Paychex (PAYX) AI Stock Analysis

• Market Cap: $31.76B
• Dividend Yield: 3.7%
• Average Volume (3M): 3.78M
• Price to Earnings (P/E): 20.1
• Beta (1Y): 0.50
• Revenue Growth: 12.37%
• EPS Growth: -7.18%
• Country: US
• Employees: 16,500
• Sector: Technology
• Sector Strength: 88
• Industry: Staffing & Employment Services
• EPS (TTM): 1.26
• Shares Outstanding: 358,967,440
• 10 Day Avg. Volume: 4,073,006
• 30 Day Avg. Volume: 3,776,945
• PEG Ratio: -17.88
• Price to Book (P/B): 13.78
• Price to Sales (P/S): 10.21
• P/FCF Ratio: 32.33
• Enterprise Value/Market Cap: 1.14
• Enterprise Value/Revenue: 6.01
• Enterprise Value/Gross Profit: 8.19
• Enterprise Value/Ebitda: 13.61
• 1Y Price Target: $118.38
• Price Target Upside: 29.76% Upside
• Rating Consensus: Hold
• Number of Analyst Covering: 14
• EPS Forecast (FY): 5.49
• Revenue Forecast (FY): $6.50B

• Rating: 73 Outperform
• Price Target: $99.00 ▲(8.52% Upside)
• Action: Downgraded Date: 01/27/26
• Date: Action: Downgraded 01/27/26

The score is driven primarily by strong financial fundamentals (high margins, solid cash generation, and very low leverage), supported by a constructive earnings update (raised adjusted EPS outlook and Paycor/AI synergies). These positives are tempered by weak technicals (below key moving averages with negative MACD) and some operational cautions (softer revenue per client and insurance headwinds), while valuation is moderately supportive due to the ~4% dividend yield.

Positive Factors

High Profitability & Recurring Revenue

Sustained high gross and net margins combined with recurring payroll and HR service fees support durable cash generation and pricing power. Strong margins give Paychex room to invest in tech, dividends and buybacks while withstanding cyclical pressures in SMB demand.

Very Low Leverage & Enhanced Liquidity

Minimal net debt and an extended $1B revolving facility materially strengthen financial flexibility, lowering refinancing and liquidity risk. This balance sheet profile supports continued capital returns, strategic M&A integration, and cushions against sector volatility over the medium term.

Paycor Integration & AI-Driven Synergies

Realized and forecasted Paycor synergies plus proprietary AI initiatives create structural efficiency and differentiated product capabilities. Cost savings and AI-enabled productivity improvements can sustainably lift margins and deepen client stickiness across HCM offerings.

Negative Factors

Softer Revenue Per Client

A persistent decline in revenue per client, driven by smaller initial deals and lower attachment rates, can reduce lifetime client value and slow organic revenue expansion. Over months this can limit the benefit of scale and make growth more dependent on new client acquisition and M&A.

Insurance Agency Headwinds

Adverse trends in worker compensation pricing and weaker health/benefit volumes compress revenue and margins in the insurance channel. Because insurance and benefits are material adjunct revenue streams, protracted softness could reduce cross-sell economics and overall segment profitability.

Paycor Growth & Integration Risk

Slower-than-expected Paycor growth and integration complexity increase execution risk for revenue synergies and client retention. If integration frictions persist, anticipated cross-sell and upsell benefits could be delayed, pressuring medium-term revenue trajectory and margin targets.

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 diverse portfolio of services, which can be categorized into two main segments: Payroll Services and Human Resource Services. The Payroll Services segment accounts for a significant portion of the company's revenue, providing clients with payroll processing, tax filing, and employee payment services. The Human Resource Services segment includes offerings such as employee benefits administration, HR consulting, and compliance assistance. Revenue is typically derived from service fees that clients pay based on the number of employees or the volume of payroll processed. Additionally, Paychex has formed strategic partnerships with various financial institutions and technology providers, enhancing its service offerings and expanding its market reach. The company also benefits from recurring revenue streams through subscription models for ongoing HR services and software solutions, thus ensuring stable and predictable cash flow.

Paychex Financial Statement Overview

Summary

Strong profitability (TTM gross margin 73.36%, net margin 26.45%), consistent revenue growth (TTM +4.16%), improved leverage profile (very low TTM debt-to-equity 0.02), and healthy free cash flow growth (TTM +7.01%). Minor pressure from slightly lower EBIT/EBITDA margins keeps the score below top-tier.

Income Statement

Paychex has demonstrated consistent revenue growth with a TTM growth rate of 4.16%. The company maintains strong profitability metrics, with a gross profit margin of 73.36% and a net profit margin of 26.45% in the TTM. Although there is a slight decline in EBIT and EBITDA margins compared to previous years, the overall profitability remains robust.

