Paychex (PAYX)
Market Price (9/25/2026): $101.7 | Market Cap: $36.2 BilInvestor Relations Sector: Industrials | Industry: Human Resource & Employment Services
Paychex (PAYX)
Market Price (9/25/2026): $101.7Market Cap: $36.2 BilSector: IndustrialsIndustry: Human Resource & Employment Services
Investment Highlights Why It Matters Detailed financial logic regarding cash flow yields vs trend-riding momentum.
Attractive yieldTotal YieldTotal Yield = Earnings Yield + Dividend Yield, Earnings Yield = Net Income / Market Cap Dividend Yield = Total Dividends / Market Cap is 9.0%, Dividend Yield is 4.3%, ERPEquity Risk Premium (ERP) = Total Yield - Risk Free Rate, Reflects the premium above risk free assets offered by the investment. is 4.9%, FCF Yield is 6.2% Attractive operating marginsOp Mgn LTMOperating Margin = Operating Income / Revenue Reflects profitability before taxes and before impact of capital structure (interest payments). is 39% Attractive cash flow generationCFO/Rev LTMCash Flow from Operations / Revenue (Sales), Last Twelve Months (LTM) is 39%, FCF/Rev LTMFree Cash Flow / Revenue (Sales), Last Twelve Months (LTM) is 36%, CFO LTM is 2.6 Bil, FCF LTM is 2.3 Bil Low stock price volatilityVol 12M is 29% Megatrend and thematic driversMegatrends include Cloud Computing, Fintech & Digital Payments, and Automation & Robotics. Themes include Software as a Service (SaaS), Show more. | Weak multi-year price returns2Y Excs Rtn is -52%, 3Y Excs Rtn is -74% | Key risksPAYX key risks include [1] its substantial reliance on the U.S. Show more. |
| Attractive yieldTotal YieldTotal Yield = Earnings Yield + Dividend Yield, Earnings Yield = Net Income / Market Cap Dividend Yield = Total Dividends / Market Cap is 9.0%, Dividend Yield is 4.3%, ERPEquity Risk Premium (ERP) = Total Yield - Risk Free Rate, Reflects the premium above risk free assets offered by the investment. is 4.9%, FCF Yield is 6.2% |
| Attractive operating marginsOp Mgn LTMOperating Margin = Operating Income / Revenue Reflects profitability before taxes and before impact of capital structure (interest payments). is 39% |
| Attractive cash flow generationCFO/Rev LTMCash Flow from Operations / Revenue (Sales), Last Twelve Months (LTM) is 39%, FCF/Rev LTMFree Cash Flow / Revenue (Sales), Last Twelve Months (LTM) is 36%, CFO LTM is 2.6 Bil, FCF LTM is 2.3 Bil |
| Low stock price volatilityVol 12M is 29% |
| Megatrend and thematic driversMegatrends include Cloud Computing, Fintech & Digital Payments, and Automation & Robotics. Themes include Software as a Service (SaaS), Show more. |
| Weak multi-year price returns2Y Excs Rtn is -52%, 3Y Excs Rtn is -74% |
| Key risksPAYX key risks include [1] its substantial reliance on the U.S. Show more. |
Qualitative Assessment
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Paychex (PAYX) stock has gained about 10% since 5/31/2026 because of the following key factors:
1. Strong Financial Performance in Fiscal Q4 2026 and Fiscal Q1 2027.
Paychex demonstrated robust financial performance, which likely supported its stock appreciation. For fiscal year 2026, which ended on May 31, 2026, the company reported a 17% increase in total revenue to $6.5 billion and an 11% rise in adjusted diluted earnings per share to $5.51. For the fourth quarter of fiscal 2026, diluted EPS increased by 43% to $1.17, and adjusted diluted EPS grew 11% to $1.32, surpassing analyst estimates. Subsequently, in fiscal Q1 2027, ended August 31, 2026, Paychex reported a 6% increase in total revenue to $1.63 billion and adjusted diluted EPS of $1.34, exceeding the $1.32 consensus estimate.
2. Robust Growth and Increased Outlook for PEO and Insurance Solutions Segment.
The company's Professional Employer Organization (PEO) and Insurance Solutions segment was a significant driver of growth. This segment saw its revenue increase by a strong 12% in fiscal Q1 2027. This growth was attributed to a high-single-digit increase in average worksite employees and higher insurance volumes. Furthermore, Paychex raised its full-year fiscal 2027 growth outlook for the PEO and Insurance Solutions segment to 7-8%, up from the previous guidance of 6-7%, signaling continued strong demand and positive expectations for this part of the business.
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Paychex (PAYX) stock has gained about 10% since 5/31/2026 because of the following key factors:
1. Strong Financial Performance in Fiscal Q4 2026 and Fiscal Q1 2027.
Paychex demonstrated robust financial performance, which likely supported its stock appreciation. For fiscal year 2026, which ended on May 31, 2026, the company reported a 17% increase in total revenue to $6.5 billion and an 11% rise in adjusted diluted earnings per share to $5.51. For the fourth quarter of fiscal 2026, diluted EPS increased by 43% to $1.17, and adjusted diluted EPS grew 11% to $1.32, surpassing analyst estimates. Subsequently, in fiscal Q1 2027, ended August 31, 2026, Paychex reported a 6% increase in total revenue to $1.63 billion and adjusted diluted EPS of $1.34, exceeding the $1.32 consensus estimate.
2. Robust Growth and Increased Outlook for PEO and Insurance Solutions Segment.
The company's Professional Employer Organization (PEO) and Insurance Solutions segment was a significant driver of growth. This segment saw its revenue increase by a strong 12% in fiscal Q1 2027. This growth was attributed to a high-single-digit increase in average worksite employees and higher insurance volumes. Furthermore, Paychex raised its full-year fiscal 2027 growth outlook for the PEO and Insurance Solutions segment to 7-8%, up from the previous guidance of 6-7%, signaling continued strong demand and positive expectations for this part of the business.
3. Advancements in AI and Industry Recognition.
Paychex enhanced its leadership in human capital management (HCM) technology through strategic investments in artificial intelligence (AI). In fiscal Q4 2026, the company launched its WISE Workforce Intelligence Engine. This innovation, along with others, led to Paychex being recognized by TIME as one of America's Top WorkTech Companies 2026 in June 2026. By August 2026, early results from WISE demonstrated its effectiveness in reducing payroll errors and improving service efficiency. The company continued to expand its AI capabilities with the introduction of WISE Hire, an agentic recruiting solution, and WISE was named a 2026 Top HR Product of the Year by HR Executive in September 2026. These advancements underscore Paychex's commitment to innovation and market positioning in the evolving HR technology landscape.
