Paychex (PAYX) AI Stock Analysis

• Market Cap: $40.33B
• Dividend Yield: 3.77%
• Average Volume (3M): 3.01M
• Price to Earnings (P/E): 25.1
• Beta (1Y): 0.47
• Revenue Growth: 9.08%
• EPS Growth: -5.00%
• Country: US
• Employees: 16,500
• Sector: Technology
• Sector Strength: 88
• Industry: Staffing & Employment Services
• EPS (TTM): 1.22
• Shares Outstanding: 359,894,130
• 10 Day Avg. Volume: 2,978,621
• 30 Day Avg. Volume: 3,013,730
• 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: 1.33
• Enterprise Value/Revenue: 9.28
• Enterprise Value/Gross Profit: 12.74
• Enterprise Value/Ebitda: 21.00
• 1Y Price Target: $129.92
• Price Target Upside: 15.94% Upside
• Rating Consensus: Hold
• Number of Analyst Covering: 13
• EPS Forecast (FY): N/A
• Revenue Forecast (FY): N/A

• Rating: 73 Outperform
• Price Target: $123.00 ▲(9.76% Upside)

Paychex's overall stock score is driven by its strong financial performance and positive earnings call, which highlight robust growth and strategic advancements. However, bearish technical indicators and valuation concerns slightly offset these strengths. The company's ability to maintain growth and leverage strategic initiatives will be crucial moving forward.

Positive Factors

Revenue Growth

Strong revenue growth indicates effective market expansion and product adoption, enhancing long-term business sustainability and competitive positioning.

Successful Integration

Successful integration of acquisitions like Paycor enhances operational efficiency and opens new cross-selling opportunities, supporting sustained growth.

AI and Innovation

Investments in AI and innovation improve service offerings and operational efficiency, strengthening competitive advantage and future growth potential.

Negative Factors

Decreased Earnings per Share

A decrease in earnings per share can indicate challenges in cost management or market conditions, potentially impacting investor confidence and valuation.

Challenges in Florida PEO Market

Challenges in specific markets like Florida can hinder growth in key segments, affecting overall business performance and market share.

Higher Expense Growth

Rising expenses, especially from acquisitions, can strain profitability and cash flow, impacting long-term financial health and operational flexibility.

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

Paychex exhibits strong financial health with robust profitability, efficient cash flow management, and a stable balance sheet. The company is well-positioned for continued growth, supported by its strong margins and low leverage. While the slight decrease in stockholders' equity is a point to watch, the overall financial outlook remains positive.

Income Statement

Paychex demonstrates strong profitability with a consistent increase in revenue and stable margins. The TTM data shows a gross profit margin of 72.83% and a net profit margin of 27.86%, indicating efficient cost management. Revenue growth is steady at 3.98% TTM, reflecting a healthy expansion trajectory. EBIT and EBITDA margins remain robust, supporting the company's operational efficiency.

Balance Sheet

The balance sheet is solid with a low debt-to-equity ratio of 0.018 TTM, showcasing minimal leverage and financial stability. Return on equity is impressive at 39.99%, indicating strong profitability relative to shareholder investments. The equity ratio is healthy, suggesting a strong capital structure, though the slight decrease in stockholders' equity warrants monitoring.

Cash Flow

Cash flow metrics are strong, with a free cash flow growth rate of 8.58% TTM, indicating effective cash generation. The operating cash flow to net income ratio is 0.30, reflecting good cash conversion efficiency. The free cash flow to net income ratio of 0.90 suggests that the company is effectively converting its profits into cash.

Breakdown	TTM	Dec 2025	Dec 2024	Dec 2023	Dec 2022	Dec 2021
Income Statement
Total Revenue	5.79B	5.57B	5.28B	5.01B	4.61B	4.06B
Gross Profit	4.22B	4.03B	3.80B	3.55B	3.26B	2.79B
EBITDA	2.56B	2.49B	2.43B	2.21B	2.03B	1.65B
Net Income	1.61B	1.66B	1.69B	1.56B	1.39B	1.10B
Balance Sheet
Total Assets	16.66B	16.56B	10.38B	10.55B	9.64B	9.23B
Cash, Cash Equivalents and Short-Term Investments	1.67B	1.66B	1.50B	1.60B	1.22B	1.03B
Total Debt	5.02B	5.02B	866.30M	865.70M	881.20M	897.10M
Total Liabilities	12.69B	12.44B	6.58B	7.05B	6.55B	6.28B
Stockholders Equity	3.97B	4.13B	3.80B	3.49B	3.09B	2.95B
Cash Flow
Free Cash Flow	1.92B	1.76B	1.74B	1.56B	1.37B	1.15B
Operating Cash Flow	2.13B	1.95B	1.90B	1.70B	1.51B	1.26B
Investing Cash Flow	-4.87B	-3.68B	-260.90M	218.50M	-1.42B	-460.60M
Financing Cash Flow	2.52B	2.56B	-1.87B	-711.40M	-979.30M	-636.40M

Paychex Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 112.06
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Negative
• 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 112.06 is above the 20-day moving average (MA) of 111.18, below the 50-day MA of 117.99, and below the 200-day MA of 136.85, indicating a neutral trend. The MACD of -1.74 indicates Negative momentum. The RSI at 44.83 is Neutral, neither overbought nor oversold. The STOCH value of 69.97 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
PAYX	73 Outperform	$40.33B	25.14	41.27%	3.77%	9.08%	-5.00%
ADP	70 Outperform	$105.82B	25.80	70.57%	2.35%	7.07%	8.32%
TNET	62 Neutral	$2.79B	21.19	111.30%	1.89%	0.99%	-47.02%
Sector *	61 Neutral	$37.18B	12.37	-10.20%	1.83%	8.50%	-7.62%
ZIP	55 Neutral	$458.60M	―	―	―	-10.14%	-1381.34%
NSP	50 Neutral	$1.32B	79.45	16.04%	6.83%	3.19%	-86.21%
MAN	49 Neutral	$1.29B	―	-1.00%	5.16%	-2.44%	-156.01%

Paychex Corporate Events

Paychex Reports Strong Revenue Growth and Positive Outlook

Paychex, Inc. is a leading human capital management company that provides comprehensive HR solutions to businesses of all sizes across the U.S. and Europe. The company is known for its innovative approach and digital solutions in the HR sector.

Paychex Earnings Call: Positive Growth Amid Challenges

The recent earnings call for Paychex painted a generally positive picture of the company’s financial performance and strategic advancements. The successful integration of Paycor and robust revenue growth were highlighted as significant achievements. However, challenges such as decreased earnings per share and ongoing issues in the Florida PEO market were also discussed. Despite these hurdles, the company’s proactive approach to innovation and partnerships, along with a positive financial outlook, contribute to an optimistic view moving forward.