One-glance verdict
Within fair range
$94.85 our estimate vs market $100.58
Wall Street consensus: $102.14 (7.7% higher than our fair-value estimate)
6% above our estimate
Fundamentals snapshot
Paychex, Inc.
PAYX · NMS · Technology · Software - Application
Current price
$100.58
52-week range
$85.45 - $154.90
Market cap
$36.04B
Balance sheet
Watch
20.95x Strong cushion
Net debt $3.23B. Interest coverage shows how many times profit covers the interest bill.
What stands out
3 Rewards
0 Risks
3 rewards · 0 risks
- Reward Revenue grew 13.7% last year.
- Reward Free cash flow was positive in 10/10 years.
- Reward Dividend yield is 4.8% with 39-year payout history.
What this company does
Paychex, Inc.
Paychex acts as the human resources (HR) department for small and medium-sized businesses, managing essential tasks like employee payroll, benefits, and insurance. The company makes its money by charging clients regular fees for these services, which creates predictable recurring revenue (money that comes in consistently, like a subscription) and helps make its business stable. This one-stop-shop model makes it convenient for customers to sign up and difficult for them to leave.
How the company got here
Paychex was started in 1971 by Tom Golisano with just $3,000. He saw an opportunity to provide payroll services to small businesses, which were often ignored by larger payroll companies that focused on big corporations. The company grew by franchising and consolidating, eventually going public in 1983 to raise money for expansion. Over the years, Paychex acquired several other companies to add new services like retirement plan administration, time tracking, and HR outsourcing. This strategy transformed it from a simple payroll processor into a comprehensive provider of human capital management (HCM) solutions.
What it actually does
Paychex helps small- and medium-sized businesses manage the behind-the-scenes work of having employees. Its main job is to process payroll (calculating and distributing employee pay and handling taxes), but it also offers a wide range of other services. Think of it as an all-in-one platform for a company's workforce needs, including human resources (HR) support, employee benefits like health insurance and 401(k) plans, and time-tracking tools. Businesses pay Paychex to handle these complex tasks so they can focus on their actual operations, saving them time and helping them stay compliant with government regulations.
Management Solutions
This is the company's largest business area, making up about three-quarters of its total revenue. It includes the core services people associate with Paychex, primarily payroll processing, tax administration, and retirement services. Clients also get access to a software platform called Paychex Flex, which is a hub for managing HR tasks, tracking employee time, and onboarding new hires. Businesses pay recurring fees for these services, often based on the number of employees they have.
PEO and Insurance Services
This segment, which accounts for the remaining quarter of revenue, offers a more all-inclusive service. PEO stands for Professional Employer Organization, which is a service where Paychex becomes a co-employer of a client's employees. This allows smaller businesses to offer better employee benefits, like more affordable health insurance, that are usually only available to large corporations. In addition to benefits, this segment also provides workers' compensation and other business insurance, bundling many HR functions into a single package.
Interest on Client Funds
This is a smaller, but still important, way Paychex makes money. When a client gives Paychex money to pay its employees and payroll taxes, there's a short period before that money is actually sent out. During this time, Paychex invests the funds—a practice often called earning interest on "float"—and keeps the returns it makes. While it's not a primary business line, it provides an additional stream of income for the company.
What management is betting on now
Paychex is focused on being a technology-driven HR leader for businesses of all sizes. A key part of this strategy is using artificial intelligence (AI) to automate routine tasks, provide smarter insights to clients, and make its software easier to use. The company is also pushing to get more clients for its PEO and comprehensive HR solutions, as these services generate more revenue per customer and make clients more likely to stick around. Finally, Paychex continues to acquire other companies to add new technologies and expand its reach, particularly in serving larger mid-market companies.
Price history
How the share price has moved
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Earnings history
Last 8 quarters — what happened
Click any quarter to read the call summary and what the numbers say.