4. Expansion of Operating Margins.
Paychex demonstrated efficient operations and increased profitability through significant operating margin expansion. For fiscal Q1 2027, the company's operating margin expanded by 280 basis points to 38.0% compared to the prior-year period. Adjusted operating margin also improved to 42.0% from 40.7% year-over-year. This margin improvement indicates disciplined cost management and effective leverage of revenue growth.
5. Stable Small Business Employment Environment.
A relatively stable U.S. labor market, particularly within the small business sector, provided a favorable operating environment for Paychex. The U.S. economy experienced modest job growth and a stable unemployment rate around 4.2% in June and July 2026, settling into what has been described as a "low-hire, low-fire" equilibrium. The Paychex Small Business Jobs Index showed improved job growth among U.S. small businesses for the fourth consecutive month in June 2026, reaching its highest level since August 2025. Stable employment levels for small businesses continued through August 2026. While overall job growth saw some moderation, sectors relevant to Paychex, such as professional and business services, continued to experience job gains.
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Stock Movement Drivers
Fundamental Drivers
The 8.9% change in PAYX stock from 5/31/2026 to 9/23/2026 was primarily driven by a 4.6% change in the company's Net Income Margin (%).| (LTM values as of) | 5312026 | 9232026 | Change |
|---|---|---|---|
| Stock Price ($) | 95.98 | 104.49 | 8.9% |
| Change Contribution By: | |||
| Total Revenues ($ Mil) | 6,334 | 6,512 | 2.8% |
| Net Income Margin (%) | 25.8% | 27.0% | 4.6% |
| P/E Multiple | 21.0 | 21.2 | 0.9% |
| Shares Outstanding (Mil) | 359 | 357 | 0.4% |
| Cumulative Contribution | 8.9% |
Market Drivers
5/31/2026 to 9/23/2026| Return | Correlation | |
|---|---|---|
| PAYX | 8.9% | |
| Market (SPY) | 1.8% | -6.9% |
| Sector (XLI) | -1.5% | -24.9% |
Fundamental Drivers
The 14.2% change in PAYX stock from 2/28/2026 to 9/23/2026 was primarily driven by a 7.9% change in the company's Total Revenues ($ Mil).| (LTM values as of) | 2282026 | 9232026 | Change |
|---|---|---|---|
| Stock Price ($) | 91.51 | 104.49 | 14.2% |
| Change Contribution By: | |||
| Total Revenues ($ Mil) | 6,034 | 6,512 | 7.9% |
| Net Income Margin (%) | 26.4% | 27.0% | 2.2% |
| P/E Multiple | 20.6 | 21.2 | 2.9% |
| Shares Outstanding (Mil) | 359 | 357 | 0.6% |
| Cumulative Contribution | 14.2% |
Market Drivers
2/28/2026 to 9/23/2026| Return | Correlation | |
|---|---|---|
| PAYX | 14.2% | |
| Market (SPY) | 12.5% | -8.6% |
| Sector (XLI) | -3.5% | -27.4% |
Fundamental Drivers
The -21.8% change in PAYX stock from 8/31/2025 to 9/23/2026 was primarily driven by a -27.0% change in the company's P/E Multiple.| (LTM values as of) | 8312025 | 9232026 | Change |
|---|---|---|---|
| Stock Price ($) | 133.57 | 104.49 | -21.8% |
| Change Contribution By: | |||
| Total Revenues ($ Mil) | 5,572 | 6,512 | 16.9% |
| Net Income Margin (%) | 29.7% | 27.0% | -9.1% |
| P/E Multiple | 29.1 | 21.2 | -27.0% |
| Shares Outstanding (Mil) | 360 | 357 | 0.9% |
| Cumulative Contribution | -21.8% |
Market Drivers
8/31/2025 to 9/23/2026| Return | Correlation | |
|---|---|---|
| PAYX | -21.8% | |
| Market (SPY) | 20.3% | 2.3% |
| Sector (XLI) | 13.3% | -13.5% |
Fundamental Drivers
The -5.3% change in PAYX stock from 8/31/2023 to 9/23/2026 was primarily driven by a -17.0% change in the company's P/E Multiple.| (LTM values as of) | 8312023 | 9232026 | Change |
|---|---|---|---|
| Stock Price ($) | 110.37 | 104.49 | -5.3% |
| Change Contribution By: | |||
| Total Revenues ($ Mil) | 5,007 | 6,512 | 30.1% |
| Net Income Margin (%) | 31.1% | 27.0% | -13.1% |
| P/E Multiple | 25.6 | 21.2 | -17.0% |
| Shares Outstanding (Mil) | 361 | 357 | 0.9% |
| Cumulative Contribution | -5.3% |
Market Drivers
8/31/2023 to 9/23/2026| Return | Correlation | |
|---|---|---|
| PAYX | -5.3% | |
| Market (SPY) | 77.0% | 29.5% |
| Sector (XLI) | 64.1% | 26.0% |
Price Returns Compared
| 2021 | 2022 | 2023 | 2024 | 2025 | 2026 | Total [1] | |
|---|---|---|---|---|---|---|---|
| Returns | |||||||
| PAYX Return | 50% | -13% | 6% | 21% | -17% | 6% | 46% |
| Peers Return | 28% | -22% | 18% | 5% | -17% | 1% | 3% |
| S&P 500 Return | 27% | -19% | 24% | 23% | 16% | 13% | 107% |
Monthly Win Rates [3] | |||||||
| PAYX Win Rate | 67% | 42% | 42% | 75% | 42% | 56% | |
| Peers Win Rate | 58% | 38% | 53% | 50% | 45% | 47% | |
| S&P 500 Win Rate | 75% | 42% | 67% | 75% | 67% | 56% | |
Max Drawdowns [4] | |||||||
| PAYX Max Drawdown | -10% | -23% | -14% | -9% | -31% | -24% | |
| Peers Max Drawdown | -20% | -36% | -29% | -24% | -33% | -41% | |
| S&P 500 Max Drawdown | -5% | -25% | -10% | -8% | -19% | -9% | |
[1] Cumulative total returns since the beginning of 2021
[2] Peers: ADP, INTU, PAYC, PCTY, TNET. See PAYX Returns vs. Peers.
