Paychex (PAYX) AI Stock Analysis

• Market Cap: $48.80B
• Dividend Yield: 3.05%
• Average Volume (3M): 2.12M
• Price to Earnings (P/E): 29.6
• Beta (1Y): 0.53
• Revenue Growth: 5.56%
• EPS Growth: -1.91%
• Country: US
• Employees: 16,500
• Sector: Technology
• Sector Strength: 85
• Industry: Staffing & Employment Services
• EPS (TTM): 1.19
• Shares Outstanding: 360,243,870
• 10 Day Avg. Volume: 1,794,509
• 30 Day Avg. Volume: 2,115,907
• PEG Ratio: N/A
• Price to Book (P/B): N/A
• Price to Sales (P/S): N/A
• P/FCF Ratio: N/A
• Enterprise Value/Market Cap: 1.24
• Enterprise Value/Revenue: 10.87
• Enterprise Value/Gross Profit: 15.02
• Enterprise Value/Ebitda: 24.31
• 1Y Price Target: $147.82
• Price Target Upside: 9.41% Upside
• Rating Consensus: Hold
• Number of Analyst Covering: 12

• Rating: 66 Neutral
• Price Target: $149.00 ▲(10.28% Upside)

Paychex's overall stock score is driven by strong financial performance and positive earnings call guidance. However, bearish technical indicators and a relatively high P/E ratio suggest caution. The company's ability to navigate macroeconomic uncertainties and leverage its strategic acquisitions will be key to future performance.

Positive Factors

Revenue Growth

Consistent revenue growth indicates strong market demand and effective business strategies, enhancing long-term financial stability.

Successful Integration of Paycor

Successful integration of acquisitions like Paycor enhances operational efficiency and expands market reach, supporting future growth.

Strong Financial Position

A strong financial position with ample cash reserves and high ROE provides flexibility for strategic investments and resilience in downturns.

Negative Factors

Macroeconomic Uncertainties

Macroeconomic uncertainties can impact client spending and business expansion, posing risks to revenue stability and growth prospects.

Executive Retirements

Leadership changes can lead to strategic shifts and potential disruptions, affecting continuity and execution of long-term business plans.

Florida At-Risk Medical Plan Challenges

Challenges in specific service lines like the Florida medical plan can affect revenue streams and require strategic adjustments.

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 service offerings, which include payroll processing, human resource management, time and attendance solutions, and employee benefits administration. The company operates on a subscription-based model, charging clients monthly fees for its software and services. Key revenue streams include recurring payroll processing fees and fees associated with HR services, including employee benefits and compliance consulting. Additionally, Paychex earns revenue from partnerships with financial institutions and insurance providers, which allow it to offer bundled services and expand its customer base. The company's focus on technology and innovation, such as its cloud-based solutions and mobile applications, enhances its value proposition to clients and contributes to its earnings growth.

Paychex Financial Statement Overview

Summary

Paychex demonstrates solid financial health with strong revenue growth, high profitability margins, and effective cash flow management. The income statement shows consistent revenue growth and robust profitability margins, although there's a slight decline in net income. The balance sheet reflects moderate leverage with a strong ROE, supporting future growth. Cash flow metrics are strong, with good conversion of profits into cash.

Income Statement

Paychex demonstrates strong financial performance with consistent revenue growth, evidenced by a 5.57% increase from 2024 to 2025. The company maintains robust profitability margins, including a Gross Profit Margin of 72.35% and a Net Profit Margin of 29.74% for 2025. The EBIT Margin remains high at 39.62%, indicating efficient operational management. However, there is a slight decline in Net Income from 2024 to 2025, which may require attention.

Balance Sheet

The balance sheet reflects a solid financial position with a Debt-to-Equity Ratio of 1.21, suggesting moderate leverage. The Return on Equity (ROE) is strong at 40.15%, showcasing effective use of equity to generate profits. The Equity Ratio stands at 24.92%, indicating a balanced capital structure. The increase in total assets from 2024 to 2025 supports potential growth opportunities.

Cash Flow

Paychex's cash flow metrics are robust, with positive Free Cash Flow of $1.76 billion in 2025. The Free Cash Flow to Net Income Ratio is 1.06, indicating good conversion of profits into cash. The Operating Cash Flow to Net Income Ratio is 1.18, reflecting healthy cash generation capabilities. Despite a significant increase in financing cash flow, the company's overall cash flow generation remains strong.

Breakdown	TTM	Dec 2025	Dec 2024	Dec 2023	Dec 2022	Dec 2021
Income Statement
Total Revenue	5.57B	5.57B	5.28B	5.01B	4.61B	4.06B
Gross Profit	4.03B	4.03B	3.80B	3.55B	3.26B	2.79B
EBITDA	2.49B	2.49B	2.43B	2.21B	2.03B	1.65B
Net Income	1.66B	1.66B	1.69B	1.56B	1.39B	1.10B
Balance Sheet
Total Assets	16.56B	16.56B	10.38B	10.55B	9.64B	9.23B
Cash, Cash Equivalents and Short-Term Investments	1.66B	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	12.44B	12.44B	6.58B	7.05B	6.55B	6.28B
Stockholders Equity	4.13B	4.13B	3.80B	3.49B	3.09B	2.95B
Cash Flow
Free Cash Flow	1.77B	1.76B	1.74B	1.56B	1.37B	1.15B
Operating Cash Flow	1.96B	1.95B	1.90B	1.70B	1.51B	1.26B
Investing Cash Flow	-3.68B	-3.68B	-260.90M	218.50M	-1.42B	-460.60M
Financing Cash Flow	2.55B	2.56B	-1.87B	-711.40M	-979.30M	-636.40M

Paychex Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 135.11
• 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 135.11 is below the 20-day moving average (MA) of 137.21, below the 50-day MA of 140.35, and below the 200-day MA of 144.16, indicating a bearish trend. The MACD of -1.70 indicates Positive momentum. The RSI at 42.05 is Neutral, neither overbought nor oversold. The STOCH value of 30.60 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	$120.72B	29.86	76.00%	2.10%	7.07%	9.66%
PAYX	66 Neutral	$48.80B	29.59	41.80%	3.05%	5.56%	-1.91%
Sector *	61 Neutral	$36.69B	12.42	-10.20%	1.85%	8.50%	-7.32%
TNET	59 Neutral	$3.48B	24.42	139.13%	1.52%	1.39%	-50.47%
MAN	54 Neutral	$1.83B	18.36	-0.78%	5.89%	-3.79%	-138.56%
NSP	49 Neutral	$2.04B	51.67	31.50%	4.53%	2.40%	-75.66%
ZIP	48 Neutral	$438.21M	225.24	-2897.28%	―	-16.20%	-222.75%

Paychex Corporate Events

Paychex Announces Executive Retirements and Board Reduction

On July 8, 2025, Paychex announced the immediate retirement of two senior executives, Mark Bottini and Michael Gioja, who will both serve as special advisors to ensure a smooth transition. Additionally, the company’s Board of Directors decided to reduce its size from 11 to 10 members following the departure of B. Thomas Golisano on July 9, 2025.