improved product monetization.
Read all positive and negative factors
Positive Factors
Negative Factors
Recurring, high-margin HCM revenue mix
Paychex's core payroll and HCM services are delivered as recurring, per-employee and per-period fees to SMBs, creating high revenue visibility and client stickiness. This durable business model supports predictable cash flows and ongoing cross-sell opportunities into benefits, PEO and advisory services, underpinning long-term margin stability.
Read all positive factors
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 (PAYX) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$41.56B
Dividend Yield3.89%
Average Volume (3M)3.49M
Price to Earnings (P/E)23.8
Beta (1Y)0.44
Revenue Growth16.88%
EPS Growth6.56%
CountryUS
Employees17,600
SectorTechnology
Sector Strength88
IndustryStaffing & Employment Services
Share Statistics
EPS (TTM)4.91
Shares Outstanding355,682,860
10 Day Avg. Volume3,054,605
30 Day Avg. Volume3,489,895
Financial Highlights & Ratios
PEG Ratio3.21
Price to Book (P/B)9.84
Price to Sales (P/S)5.65
P/FCF Ratio15.84
Enterprise Value/Market Cap<0.01
Enterprise Value/Revenue<0.01
Enterprise Value/Gross Profit<0.01
Enterprise Value/Ebitda<0.01
Forecast
1Y Price Target
$109.40Price Target Upside-3.65% Downside
Rating ConsensusHold
Number of Analyst Covering12
EPS Forecast (FY)5.97
Revenue Forecast (FY)$6.86B
Paychex Business Overview & Revenue Model
Company Description
Founded in 1971 and headquartered in Rochester, New York, Paychex, Inc. delivers comprehensive human capital management (HCM) solutions. The company primarily serves small to medium-sized enterprises (SMEs) across the United States, Europe, and In...
How the Company Makes Money
Paychex generates revenue primarily through recurring fees for delivering payroll and HCM-related services and through interest income earned on client funds it holds temporarily. Its key revenue streams generally include: (1) Service revenue: fee...
Paychex Earnings Call Summary
Earnings Call Date:Jun 24, 2026
(Q4-2026)
| % Change Since: |
Next Earnings Date:Sep 30, 2026
Earnings Call Sentiment Positive
The call conveyed strong operational execution and financial performance in fiscal 2026 — double-digit revenue and earnings growth, margin expansion, exceptional cash generation, successful Paycor integration with >$100M in cost synergies, and early commercial traction for the WISE AI platform and advisory offerings. Management tempered optimism with conservative fiscal 2027 guidance (5%–6% revenue growth) reflecting lower interest income, the lapping of one-time gains, and an intentional, selective approach to client acquisition. While there are near-term headwinds (interest float decline, insurance agency drag, flat client counts) and ongoing integration/legal complexity, the balance of evidence — robust cash flow, shareholder returns, improving organic momentum, and AI-enabled product differentiation — points to continued durable performance and strategic optionality.Positive Updates
Strong Top-Line Growth
Total revenue increased 12% in Q4 to $1.6 billion and 17% for fiscal 2026 to $6.5 billion, driven by the Paycor acquisition anniversary and accelerating organic growth each quarter.
Negative Updates
Slower Guided Growth for Fiscal 2027
Guidance for fiscal 2027 calls for total revenue growth of 5%–6% (management solutions 5%–6%, PEO/Insurance 6%–7%) and adjusted diluted EPS growth of 7%–9%, a meaningful deceleration from fiscal 2026's 17% revenue growth.
Read all updates
Q4-2026 Updates
Positive
Negative
Strong Top-Line Growth
Total revenue increased 12% in Q4 to $1.6 billion and 17% for fiscal 2026 to $6.5 billion, driven by the Paycor acquisition anniversary and accelerating organic growth each quarter.