[3] Win Rate = % of calendar months in which monthly returns were positive
[4] Max drawdown represents maximum peak-to-trough decline within a year
[5] 2026 data is for the year up to 9/23/2026 (YTD)
How Low Can It Go
| Event | PAYX | S&P 500 |
|---|---|---|
| Summer-Fall 2023 Five Percent Yield Shock | ||
| % Loss | -12.3% | -9.5% |
| % Gain to Breakeven | 14.0% | 10.5% |
| Time to Breakeven | 30 days | 24 days |
| 2022 Inflation Shock & Fed Tightening | ||
| % Loss | -18.2% | -24.5% |
| % Gain to Breakeven | 22.3% | 32.4% |
| Time to Breakeven | 427 days | 427 days |
| 2020 COVID-19 Crash | ||
| % Loss | -44.1% | -33.7% |
| % Gain to Breakeven | 78.8% | 50.9% |
| Time to Breakeven | 228 days | 140 days |
| Q4 2018 Fed Policy Error / Growth Scare | ||
| % Loss | -15.1% | -19.2% |
| % Gain to Breakeven | 17.7% | 23.8% |
| Time to Breakeven | 42 days | 105 days |
| 2015-2016 China Devaluation / Global Growth Scare | ||
| % Loss | -11.3% | -12.2% |
| % Gain to Breakeven | 12.7% | 13.9% |
| Time to Breakeven | 41 days | 62 days |
| 2011 US Debt Ceiling Crisis & European Contagion | ||
| % Loss | -14.5% | -17.9% |
| % Gain to Breakeven | 17.0% | 21.8% |
| Time to Breakeven | 66 days | 123 days |
In The Past
Paychex's stock fell -8.7% during the 2025 US Tariff Shock. Such a loss loss requires a 9.5% gain to breakeven.
Preserve Wealth
Limiting losses and compounding gains is essential to preserving wealth.
Asset Allocation
Actively managed asset allocation strategies protect wealth. Learn more.
| Event | PAYX | S&P 500 |
|---|---|---|
| 2020 COVID-19 Crash | ||
| % Loss | -44.1% | -33.7% |
| % Gain to Breakeven | 78.8% | 50.9% |
| Time to Breakeven | 228 days | 140 days |
| 2008-2009 Global Financial Crisis | ||
| % Loss | -42.4% | -53.4% |
| % Gain to Breakeven | 73.6% | 114.4% |
| Time to Breakeven | 686 days | 1085 days |
In The Past
Paychex's stock fell -8.7% during the 2025 US Tariff Shock. Such a loss loss requires a 9.5% gain to breakeven.
Preserve Wealth
Limiting losses and compounding gains is essential to preserving wealth.
Asset Allocation
Actively managed asset allocation strategies protect wealth. Learn more.
About Paychex (PAYX)
Paychex, Inc. is a leading provider of integrated human capital management (HCM) solutions, serving as a comprehensive partner for small to medium-sized businesses. The company specializes in streamlining and automating critical administrative functions related to human resources, payroll, benefits, and insurance, enabling its clients to efficiently manage their workforce and comply with various regulations.
The core of Paychex's offerings includes payroll processing and tax administration services, ensuring accurate and timely employee payments and regulatory compliance. Beyond payroll, the company provides extensive HR solutions, encompassing employer compliance, benefits administration, risk management outsourcing, and cloud-based HR software for functions like time and attendance, recruiting, and onboarding. Additionally, Paychex offers retirement plan administration services and a wide range of insurance products, including property and casualty coverage (such as workers' compensation and business-owner policies) and health and benefits coverage (like health, dental, and vision).
Paychex primarily markets and sells its services to small to medium-sized businesses (SMBs) throughout the United States and Europe. By offering a centralized platform for essential business functions, Paychex helps these companies navigate complex HR challenges, mitigate operational risks, and free up valuable time and resources, allowing them to focus on growth and core business activities.
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Here are 1-3 brief analogies for Paychex:
Paychex is like **ADP for small to medium-sized businesses.**
Paychex is like the **Salesforce for human resources, payroll, and benefits management.**
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- Payroll Processing Services: Manages payroll calculations, tax administration, employee payments, and regulatory compliance for businesses.
- Human Resources (HR) Solutions: Provides comprehensive HR management, including employer compliance, benefits administration, and risk management outsourcing.
- Retirement Services Administration: Administers retirement plans, covering implementation, ongoing compliance, reporting, and participant access.
- Cloud-based HR Administration Software: Offers software products for managing employee benefits, time and attendance, recruiting, and onboarding.
- Insurance Services: Provides various insurance coverages, including property & casualty (e.g., workers' compensation) and health & benefits (e.g., health, dental, vision).
- Business Services: Offers additional services such as payment processing, financial fitness programs, and a small-business loan resource center.
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Major Customers of Paychex (PAYX)
Paychex, Inc. primarily sells its integrated human capital management solutions to other companies.
Its major customers are small to medium-sized businesses (SMBs) across a wide range of industries in the United States and Europe. These businesses utilize Paychex for payroll, HR, benefits administration, insurance, and other related services.
Due to the highly fragmented nature of its customer base, which comprises hundreds of thousands of SMBs, Paychex does not have a small number of individually identifiable "major customer companies" whose names and public symbols could be listed.
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John Gibson, President and Chief Executive Officer
John Gibson assumed the role of President and Chief Executive Officer of Paychex in October 2022. He joined Paychex in May 2013 as Senior Vice President of Service and was promoted to President and Chief Operating Officer in December 2021. Prior to joining Paychex, he served in senior executive positions at HR outsourcing and technology companies, including Ameritech (now AT&T) and Convergys (now Concentrix), where he was president of the HR management division providing global HR solutions. He also previously served as CEO of Tinker, Inc. Under his leadership, Paychex completed its largest acquisition, Paycor, in April 2025.
Robert Schrader, Chief Financial Officer
Robert Schrader was appointed Senior Vice President and Chief Financial Officer of Paychex in October 2023. He joined Paychex in December 2014 as Director, Internal Audit, and subsequently held leadership roles including Senior Director, Financial Planning and Analysis, Vice President and Controller, and Vice President of Finance and Investor Relations. Before his tenure at Paychex, Schrader served as Chief Financial Officer for Unither Manufacturing, LLC. He also spent 10 years at Bausch & Lomb, Inc., where his positions included Vice President of Finance and Controller of Global Quality and Operations, and he was a former Audit Manager at PricewaterhouseCoopers LLP.
Mason Argiropoulos, Chief Human Resources Officer
Mason Argiropoulos serves as the Chief Human Resources Officer at Paychex.
