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Paychex
(NASDAQ:PAYX)
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Rating:69Neutral
Price Target:
$123.00
▼(-1.59% Downside)
Action:Downgraded
Date:09/28/26
The score is driven primarily by strong financial quality (durable margins and solid cash conversion) and a constructive earnings outlook with reaffirmed/raised guidance. These positives are tempered by notably weak current technicals (broadly below key moving averages with negative momentum) and some fundamental watch-items, including higher recent leverage and near-term free-cash-flow growth softness.
Positive Factors
Durable profitability
Persistently high margins across annual and trailing periods indicate Paychex converts its recurring HCM offering into substantial operating profit. This profitability provides resilience, supports continued investment in products and AI, and leaves meaningful capacity for shareholder returns.
Negative Factors
Higher leverage
The recent leverage step-up materially changes Paychex's historically low-debt profile and increases financial risk relative to prior years. Higher debt can reduce flexibility for acquisitions, technology spending, or shareholder returns if operating conditions weaken or financing costs rise.
Read all positive and negative factors
Positive Factors
Negative Factors
Durable profitability
Persistently high margins across annual and trailing periods indicate Paychex converts its recurring HCM offering into substantial operating profit. This profitability provides resilience, supports continued investment in products and AI, and leaves meaningful capacity for shareholder returns.
Read all positive factors
Paychex Key Performance Indicators (KPIs)
Any
Revenue by Segment
Breaks down revenue across different business lines, highlighting which segments are driving growth and profitability, and where there may be opportunities or challenges.
Breaks down revenue across different business lines, highlighting which segments are driving growth and profitability, and where there may be opportunities or challenges.
Data provided by:
The Fly
The FlyPaychex (PAYX) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$40.05B
Dividend Yield4.04%
Average Volume (3M)3.39M
Price to Earnings (P/E)22.3
Beta (1Y)0.39
Revenue Growth13.97%
EPS Growth12.61%
CountryUS
Employees17,600
SectorTechnology
Sector Strength88
IndustryStaffing & Employment Services
Share Statistics
EPS (TTM)5.05
Shares Outstanding355,980,470
10 Day Avg. Volume2,921,475
30 Day Avg. Volume3,391,804
Financial Highlights & Ratios
PEG Ratio3.21
Price to Book (P/B)9.84
Price to Sales (P/S)5.65
P/FCF Ratio15.84
Enterprise Value/Market Cap1.22
Enterprise Value/Revenue7.43
Enterprise Value/Gross Profit9.98
Enterprise Value/Ebitda15.96
Forecast
1Y Price Target
$116.00Price Target Upside-7.19% Downside
Rating ConsensusHold
Number of Analyst Covering16
EPS Forecast (FY)5.96
Revenue Forecast (FY)$6.86B
Paychex Business Overview & Revenue Model
Company Description
Founded in 1971 and headquartered in Rochester, New York, Paychex, Inc. delivers comprehensive human capital management (HCM) solutions. The company primarily serves small to medium-sized enterprises (SMEs) across the United States, Europe, and In...
How the Company Makes Money
Paychex primarily generates revenue by charging clients recurring fees for payroll and HCM services and by earning interest income on client funds it holds temporarily. (1) Service revenue: Paychex charges fees (often per pay period and/or per emp...
Paychex Earnings Call Summary
Earnings Call Date:Sep 23, 2026
(Q1-2027)
| % Change Since: |
Next Earnings Date:Dec 17, 2026
Earnings Call Sentiment Positive
The call was strongly positive. Paychex reported solid revenue, earnings and margin growth; raised PEO and Insurance Solutions guidance; achieved record PEO retention; and described strong momentum in advisory solutions, bookings, referrals, AI deployment and revenue synergies. The main cautions were a Management Solutions result slightly below expectations due to the favorable mix shift into PEO, a difficult second-quarter comparison, flat employment levels, health-care renewal uncertainty and continued heavy AI investment. Management remained confident in the strategy and full-year outlook.Positive Updates
Solid First-Quarter Financial Performance
Total revenue increased 6% to $1.6 billion. Operating income and earnings per share grew at double-digit rates, diluted EPS increased 14% to $1.21, and adjusted diluted EPS increased 10% to $1.34.
Negative Updates
Management Solutions Slightly Below Expectations
Management Solutions revenue growth was 4%, or approximately 4.3% in the quarter, and management said the result was slightly below expectations. The primary reason cited was the stronger-than-expected shift of ASO clients and new business into PEO.
Read all updates
Q1-2027 Updates
Positive
Negative
Solid First-Quarter Financial Performance
Total revenue increased 6% to $1.6 billion. Operating income and earnings per share grew at double-digit rates, diluted EPS increased 14% to $1.21, and adjusted diluted EPS increased 10% to $1.34.