FY2024 Q4
$180.40M
FY2025 Q1
$510.50M
FY2025 Q2
$248.00M
FY2025 Q3
$667.30M
FY2025 Q4
$283.30M
FY2026 Q1
$662.50M
FY2026 Q2
$382.80M
FY2026 Q3
$761.50M
Revenue
$1.81B
Net income
$560.30M
Diluted EPS
1.56
Operating cash flow
$812.50M
Free cash flow
$761.50M
Fetching…
Sources
Revenue
$1.56B
Net income
$395.40M
Diluted EPS
1.10
Operating cash flow
$444.90M
Free cash flow
$382.80M
Fetching…
Sources
Revenue
$1.54B
Net income
$383.80M
Diluted EPS
1.06
Operating cash flow
$718.40M
Free cash flow
$662.50M
Fetching…
Sources
Revenue
$1.43B
Net income
—
Diluted EPS
0.83
Operating cash flow
$343.80M
Free cash flow
$283.30M
Fetching…
Sources
Revenue
$1.51B
Net income
$519.30M
Diluted EPS
1.43
Operating cash flow
$716.00M
Free cash flow
$667.30M
Fetching…
Sources
Revenue
$1.32B
Net income
$413.40M
Diluted EPS
1.14
Operating cash flow
$295.00M
Free cash flow
$248.00M
Fetching…
Sources
Revenue
$1.32B
Net income
$427.40M
Diluted EPS
1.18
Operating cash flow
$546.10M
Free cash flow
$510.50M
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Sources
Revenue
$1.30B
Net income
—
Diluted EPS
1.05
Operating cash flow
$221.70M
Free cash flow
$180.40M
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Sources
Is it cheap or expensive?
Fair value $94.85 vs current price $100.58
Wall Street consensus is the average analyst price target: $102.14 (7.7% higher than our fair-value estimate).
Our most-likely fair value is $94.85 a share — about 5.7% away from today's price of $100.58, so the stock currently looks fairly priced.
Is it drowning in debt?
Watch
Net debt $3.2B. Interest coverage 20.9x.
Net debt
$3.23B
Interest coverage
20.95x
Paychex, Inc.'s profit covers its interest bill about 20.9 times over. which is stronger than most peers shown here and 1 peers sit below 1x, which is the danger zone where profit does not fully cover the interest bill.
Watch
Worse cushion
Baseline
Better cushion
PAYX
BASELINE
Paychex, Inc.
Total debt $5.01B Interest coverage 20.95x This is the baseline the peer rows are being compared against.
Total debt $4.40B Interest coverage 11.87x -43% vs PAYX Carries about 1.8x less debt cushion than PAYX.
Total debt $763.60M Interest coverage 166.82x +696% vs PAYX Carries about 8.0x more debt cushion than PAYX.
Total debt $6.90B Interest coverage 19.99x -5% vs PAYX Has roughly the same debt cushion as PAYX.
Total debt $430.00M Interest coverage -0.42x -100% vs PAYX This peer has almost no interest-payment cushion compared with PAYX.
What you should know
The case for and against PAYX
3 Rewards
0 Risks
Rewards
-
Revenue grew 13.7% last year.
-
Free cash flow was positive in 10/10 years.
-
Dividend yield is 4.8% with 39-year payout history.
Risks
The numbers
All the key metrics, grouped by purpose
Tap any ? icon to learn what it means.
Valuation
How expensive the stock looks
P/E (TTM)
22.20x
Forward P/E
17.06x
P/B
8.98x
P/S
9.08x
EV/EBITDA
24.13x
PEG ratio
1.76x
Profitability
How much profit each dollar creates
Gross margin
67.2%
Operating margin
44.4%
Net margin
26.6%
ROE
—
ROA
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Health
Liquidity and balance-sheet strength
Debt / equity
1.25x
Current ratio
1.15x
Quick ratio
0.30x
Total debt
$5.01B
Total cash
$1.78B
Growth
How the business has been compounding
Revenue TTM
$6.33B
Revenue 5Y CAGR
8.3%
EPS TTM
4.53
EPS 5Y CAGR
6.1%
Cash flow
How much cash the business throws off
Operating CF TTM
$2.32B
Free CF TTM
$1.71B
FCF margin
27.0%
Dividend
Shareholder payout
Yield
4.8%
Payout ratio
95.4%
Last ex-div date
2026-05-13