Prabha Sipi Bhandari, Chief Legal Officer, Chief Ethics Officer, and Secretary
Prabha Sipi Bhandari holds the titles of Chief Legal Officer, Chief Ethics Officer, and Secretary at Paychex.
Ryan Bergstrom, Chief Product Officer
Ryan Bergstrom is the Chief Product Officer at Paychex.
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The key risks to Paychex's business include intense competition, significant regulatory and compliance changes, and macroeconomic pressures affecting its small to medium-sized business clients.
- Intense Competition and Challenges to Organic Revenue Growth: Paychex faces significant challenges in achieving organic revenue growth due to intense competition within the small and medium-sized enterprise (SME) market. Analysts perceive strategic acquisitions, such as that of Paycor, primarily as defensive moves with limited potential for long-term organic growth, highlighting the persistent competitive pressures in the sector.
- Regulatory and Compliance Risks: As a provider of human capital management solutions, Paychex's business model is heavily reliant on navigating complex and evolving regulatory landscapes. Significant legislative changes, such as the potential sunset of the 2017 Tax Cuts and Jobs Act (TCJA) provisions, could alter income tax withholding rules and introduce substantial implementation risks. Additionally, the increasing adoption of artificial intelligence (AI) and the subsequent ramp-up of state-level AI regulations concerning hiring bias, data privacy, and copyright protections pose ongoing compliance challenges that Paychex and its clients must address.
- Macroeconomic Pressures: Paychex's business is directly impacted by the macroeconomic environment, particularly factors like inflation and interest rate changes, which affect the financial health of its small and medium-sized business clients. If these client businesses struggle, Paychex faces the risk of reduced demand for its services or even clients failing to reimburse payments made on their behalf, a financial risk inherent in its model. Historically, Paychex's stock has also experienced significant declines during major economic crises, underscoring its vulnerability to broader market shifts.
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The clear emerging threat to Paychex stems from the rise of highly integrated, cloud-native human capital management (HCM) platforms and specialized fintech/insurtech solutions. These new entrants leverage advanced technologies such as artificial intelligence and modern cloud infrastructure to offer small to medium-sized businesses a more seamless, automated, and often more cost-effective experience across payroll, HR, benefits, and insurance services. They aim to provide a unified user interface, deeper integrations, and greater automation, potentially disintermediating traditional service models and accelerating the shift away from fragmented or more manually intensive solutions. This trend represents a fundamental shift in service delivery and customer expectation, challenging established providers like Paychex on efficiency, user experience, and pricing.
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Paychex, Inc. provides integrated human capital management solutions to small and medium-sized businesses, encompassing a range of services from payroll and HR to benefits and insurance. The addressable markets for its main products and services in the United States and globally are substantial:
Payroll Processing and Tax Administration
- The United States payroll services market is estimated at approximately USD 8.44 billion in 2025 and is projected to reach USD 11.06 billion by 2030, growing at a compound annual growth rate (CAGR) of 5.54% during the forecast period.
- The broader Payroll & Bookkeeping Services market in the U.S. was valued at USD 75.1 billion in 2024 and is expected to reach USD 76.5 billion in 2025.
- The U.S. HR & Payroll Software market was valued at USD 20.9 billion in 2024 and is anticipated to grow to USD 29.2 billion by 2032, at a CAGR of 4.4%.
Human Resources (HR) Solutions and Human Capital Management (HCM) Software
- The Human Capital Management (HCM) in the SMB market is estimated to have been around USD 10 billion in 2023 and is projected to reach USD 18.51 billion by 2031, exhibiting an 8% CAGR from 2024 to 2031.
- The global Human Capital Management market was valued at USD 29 billion in 2023 and is estimated to grow at a CAGR of over 4% between 2024 and 2032. North America dominated this market with a share of over 39% in 2023.
- Another estimate places the global HCM market size at USD 34.12 billion in 2025, projected to grow to USD 76.22 billion by 2034 at a CAGR of 9.40%. North America held a 45.50% share of this global market in 2025.
- The U.S. Human Capital Management market size was USD 10.14 billion in 2024 and is projected to reach approximately USD 24.73 billion by 2034, with a CAGR of 9.32% from 2025 to 2034.
- The global HR Outsourcing market was valued at approximately USD 31.2 billion in 2024 and is expected to reach around USD 56.4 billion by 2034, with a CAGR of 6.1%. North America held a dominant share of more than 37% in 2024, contributing USD 11.54 billion in revenue. The U.S. market alone generated USD 10.8 billion in 2024.
- The HR Outsourcing market in the U.S. is estimated at US$14.2 billion in 2024.
- The global HR Software market size is projected at approximately USD 30 billion (USD 29956.66 million) in 2025 and is anticipated to reach approximately USD 68.5 billion (USD 68563.83 million) by 2034, registering a CAGR of 10.9%. North America remains the global leader with a 38% share. Small and medium businesses represent 61% of U.S. HR tech adoption.
Retirement Services Administration
- Pooled Employer Plans (PEPs), a growing option for small businesses, are expected to see their assets reach $25 billion by the end of 2025, an increase from $9 billion at the end of 2023.
- In 2024, 54% of employees at businesses with fewer than 50 workers in the U.S. had access to a defined contribution plan, up from 47% in 2020. For companies with 51 to 100 employees, 67% had access in 2024, compared with 66% in 2020.
Insurance Services
- The U.S. Small and Medium Business (SMB) commercial insurance market is approximately $110 billion.
- The global SME Insurance market was valued at USD 417.2 billion in 2023 and is estimated to grow at a CAGR of over 7% between 2024 and 2032.
- The United States SME insurance market had a market share of approximately USD 7.42 billion (USD 7420.45 million) in 2024 and is projected to grow at a CAGR of 4.5%. North America holds 38% of the global SME insurance share.
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Here are 3-5 expected drivers of future revenue growth for Paychex (PAYX) over the next 2-3 years:
- Paycor Acquisition and Integration: The recent acquisition of Paycor is a significant driver of revenue growth, contributing substantially to Paychex's fiscal year 2026 total revenue growth guidance of 16.5% to 18.5%. The integration is expected to generate both client additions from Paycor's base and revenue synergies through cross-selling an expanded suite of HR and payroll solutions across different market segments.
- Expansion of Management Solutions through Client Acquisition and Product Penetration: Paychex anticipates continued revenue growth from its Management Solutions segment by increasing its client base and enhancing product penetration. This involves attracting new clients to its comprehensive human capital management (HCM) solutions and selling additional services, including newly launched products like Paychex Flex Engage and Recruiting Copilot, to existing clients.