Read all positive updates
Company Guidance
For fiscal 2027, Paychex is reaffirming total revenue growth of 5% to 6%, with PEO and Insurance Solutions revenue growth now expected in the range of 7% to 8%, Management Solutions trending towards the low end, and Interest on funds held for clients expected in the range of $200 million to $210 million; the outlook assumes the current macro environment, including stable demand and flat employment levels. If Q1 strength in PEO upsells and HCM referrals continues, PEO and Insurance Solutions could trend toward the high end of the updated range. For the second quarter, revenue growth is expected to be approximately 4% with an adjusted operating margin of approximately 40%; excluding the revenue synergy benefit and realized gains recognized in Q2 of last year, revenue growth would be in line with the first quarter growth rate.
Paychex Financial Statement Overview
Summary
Income Statement
88
Very Positive
Balance Sheet
72
Positive
Cash Flow
80
Positive
| Breakdown | TTM | May 2026 | May 2025 | May 2024 | May 2023 | May 2022 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 6.60B | 6.51B | 5.57B | 5.28B | 5.01B | 4.61B |
| Gross Profit | 4.91B | 4.84B | 4.03B | 3.80B | 3.55B | 3.26B |
| EBITDA | 3.07B | 3.02B | 2.49B | 2.43B | 2.26B | 2.05B |
| Net Income | 1.81B | 1.76B | 1.66B | 1.69B | 1.56B | 1.39B |
Balance Sheet | ||||||
| Total Assets | 15.66B | 16.17B | 16.56B | 10.38B | 10.55B | 9.64B |
| Cash, Cash Equivalents and Short-Term Investments | 934.20M | 1.18B | 1.66B | 1.50B | 1.60B | 1.22B |
| Total Debt | 4.62B | 4.63B | 5.02B | 866.30M | 865.70M | 881.20M |
| Total Liabilities | 11.96B | 12.44B | 12.44B | 6.58B | 7.05B | 6.55B |
| Stockholders Equity | 3.71B | 3.74B | 4.13B | 3.80B | 3.49B | 3.09B |
Cash Flow | ||||||
| Free Cash Flow | 2.02B | 2.32B | 1.76B | 1.74B | 1.56B | 1.37B |
| Operating Cash Flow | 2.25B | 2.56B | 1.95B | 1.90B | 1.70B | 1.51B |
| Investing Cash Flow | -185.50M | -1.15B | -3.68B | -260.90M | 218.50M | -1.42B |
| Financing Cash Flow | -3.04B | -2.65B | 2.56B | -1.87B | -711.40M | -979.30M |
Paychex Technical Analysis
Positive
124.99
Price Trends
114.01
Negative
110.34
Positive
102.06
Positive
Market Momentum
-0.07
Negative
59.56
Neutral
86.64
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 124.99 is above the 20-day moving average (MA) of 104.41, above the 50-day MA of 114.01, and above the 200-day MA of 102.06, indicating a neutral trend. The MACD of -0.07 indicates Negative momentum. The RSI at 59.56 is Neutral, neither overbought nor oversold. The STOCH value of 86.64 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for PAYX.
Paychex Risk Analysis
Paychex disclosed 22 risk factors in its most recent earnings report. Paychex reported the most risks in the "Legal & Regulatory" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Paychex Peers Comparison
UnderperformOutperform
Sector (61)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
70 Outperform | $771.41M | 22.90 | 15.76% | 1.01% | 5.59% | -33.45% | |
69 Neutral | $40.05B | 22.28 | 47.11% | 4.04% | 13.97% | 12.61% | |
61 Neutral | $37.18B | 12.37 | -10.20% | 1.83% | 8.50% | -7.62% | |
59 Neutral | $3.26B | 19.00 | 188.17% | 1.61% | -2.83% | 26.75% | |
58 Neutral | $1.91B | -119.48 | -24.52% | 4.78% | 2.64% | -140.86% | |
57 Neutral | $3.46B | 30.12 | 9.18% | 6.81% | -4.95% | -34.47% | |
54 Neutral | $2.08B | 17.30 | 5.75% | 3.23% | 7.25% | ― |
* Technology Sector Average
PAYX
Paychex
112.50
-6.99
-5.85%
BBSI
Barrett Business Services
31.83
-9.42
-22.84%
NSP
Insperity
50.18
7.15
16.63%
MAN
ManpowerGroup
44.64
12.60
39.32%
RHI
Robert Half
34.64
7.68
28.50%
TNET
TriNet Group
71.03
9.78
15.96%
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.