Read all positive updates
Company Guidance
Paychex guided fiscal 2027 total revenue growth of 5–6%, with Management Solutions revenue also +5–6% and PEO & Insurance Solutions revenue +6–7%; interest on funds held for clients is expected to be $195–205 million (a year‑over‑year decline reflecting the full‑year impact of 75 bps of cuts and lapping one‑time gains). The company expects adjusted operating income margin of approximately 44% (with first‑quarter adjusted operating margin of 41–42%), an effective tax rate of about 24%, and adjusted diluted EPS growth of 7–9%; Q1 revenue growth is expected to be consistent with the full‑year guide. The outlook assumes employment levels remain flat and no further changes to the Fed funds rate, and is subject to macroeconomic uncertainty.Paychex Financial Statement Overview
Summary
Income Statement
86
Very Positive
Balance Sheet
72
Positive
Cash Flow
88
Very Positive
| Breakdown | May 2026 | May 2025 | May 2024 | May 2023 | May 2022 |
|---|---|---|---|---|---|
Income Statement | |||||
| Total Revenue | 6.51B | 5.57B | 5.28B | 5.01B | 4.61B |
| Gross Profit | 4.84B | 4.03B | 3.80B | 3.55B | 3.26B |
| EBITDA | 3.02B | 2.49B | 2.43B | 2.26B | 2.05B |
| Net Income | 1.76B | 1.66B | 1.69B | 1.56B | 1.39B |
Balance Sheet | |||||
| Total Assets | 16.17B | 16.56B | 10.38B | 10.55B | 9.64B |
| Cash, Cash Equivalents and Short-Term Investments | 1.18B | 1.66B | 1.50B | 1.60B | 1.22B |
| Total Debt | 4.61B | 5.02B | 866.30M | 865.70M | 881.20M |
| Total Liabilities | 12.44B | 12.44B | 6.58B | 7.05B | 6.55B |
| Stockholders Equity | 3.74B | 4.13B | 3.80B | 3.49B | 3.09B |
Cash Flow | |||||
| Free Cash Flow | 2.32B | 1.76B | 1.74B | 1.56B | 1.37B |
| Operating Cash Flow | 2.56B | 1.95B | 1.90B | 1.70B | 1.51B |
| Investing Cash Flow | -1.15B | -3.68B | -260.90M | 218.50M | -1.42B |
| Financing Cash Flow | -2.65B | 2.56B | -1.87B | -711.40M | -979.30M |
Paychex Technical Analysis
Positive
113.55
Price Trends
104.12
Positive
97.06
Positive
101.05
Positive
Market Momentum
4.35
Negative
65.33
Neutral
54.32
Neutral
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 113.55 is above the 20-day moving average (MA) of 112.59, above the 50-day MA of 104.12, and above the 200-day MA of 101.05, indicating a bullish trend. The MACD of 4.35 indicates Negative momentum. The RSI at 65.33 is Neutral, neither overbought nor oversold. The STOCH value of 54.32 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive 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 |
|---|---|---|---|---|---|---|---|
78 Outperform | $106.51B | 24.29 | 70.20% | 2.66% | 6.74% | 9.46% | |
75 Outperform | $41.56B | 23.80 | 45.13% | 3.90% | 16.88% | 6.56% | |
68 Neutral | $3.02B | 17.61 | 188.17% | 1.76% | -2.83% | 26.75% | |
61 Neutral | $37.18B | 12.37 | -10.20% | 1.83% | 8.50% | -7.62% | |
58 Neutral | $1.93B | -120.50 | -24.52% | 4.96% | 2.64% | -140.86% | |
55 Neutral | $2.44B | 23.40 | 5.06% | 2.81% | 6.72% | ― | |
53 Neutral | $321.20M | -14.08 | 32.87% | ― | -3.33% | -45.12% |
* Technology Sector Average
PAYX
Paychex
118.66
-14.55
-10.92%
ADP
Automatic Data Processing
270.62
-22.86
-7.79%
NSP
Insperity
52.97
6.06
12.93%
MAN
ManpowerGroup
54.80
18.21
49.78%
TNET
TriNet Group
69.30
7.29
11.76%
ZIP
ZipRecruiter
4.49
0.73
19.41%
Paychex Corporate Events
Business Operations and StrategyExecutive/Board ChangesShareholder Meetings
Paychex announces board transition as director steps down
Neutral
Jul 21, 2026
On July 16, 2026, Paychex announced that director Kara Wilson notified the Board she will not stand for re-election at the company’s 2026 annual meeting of stockholders. The Board responded by deciding to reduce its size from 11 to 10 direct...
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.