- Growth in Professional Employer Organization (PEO) and Insurance Solutions: The PEO and Insurance Solutions segment is expected to continue growing, driven primarily by an increase in the number of average worksite employees and higher PEO and insurance revenues. Paychex projects this segment to grow in the range of 6% to 8% for fiscal year 2026.
- Price Realization: Paychex has demonstrated and expects to continue realizing higher revenue per client through strategic price adjustments across its services. This "price realization" is consistently cited as a factor in the growth of its Management Solutions revenue.
- Interest on Funds Held for Clients: Revenue from interest on funds held for clients is a notable contributor to Paychex's overall revenue. While sensitive to interest rate fluctuations, the company has provided guidance for this segment to be in the range of $190 million to $200 million for fiscal year 2026, indicating its ongoing importance as a revenue driver.
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Share Repurchases
- Paychex's Board of Directors authorized a new $1 billion share repurchase program in January 2026, replacing a previous $400 million authorization from 2024.
- In fiscal year 2025, Paychex returned over $1.5 billion to shareholders through a combination of cash dividends and share repurchases.
- Over the six months leading up to February 2026, Paychex allocated $287 million for share repurchases.
Outbound Investments
- In April 2025, Paychex completed the acquisition of Paycor for approximately $4.1 billion. This acquisition was aimed at enhancing the company's capabilities for serving clients with 100 employees and above.
Capital Expenditures
- Capital expenditures in the last 12 months, leading up to a December 2025 update, were approximately $227.20 million.
- Annual capital expenditures were -$168.9 million in fiscal year 2025, -$148.8 million in fiscal year 2024, -$133.8 million in fiscal year 2023, -$124.7 million in fiscal year 2022, and -$96.8 million in fiscal year 2021.
- The company's capital allocation strategy prioritizes investment in the business, which includes capital expenditures, followed by dividends and share buybacks.
Peer Outperformance in Human Resource & Employment Services
| Ticker | Name | Rev Growth 3Y Avg | P/E | 1Y | 3Y | 5Y | 5Y Gap |
|---|---|---|---|---|---|---|---|
| PAYX | Paychex | 9.3% | 21.2x | -15.6% | 2.5% | 11.0% | — |
| ADP | Automatic Data Processing | 6.8% | 23.8x | -6.2% | 18.4% | 45.8% | +35pp |
| Industry | Names | 1Y med | 3Y med | 5Y med | Top 3 by 5Y |
|---|---|---|---|---|---|
| Construction & Engineering | 31 | 4.1% | 117.9% | 190.5% | STRL 2242% · FIX 2199% · CDNL 2106% |
| Marine Transportation | 9 | 74.5% | 105.0% | 154.6% | HOS 43847% · ASC 502% · MATX 192% |
| Construction Machinery & Heavy Transportation Equipment | 13 | 6.6% | 48.5% | 129.5% | CAT 350% · ALSN 250% · WAB 236% |
| Aerospace & Defense | 56 | -7.9% | 72.9% | 75.3% | ATI 996% · FTAI 926% · HWM 636% |
| Trading Companies & Distributors | 19 | 7.9% | 43.1% | 57.8% | DXPE 558% · AIT 293% · WCC 222% |
| Rail Transportation | 7 | 23.4% | 57.7% | 51.3% | FSTR 144% · RAIL 69% · CSX 66% |
| Industrial Machinery & Supplies & Components | 73 | 11.5% | 51.3% | 43.3% | CRS 1180% · PSIX 1118% · EROC 620% |
| Diversified Support Services | 33 | 10.9% | 32.9% | 37.2% | LIME 3226% · TH 439% · WLFC 353% |
| Cargo Ground Transportation | 16 | 35.0% | 0.2% | 31.1% | XPO 246% · R 226% · CVLG 153% |
| Electrical Components & Equipment | 41 | -2.4% | 63.6% | 23.5% | POWL 2398% · BE 1347% · VRT 949% |
| Building Products | 34 | -12.8% | 2.0% | 19.6% | LMB 623% · GFF 395% · PPIH 295% |
| Passenger Ground Transportation | 3 | -33.1% | 48.6% | -0.4% | UBER 49% · CAR 0% · LYFT -74% |
| Agricultural & Farm Machinery | 17 | 4.0% | 4.6% | -3.6% | BLBD 187% · DE 117% · GENC 56% |
| Industrial Conglomerates | 17 | 8.8% | 4.5% | -6.3% | RCMT 424% · CSW 143% · DD 76% |
| Environmental & Facilities Services | 30 | -12.1% | 20.0% | -7.8% | CECO 979% · ADUR 429% · GEO 333% |
| Research & Consulting Services | 14 | -15.5% | -25.1% | -12.8% | HURN 210% · GRNQ 84% · CRAI 78% |
| Data Processing & Outsourced Services | 6 | -33.7% | -16.2% | -28.2% | EXLS 41% · BR 6% · G -26% |
| Office Services & Supplies | 9 | 9.7% | 15.5% | -34.5% | PBI 167% · TILE 144% · HNI 51% |
| Passenger Airlines | 11 | 7.9% | 15.2% | -34.7% | LTM 2685% · UAL 127% · SKYW 98% |
| Human Resource & Employment Services ← | 22 | 3.0% | -15.2% | -37.6% | BBSI 76% · ADP 46% · PAYX 11% |
| Air Freight & Logistics | 12 | -10.9% | -21.8% | -39.2% | CHRW 90% · FDX 77% · EXPD 60% |