Balance Sheet

The balance sheet shows a significant reduction in total debt, leading to a very low debt-to-equity ratio of 0.02 in the TTM, indicating strong financial stability. The return on equity is impressive at 39.66%, reflecting efficient use of equity to generate profits. However, the equity ratio is not calculated due to missing data on total assets.

Cash Flow

Paychex has shown a healthy free cash flow growth rate of 7.01% in the TTM, indicating strong cash generation capabilities. The operating cash flow to net income ratio is 0.32, and the free cash flow to net income ratio is 0.90, both suggesting efficient cash flow management. The company has consistently improved its cash flow metrics over the years.

Breakdown	TTM	May 2025	May 2024	May 2023	May 2022	May 2021
Income Statement
Total Revenue	6.03B	5.57B	5.28B	5.01B	4.61B	4.06B
Gross Profit	4.43B	4.03B	3.80B	3.55B	3.26B	2.79B
EBITDA	2.66B	2.49B	2.43B	2.21B	2.03B	1.65B
Net Income	1.60B	1.66B	1.69B	1.56B	1.39B	1.10B
Balance Sheet
Total Assets	16.52B	16.56B	10.38B	10.55B	9.64B	9.23B
Cash, Cash Equivalents and Short-Term Investments	1.57B	1.66B	1.50B	1.60B	1.22B	1.03B
Total Debt	5.04B	5.02B	866.30M	865.70M	881.20M	897.10M
Total Liabilities	12.64B	12.44B	6.58B	7.05B	6.55B	6.28B
Stockholders Equity	3.88B	4.13B	3.80B	3.49B	3.09B	2.95B
Cash Flow
Free Cash Flow	2.06B	1.76B	1.74B	1.56B	1.37B	1.15B
Operating Cash Flow	2.28B	1.95B	1.90B	1.70B	1.51B	1.26B
Investing Cash Flow	-4.30B	-3.68B	-260.90M	218.50M	-1.42B	-460.60M
Financing Cash Flow	2.23B	2.56B	-1.87B	-711.40M	-979.30M	-636.40M

Paychex Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 91.23
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• 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 Negative. The current price of 91.23 is below the 20-day moving average (MA) of 95.98, below the 50-day MA of 104.69, and below the 200-day MA of 125.32, indicating a bearish trend. The MACD of -4.36 indicates Positive momentum. The RSI at 35.00 is Neutral, neither overbought nor oversold. The STOCH value of 21.16 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for PAYX.

Paychex Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
ADP	76 Outperform	$82.82B	19.76	73.84%	2.46%	7.07%	8.32%
PAYX	73 Outperform	$31.76B	20.05	40.88%	3.70%	12.37%	-7.18%
Sector *	61 Neutral	$37.18B	12.37	-10.20%	1.83%	8.50%	-7.62%
MAN	51 Neutral	$1.20B	-89.53	-0.64%	4.96%	-2.44%	-156.01%
TNET	48 Neutral	$1.63B	10.87	111.30%	1.81%	0.99%	-47.02%
ZIP	47 Neutral	$214.76M	-5.46	―	―	-10.14%	-1381.34%
NSP	43 Neutral	$834.93M	―	-9.79%	6.37%	3.19%	-86.21%

Paychex Corporate Events

Paychex Expands Revolving Credit Capacity and Extends Maturities

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 January 23, 2031, expanding the incremental facility to $500 million, and revising interest rate provisions and certain covenants, while keeping other core terms and lender relationships largely intact. On the same date, the company also amended its separate $1.0 billion 2019 unsecured revolving credit facility to adjust interest rate terms and covenants, confirmed the continuation of a $500 million incremental feature under that line, and terminated an unused $250 million 2020 revolving credit facility for Paychex Advance, collectively streamlining its capital structure, extending its debt maturity profile, and enhancing financial flexibility without increasing drawn debt levels at the time of these changes.

The most recent analyst rating on (PAYX) stock is a Hold with a $122.00 price target. To see the full list of analyst forecasts on Paychex stock, see the PAYX Stock Forecast page.

Paychex adds director and launches $1 billion buyback

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 that replaces a prior $400 million authorization. Hansen, a former long-serving Executive Vice President and Chief Financial Officer of Cintas Corporation and former Paycor board member, brings extensive financial, strategic, and audit experience to Paychex and will serve on the Audit Committee, bolstering the company’s governance bench as it deepens integration of its 2025 Paycor acquisition and signals confidence in its financial strength and long-term value creation through the significantly enlarged buyback capacity.

The most recent analyst rating on (PAYX) stock is a Hold with a $125.00 price target. To see the full list of analyst forecasts on Paychex stock, see the PAYX Stock Forecast page.