Paychex (PAYX) AI Stock Analysis

• Market Cap: $56.98B
• Dividend Yield: 2.51%
• Average Volume (3M): 2.06M
• Price to Earnings (P/E): 32.4
• Beta (1Y): 0.60
• Revenue Growth: 4.35%
• EPS Growth: 4.86%
• Country: US
• Employees: 16,500
• Sector: Industrials
• Sector Strength: 91
• Industry: Staffing & Employment Services
• EPS (TTM): 1.49
• Shares Outstanding: 360,190,670
• 10 Day Avg. Volume: 1,534,385
• 30 Day Avg. Volume: 2,062,281
• PEG Ratio: 29.70
• Price to Book (P/B): 13.10
• Price to Sales (P/S): 0.00
• P/FCF Ratio: 33.69
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: $151.57
• Price Target Upside: -3.87% Downside
• Rating Consensus: Hold
• Number of Analyst Covering: 9

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

Acquisition Strategy

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.

Cost Synergies

PAYX raised its expectations for PYCR cost synergies to greater than $80M, sees more revenue synergy potential, and now expects FY26 EPS accretion.

Financial Performance

Shares up 4.2% on the back of an in-line F3Q25 and re-affirmed F4Q25 guidance.

Negative Factors

Economic Conditions

Most near-term macro catalysts skew negative, such as deteriorating economic and/or labor market conditions, and competition in the HR technology space remains intense.

Small Business Confidence

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

Valuation Concerns

Shares are expensive against current backdrop.

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 payroll processing and human resource services. The company charges fees for processing payroll, filing taxes, and managing employee paychecks for its clients. Additionally, Paychex earns money through its human resources outsourcing services, which include employee benefits administration, retirement services, and regulatory compliance assistance. The company also offers PEO services, providing comprehensive HR solutions for clients. Key revenue streams include subscription-based services, transaction-based fees, and value-added services. Paychex's strategic partnerships with financial institutions and technology providers enhance its service offerings and contribute to its growth in the competitive HR and payroll services 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
1.60B	1.50B	1.60B	1.22B	1.03B	932.40M
	Total Assets
11.22B	10.38B	10.55B	9.64B	9.23B	8.55B
	Total Debt
863.70M	885.50M	865.70M	881.20M	897.10M	898.80M
	Net Debt
-700.10M	-583.40M	-356.30M	511.20M	-98.10M	-6.40M
	Total Liabilities
7.11B	6.58B	7.05B	6.55B	6.28B	5.77B
	Stockholders Equity
4.12B	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: Positive
• Last Price: 157.67
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Negative
• STOCH: Negative

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 157.67 is above the 20-day moving average (MA) of 149.20, above the 50-day MA of 147.05, and above the 200-day MA of 140.26, indicating a bullish trend. The MACD of 2.92 indicates Negative momentum. The RSI at 70.09 is Negative, neither overbought nor oversold. The STOCH value of 96.45 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for PAYX.

Paychex Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
PAYX	80 Outperform	$56.98B	32.44	44.25%	2.51%	4.35%	4.86%
ADP	80 Outperform	$131.10B	32.69	76.29%	1.82%	6.82%	9.03%
KFY	77 Outperform	$3.55B	14.71	13.92%	2.31%	-3.27%	62.57%
TNET	69 Neutral	$4.18B	25.66	162.14%	1.19%	1.50%	-44.95%
Sector *	64 Neutral	$4.44B	11.99	5.16%	249.23%	4.01%	-11.87%
RHI	62 Neutral	$4.92B	23.96	14.49%	4.53%	-7.81%	-40.22%
NSP	53 Neutral	$2.69B	43.41	48.65%	3.36%	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.

Spark’s Take on PAYX Stock

According to Spark, TipRanks’ AI Analyst, PAYX is a Outperform.

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.

To see Spark’s full report on PAYX stock, click here.