| Security & Alarm Services | 10 | -25.9% | 18.9% | -43.9% | CIX 140% · MG 115% · NL 72% |
| Airport Services | 3 | -75.5% | -78.0% | -62.7% | JOBY -39% · ASLE -63% · UP -100% |
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Peer Comparisons
| Peers to compare with: |
Financials
| Median | |
|---|---|
| Name | |
| Mkt Price | 182.63 |
| Mkt Cap | 10.2 |
| Rev LTM | 4,884 |
| Op Inc LTM | 648 |
| FCF LTM | 571 |
| FCF 3Y Avg | 411 |
| CFO LTM | 802 |
| CFO 3Y Avg | 624 |
Growth & Margins
| Median | |
|---|---|
| Name | |
| Rev Chg LTM | 9.2% |
| Rev Chg 3Y Avg | 9.3% |
| Rev Chg Q | 9.8% |
| QoQ Delta Rev Chg LTM | 2.3% |
| Op Inc Chg LTM | 17.7% |
| Op Inc Chg 3Y Avg | 8.6% |
| Op Mgn LTM | 26.3% |
| Op Mgn 3Y Avg | 26.1% |
| QoQ Delta Op Mgn LTM | 0.5% |
| CFO/Rev LTM | 30.1% |
| CFO/Rev 3Y Avg | 27.9% |
| FCF/Rev LTM | 24.2% |
| FCF/Rev 3Y Avg | 20.7% |
Segment Financials
Revenue by Segment| $ Mil | 2025 | 2024 | 2023 | 2022 | 2021 |
|---|---|---|---|---|---|
| Single Segment | 5,572 | 5,278 | 5,007 | 4,612 | 4,057 |
| Total | 5,572 | 5,278 | 5,007 | 4,612 | 4,057 |
| $ Mil | 2001 | 2000 | 1999 | 1998 |
|---|---|---|---|---|
| Payroll | 366 | 303 | 236 | 180 |
| HRS-PEO | 38 | 23 | 13 | 7 |
| Corporate | -61 | -52 | ||
| Total | 404 | 327 | 188 | 135 |
| $ Mil | 2025 | 2024 | 2023 |
|---|---|---|---|
| Single Segment | 1,657 | 1,690 | 1,557 |
| Total | 1,657 | 1,690 | 1,557 |
| $ Mil | 2001 | 2000 | 1999 | 1998 |
|---|---|---|---|---|
| Payroll | 2,167 | 1,890 | 1,464 | 1,244 |
| HRS-PEO | 66 | 58 | 32 | 31 |
| Corporate | 377 | 272 | ||
| Total | 2,233 | 1,947 | 1,873 | 1,547 |
Price Behavior
| Market Price | $104.49 | |
| Market Cap ($ Bil) | 37.3 | |
| First Trading Date | 03/26/1990 | |
| Distance from 52W High | -17.9% | |
| 50 Days | 200 Days | |
| DMA Price | $118.60 | $102.59 |
| DMA Trend | up | up |
| Distance from DMA | -11.9% | 1.8% |
| 3M | 1YR | |
| Volatility | 35.8% | 29.5% |
| Downside Capture | -16.77 | 25.74 |
| Upside Capture | 32.09 | 1.35 |
| Correlation (SPY) | -16.0% | 0.3% |
| 1M | 2M | 3M | 6M | 1Y | 3Y | |
|---|---|---|---|---|---|---|
| Beta | 0.67 | -0.68 | -0.41 | -0.35 | -0.00 | 0.46 |
| Up Beta | 0.42 | -1.65 | -1.27 | -0.97 | -0.32 | 0.52 |
| Down Beta | 0.15 | -0.92 | -0.31 | -0.05 | 0.23 | 0.50 |
| Up Capture | 136% | 67% | 51% | 17% | -0% | 13% |
| Bmk +ve Days | 10 | 21 | 32 | 68 | 138 | 427 |
| Stock +ve Days | 14 | 26 | 38 | 70 | 121 | 388 |
| Down Capture | -1% | -155% | -103% | -85% | 8% | 68% |
| Bmk -ve Days | 11 | 21 | 32 | 59 | 113 | 324 |
| Stock -ve Days | 7 | 16 | 26 | 57 | 129 | 361 |
[1] Upside and downside betas calculated using positive and negative benchmark daily returns respectively
Based On 1-Year Data
| Annualized Return | Annualized Volatility | Sharpe Ratio | Correlation with PAYX | |
|---|---|---|---|---|
| PAYX | -16.4% | 29.5% | -0.60 | - |
| Sector ETF (XLI) | 12.2% | 17.2% | 0.50 | -14.1% |
| Equity (SPY) | 16.2% | 13.0% | 0.88 | 2.1% |
| Gold (GLD) | 13.9% | 29.3% | 0.44 | -12.5% |
| Commodities (DBC) | 46.6% | 20.7% | 1.75 | -5.3% |
| Real Estate (VNQ) | 4.5% | 13.7% | 0.08 | 28.0% |
| Bitcoin (BTCUSD) | -23.2% | 44.8% | -0.46 | 6.2% |
Smart multi-asset allocation framework can stack odds in your favor. Learn How
Based On 5-Year Data
| Annualized Return | Annualized Volatility | Sharpe Ratio | Correlation with PAYX | |
|---|---|---|---|---|
| PAYX | 2.2% | 24.9% | 0.06 | - |
| Sector ETF (XLI) | 12.4% | 17.6% | 0.54 | 46.5% |
| Equity (SPY) | 12.9% | 17.2% | 0.57 | 50.9% |
| Gold (GLD) | 18.6% | 18.8% | 0.80 | -0.1% |
| Commodities (DBC) | 10.5% | 19.5% | 0.41 | 9.6% |
| Real Estate (VNQ) | 0.8% | 18.9% | -0.06 | 53.6% |
| Bitcoin (BTCUSD) | 12.5% | 52.6% | 0.41 | 20.5% |
Smart multi-asset allocation framework can stack odds in your favor. Learn How
Based On 10-Year Data
| Annualized Return | Annualized Volatility | Sharpe Ratio | Correlation with PAYX | |
|---|---|---|---|---|
| PAYX | 9.3% | 25.7% | 0.36 | - |
| Sector ETF (XLI) | 13.5% | 20.0% | 0.59 | 62.3% |
| Equity (SPY) | 15.5% | 17.9% | 0.73 | 65.5% |
| Gold (GLD) | 12.1% | 16.4% | 0.60 | 2.2% |
| Commodities (DBC) | 8.5% | 18.1% | 0.38 | 18.1% |
| Real Estate (VNQ) | 4.9% | 20.7% | 0.20 | 61.2% |
| Bitcoin (BTCUSD) | 64.2% | 66.2% | 1.04 | 14.7% |
Smart multi-asset allocation framework can stack odds in your favor. Learn How
Returns Analyses
Earnings Returns History
Updated 7/28/2026| Forward Returns | |||
|---|---|---|---|
| Earnings Date | 1D Returns | 5D Returns | 21D Returns |
| 6/24/2026 | -1.7% | 0.3% | 12.9% |
| 3/25/2026 | 3.0% | 1.7% | 0.4% |
