Paychex (PAYX)
Industrials · $41.0B market cap · SEC CIK 0000723531
fundamentals score out of 100
Next reports on Mar 23, 2027, with analysts expecting $1.87 in earnings per share.
The case for PAYX
- Earns 45% back on shareholder equity.
- Generated $2.3B of free cash flow in FY2025, 37% of revenue.
- 27% of revenue drops through to net profit.
- Revenue growing 16.9% year over year.
- Pays a 3.0% dividend while you wait.
- Gross margin of 91% absorbs cost shocks.
The case against
- A PEG of 3.4: a P/E of 23.3× is a lot to pay for EPS growing 7%.
- Dividend takes 90% of earnings, leaving little cushion.
- Price/sales of 6.3× is higher than 87% of Industrials companies.
What the score is made of
Each factor is half a curve over reported figures and half a rank among the other Industrials companies (momentum is judged against fixed thresholds only), and the five are blended by weight. It describes the last filing and the current price. It is not a forecast.
| Valuewhat you pay for the earnings, sales, assets and cash | 52 |
|---|---|
| Growthhow fast revenue and earnings are moving, this year and over five | 70 |
| Profitabilityhow much of the revenue becomes profit, and how much of that is cash | 90 |
| Momentumhow the price has behaved lately | 58 |
| Stabilityhow violently it moves, what it owes and what it pays you | 80 |
- Each factor except momentum is half fixed thresholds, half rank among the 79 Industrials companies.
Key numbers
| Price / earnings | 23.3× |
|---|---|
| Price / book | 9.83× |
| Price / sales | 6.3× |
| Revenue growth (YoY) | +16.9% |
| EPS growth (YoY) | +6.8% |
| Gross margin | 91% |
| Operating margin | 39% |
| Net margin | 27% |
| Return on equity | 45% |
| Debt / equity | 1.22× |
| Current ratio | 1.26 |
| Dividend yield | 3.00% |
| Beta | 0.81 |
| 52-week range | $85.45 – $131.96 |
| Position in that range | 63% of the way up |
| 3-month return | +17.1% |
| 1-year return | -11.5% |
Five years of financials, as filed
Pulled from Paychex's XBRL filings on SEC EDGAR. Italic rows are derived from the rows above.
| FY2025 | FY2024 | FY2023 | FY2022 | FY2021 | |
|---|---|---|---|---|---|
| Revenue | $6.3B | $5.4B | $5.1B | $4.9B | $4.6B |
| Operating income | $2.5B | $2.2B | $2.2B | $2.0B | $1.8B |
| Net income | $1.8B | $1.7B | $2K | $1.6B | $1.4B |
| Operating cash flow | $2.6B | $1.9B | $1.9B | $1.7B | $1.6B |
| Capital expenditure | $235M | $192M | $161M | $143M | $134M |
| Total assets | $16.5B | $10.6B | $12.1B | $9.2B | $9.7B |
| Total liabilities | $12.6B | $6.6B | $8.5B | $6.0B | $6.6B |
| Shareholder equity | $3.9B | $3.9B | $3.5B | $3.2B | $3.1B |
| Cash | $1.5B | $1.2B | $1.4B | $1.1B | $636M |
| Long-term debt | $4.6B | $799M | $798M | $798M | $798M |
| Free cash flow | $2.3B | $1.7B | $1.7B | $1.6B | $1.5B |
| Operating margin | 39.8% | 40.8% | 42.4% | 41.4% | 40.4% |
| Net margin | 27.9% | 30.6% | 0.0% | 31.7% | 30.6% |
| Diluted shares | 360M | 362M | 362M | 362M | 363M |
Share count is essentially flat over 4 years.
What Paychex says it does
Unless we state otherwise or the context otherwise requires, the terms "Paychex," the "Company," "we," "our," and "us" refer to Paychex, Inc., a Delaware corporation, and its consolidated subsidiaries. Overview We are an industry-leading human capital management ("HCM") company providing comprehensive technology and advisory solutions in human resources ("HR"), payroll processing, employee benefits, and insurance. As of May 31, 2026, we served approximately 840,000 total customers across the U.S. and parts of Europe, of which approximately 800,000 are payroll clients. Paychex was incorporated in Delaware in 1979, maintains dual corporate headquarters in Rochester, New York and Cincinnati, Ohio, and has a fiscal year that ends on May 31st. Effective human capital management requires significant resources and expertise. Organizations face a rapidly evolving employment landscape including an increasing number and complexity of federal,…
Risk factors PAYX lists in its 10-K
- We may not be able to keep pace with changes in technology or provide timely enhancements to our solutions and support
- Our use of AI technology and the incorporation of AI technology into our solutions carries risks and challenges that could adversely affect our business, financial condition, results of operations, and prospects
- We may experience software defects, undetected errors, and development delays, which could damage our relationship with customers, decrease our potential profitability and expose us to liability
- We could be subject to reduced revenues, increased costs, liability claims, or harm to our competitive position as a result of cyberattacks, security vulnerabilities or Internet disruptions
- In the event of a catastrophe, our business continuity plan may fail, which could result in the loss of customer data and adversely interrupt operations
- We may be adversely impacted by any failure of third-party service providers to perform their functions
- We may be exposed to additional risks related to our co-employment relationship within our PEO business
- We may be adversely impacted by changes in health insurance and workers’ compensation rates and underlying claims trends
- We made and may continue to make acquisitions that involve numerous risks and uncertainties
- Our clients could have insufficient funds to cover payments we made on their behalf, resulting in financial loss to us
- Our interest earned on funds held for clients may be impacted by changes in government regulations mandating the amount of tax withheld or timing of remittance
- Our debt obligations may expose us to risks affecting the operation of our business, and our failure to address these risks could have a material adverse effect on our results of operations and financial condition
- Change in our credit ratings could adversely impact our results of operations and lower our profitability
- Legal, Regulatory and Political Risks