Paychex (PAYX) AI Stock Analysis

• Market Cap: $46.22B
• Dividend Yield: 3.32%
• Average Volume (3M): 2.66M
• Price to Earnings (P/E): 28.8
• Beta (1Y): 0.51
• 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: 359,608,920
• 10 Day Avg. Volume: 4,134,100
• 30 Day Avg. Volume: 2,656,603
• 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: 1.16
• Enterprise Value/Revenue: 9.28
• Enterprise Value/Gross Profit: 12.74
• Enterprise Value/Ebitda: 22.15
• 1Y Price Target: $136.82
• Price Target Upside: 10.33% Upside
• Rating Consensus: Hold
• Number of Analyst Covering: 12

• Rating: 71 Outperform
• Price Target: $140.00 ▲(12.89% Upside)

Paychex's strong financial performance and positive earnings call outlook are the primary drivers of its overall score. However, technical analysis indicates bearish momentum, and the valuation suggests potential overvaluation. The company's strategic initiatives and dividend yield provide additional support for the stock's attractiveness.

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. is a leading provider of integrated human capital management solutions for payroll, HR, benefits, and insurance services. Founded in 1971 and headquartered in Rochester, New York, the company primarily serves small to medium-sized businesses across various sectors. Paychex offers a comprehensive suite of services, including payroll processing, employee benefits administration, human resource management, and compliance solutions, which help businesses streamline their operations and manage their workforce effectively.

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 exhibits strong financial health with consistent revenue growth, high profitability margins, and effective cash flow management. The balance sheet is solid, though attention to net income trends and leverage levels is advised.

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	5.79B	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	2.43B	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	809.00M	1.66B	1.50B	1.60B	1.22B	1.03B
Total Debt	71.40M	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: 124.01
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Positive
• RSI: Positive
• 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 124.01 is below the 20-day moving average (MA) of 131.28, below the 50-day MA of 136.71, and below the 200-day MA of 143.40, indicating a bearish trend. The MACD of -3.10 indicates Positive momentum. The RSI at 26.81 is Positive, neither overbought nor oversold. The STOCH value of 41.47 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	$118.13B	29.40	65.93%	2.11%	7.07%	9.66%
PAYX	71 Outperform	$46.22B	28.83	41.27%	3.32%	9.08%	-5.00%
TNET	59 Neutral	$3.18B	22.83	134.58%	1.64%	1.39%	-50.47%
MAN	54 Neutral	$1.77B	-100.84	-0.81%	5.91%	-3.79%	-138.56%
NSP	49 Neutral	$1.86B	46.97	35.71%	4.86%	2.40%	-75.66%
ZIP	47 Neutral	$364.16M	-11.23	54.20%	―	-16.20%	-222.75%
Sector *	61 Neutral	$37.18B	12.37	-10.20%	1.83%	8.50%	-7.62%

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.