| 12/19/2025 | -1.7% | -0.0% | -6.2% |
| 9/30/2025 | -1.4% | -3.2% | -3.5% |
| 6/25/2025 | -9.4% | -3.2% | -2.1% |
| 3/26/2025 | 4.2% | 7.3% | 0.1% |
| 12/19/2024 | 1.4% | 5.0% | 6.6% |
| 10/1/2024 | 4.9% | 2.4% | 5.7% |
| ... | |||
| SUMMARY STATS | |||
| # Positive | 12 | 16 | 13 |
| # Negative | 13 | 9 | 12 |
| Median Positive | 3.5% | 2.2% | 6.6% |
| Median Negative | -2.5% | -4.5% | -2.9% |
| Max Positive | 6.5% | 9.4% | 14.4% |
| Max Negative | -9.4% | -7.9% | -10.0% |
| Forward Returns | |||
|---|---|---|---|
| Earnings Date | 1D Returns | 5D Returns | 21D Returns |
| 6/24/2026 | -1.7% | 0.3% | 12.9% |
| 3/25/2026 | 3.0% | 1.7% | 0.4% |
| 12/19/2025 | -1.7% | -0.0% | -6.2% |
| 9/30/2025 | -1.4% | -3.2% | -3.5% |
| 6/25/2025 | -9.4% | -3.2% | -2.1% |
| 3/26/2025 | 4.2% | 7.3% | 0.1% |
| 12/19/2024 | 1.4% | 5.0% | 6.6% |
| 10/1/2024 | 4.9% | 2.4% | 5.7% |
| 6/26/2024 | -6.1% | -5.3% | -0.8% |
| 4/2/2024 | 0.4% | 1.8% | -2.3% |
| 12/21/2023 | -7.0% | -6.5% | -3.9% |
| 9/27/2023 | 3.4% | 1.3% | -0.5% |
| 6/29/2023 | -1.2% | 2.7% | 14.3% |
| 3/29/2023 | 6.5% | 0.8% | -1.0% |
| 12/22/2022 | -2.3% | 1.5% | 3.4% |
| 9/28/2022 | 3.6% | 1.8% | 1.8% |
| 6/29/2022 | -4.2% | -2.4% | 7.0% |
| 3/30/2022 | 3.3% | 5.1% | -0.1% |
| 12/22/2021 | 5.5% | 8.7% | -6.1% |
| 9/30/2021 | 4.3% | 9.4% | 14.4% |
| 6/25/2021 | 1.3% | 4.0% | 8.1% |
| 4/6/2021 | -4.9% | -4.5% | 0.4% |
| 12/23/2020 | -2.3% | -4.6% | -10.0% |
| 10/6/2020 | -2.5% | 1.9% | 7.1% |
| 7/7/2020 | -4.9% | -7.9% | -5.8% |
| SUMMARY STATS | |||
| # Positive | 12 | 16 | 13 |
| # Negative | 13 | 9 | 12 |
| Median Positive | 3.5% | 2.2% | 6.6% |
| Median Negative | -2.5% | -4.5% | -2.9% |
| Max Positive | 6.5% | 9.4% | 14.4% |
| Max Negative | -9.4% | -7.9% | -10.0% |
SEC Filings
Expand for More| Report Date | Filing Date | Filing |
|---|---|---|
| 05/31/2026 | 07/17/2026 | 10-K |
| 02/28/2026 | 03/26/2026 | 10-Q |
| 11/30/2025 | 12/22/2025 | 10-Q |
| 08/31/2025 | 09/30/2025 | 10-Q |
| 05/31/2025 | 07/11/2025 | 10-K |
| 02/28/2025 | 03/26/2025 | 10-Q |
| 11/30/2024 | 12/19/2024 | 10-Q |
| 08/31/2024 | 10/01/2024 | 10-Q |
| 05/31/2024 | 07/11/2024 | 10-K |
| 02/29/2024 | 04/02/2024 | 10-Q |
| 11/30/2023 | 12/21/2023 | 10-Q |
| 08/31/2023 | 09/28/2023 | 10-Q |
| 05/31/2023 | 07/14/2023 | 10-K |
| 02/28/2023 | 03/30/2023 | 10-Q |
| 11/30/2022 | 12/22/2022 | 10-Q |
| 08/31/2022 | 09/29/2022 | 10-Q |
| Report Date | Filing Date | Filing |
|---|---|---|
| 05/31/2026 | 07/17/2026 | 10-K |
| 02/28/2026 | 03/26/2026 | 10-Q |
| 11/30/2025 | 12/22/2025 | 10-Q |
| 08/31/2025 | 09/30/2025 | 10-Q |
| 05/31/2025 | 07/11/2025 | 10-K |
| 02/28/2025 | 03/26/2025 | 10-Q |
| 11/30/2024 | 12/19/2024 | 10-Q |
| 08/31/2024 | 10/01/2024 | 10-Q |
| 05/31/2024 | 07/11/2024 | 10-K |
| 02/29/2024 | 04/02/2024 | 10-Q |
| 11/30/2023 | 12/21/2023 | 10-Q |
| 08/31/2023 | 09/28/2023 | 10-Q |
| 05/31/2023 | 07/14/2023 | 10-K |
| 02/28/2023 | 03/30/2023 | 10-Q |
| 11/30/2022 | 12/22/2022 | 10-Q |
| 08/31/2022 | 09/29/2022 | 10-Q |
| 05/31/2022 | 07/15/2022 | 10-K |
| 02/28/2022 | 03/31/2022 | 10-Q |
| 11/30/2021 | 12/22/2021 | 10-Q |
| 08/31/2021 | 10/01/2021 | 10-Q |
| 05/31/2021 | 07/16/2021 | 10-K |
| 02/28/2021 | 04/07/2021 | 10-Q |
| 11/30/2020 | 12/23/2020 | 10-Q |
| 08/31/2020 | 10/09/2020 | 10-Q |
| 05/31/2020 | 07/17/2020 | 10-K |
| 02/29/2020 | 03/27/2020 | 10-Q |
| 11/30/2019 | 12/20/2019 | 10-Q |
| 08/31/2019 | 10/04/2019 | 10-Q |
Recent Forward Guidance
Updated 7/8/2026Latest: Q4 2026 Earnings Reported 6/24/2026
| Forward Guidance | Guidance Change | |||||||
|---|---|---|---|---|---|---|---|---|
| Metric | Source | Low | Mid | High | % Chg | % Delta | Change | Prior |
| 2027 Total Revenue Growth | Reported | 5.0% | 5.5% | 6.0% | ||||
| 2027 Management Solutions Revenue Growth | Reported | 5.0% | 5.5% | 6.0% | ||||
| 2027 PEO and Insurance Solutions Revenue Growth | Reported | 6.0% | 6.5% | 7.0% | ||||
| 2027 Adjusted operating margin | Reported | 44.0% | ||||||
| 2027 Interest on funds held for clients | Reported | 195.00 Mil | 200.00 Mil | 205.00 Mil | -2.4% | Lower New | Guidance: 205.00 Mil for 2026 | |
| 2027 Effective income tax rate | Reported | 24.0% | ||||||
| 2027 Adjusted diluted earnings per share growth | Reported | 7.0% | 8.0% | 9.0% | ||||
Prior: Q3 2026 Earnings Reported 3/25/2026
| Forward Guidance | Guidance Change | |||||||
|---|---|---|---|---|---|---|---|---|
| Metric | Source | Low | Mid | High | % Chg | % Delta | Change | Prior |
| 2026 Interest on funds held for clients | Reported | 200.00 Mil | 205.00 Mil | 210.00 Mil | ||||
Q2 2026 Earnings Reported 12/19/2025
| Forward Guidance | Guidance Change | |||||||
|---|---|---|---|---|---|---|---|---|
| Metric | Source | Low | Mid | High | % Chg | % Delta | Change | Prior |
| 2026 Adjusted Diluted EPS Growth | Reported | 10.0% | 10.5% | 11.0% | 0.5% | Raised | Guidance: 10.0% for 2026 | |
Insider Activity
Updated 9/2/2026| # | Owner | Title | Holding | Action | Filing Date | Price | Shares | Transacted Value | Value of Held Shares | Form |
|---|---|---|---|---|---|---|---|---|---|---|
| 1 | Schrader, Robert L | Sr. VP, CFO | Direct | Sell | 7212026 | 115.09 | 2,600 | 299,234 | 2,134,574 | Form |
| 2 | Simmons, Christopher C | VP, Controller & Treasurer | Direct | Sell | 7172026 | 115.92 | 2,615 | 303,131 | 396,446 | Form |
| 3 | Mucci, Martin | Direct | Sell | 7152026 | 109.93 | 25,000 | 2,748,250 | 48,830,942 | Form | |
| 4 | Tucci, Joseph M | Direct | Sell | 6302026 | 98.25 | 3,907 | 383,863 | 6,618,513 | Form | |
| 5 | Roaldsen, Elizabeth | Sr. Vice President | Direct | Sell | 5152026 | 90.00 | 459 | 41,310 | 840,150 | Form |
| # | Owner | Title | Holding | Action | Filing Date | Price | Shares | Transacted Value | Value of Held Shares | Form |
|---|---|---|---|---|---|---|---|---|---|---|
| 1 | Schrader, Robert L | Sr. VP, CFO | Direct | Sell | 7212026 | 115.09 | 2,600 | 299,234 | 2,134,574 | Form |
| 2 | Simmons, Christopher C | VP, Controller & Treasurer | Direct | Sell | 7172026 | 115.92 | 2,615 | 303,131 | 396,446 | Form |
| 3 | Mucci, Martin | Direct | Sell | 7152026 | 109.93 | 25,000 | 2,748,250 | 48,830,942 | Form | |
| 4 | Tucci, Joseph M | Direct | Sell | 6302026 | 98.25 | 3,907 | 383,863 | 6,618,513 | Form | |
| 5 | Roaldsen, Elizabeth | Sr. Vice President | Direct | Sell | 5152026 | 90.00 | 459 | 41,310 | 840,150 | Form |
| 6 | Doody, Joseph | Margaret Weiss Doody Revocable Living Trust | Buy | 2052026 | 98.76 | 1,000 | 98,760 | 98,760 | Form | |
| 7 | Bonadio, Tom | Direct | Buy | 2052026 | 98.50 | 1,000 | 98,498 | 2,118,101 | Form |
Investor Activity (13F)
Updated Sep 25, 2026Active managers (13F portfolio over $250M, at least 3 holdings) with a position over $5M that is either over 10% of their portfolio or held in a concentrated book of 50 or fewer total positions. Index/ETF, sovereign, bank, community-bank and charitable/donor-advised filers are excluded.
| Active Manager | Value | % of Portfolio | Total Positions | QoQ | Filing |
|---|---|---|---|---|---|
| Prevatt Capital Ltd | $22.6 Mil | 6.1% | 11 | New | 13F |
| Mcdonald Capital Investors Inc/Ca | $77.3 Mil | 5.3% | 21 | Hold | 13F |
| Hamlin Capital Management, LLC | $104.8 Mil | 2.5% | 30 | TRIM -16.3% | 13F |
| Caledonia Investments PLC | $12.2 Mil | 1.4% | 15 | Hold | 13F |
| Troy Asset Management Ltd | $33.7 Mil | 1.0% | 30 | TRIM -36.4% | 13F |
| Active Manager | Value | % of Portfolio | Total Positions | QoQ | Filing |
|---|---|---|---|---|---|
| Hamlin Capital Management, LLC | $104.8 Mil | 2.5% | 30 | TRIM -16.3% | 13F |
| Mcdonald Capital Investors Inc/Ca | $77.3 Mil | 5.3% | 21 | Hold | 13F |
| Troy Asset Management Ltd | $33.7 Mil | 1.0% | 30 | TRIM -36.4% | 13F |
| Prevatt Capital Ltd | $22.6 Mil | 6.1% | 11 | New | 13F |
| Caledonia Investments PLC | $12.2 Mil | 1.4% | 15 | Hold | 13F |
PAYX Trade Sentinel
Constructive
CONVICTION RATIONALE
Paychex is successfully transitioning to a more profitable, albeit slower-growing, business. While headline revenue growth is normalizing to 5-6% post-acquisition, leading indicators like record Q4 bookings and accelerating organic growth suggest a healthy underlying business. The path to 7-9% adjusted EPS growth is credibly supported by a guided expansion to an industry-leading 44% adjusted operating margin.
STOCK ARCHETYPE
Recurring Service(Number of Clients) x (Revenue per Client), where Revenue per Client is a function of base fees, per-employee fees, and the penetration of cross-sold services. Operating leverage from a large, sticky client base, combined with cross-selling higher-value, expert-enabled advisory services (ASO, PEO) and benefits (Retirement, Insurance).
INVESTMENT THESIS
Evidence suggests yes. The business is shifting from acquisition-fueled sales to a more profitable organic model.
- Management guides for FY27 adjusted operating margin of approximately 44%.
- FY27 adjusted diluted EPS is guided to grow 7% to 9%.
- Q4 bookings were stronger than a Q3 described as the best in 13 years.
- Organic revenue growth accelerated in each quarter of fiscal 2026.
- Payroll client retention remains high at 82% to 83%.
PRIMARY RISK
The sharp drop in guided revenue growth to 5-6% from 16.9% TTM could signal a sustained slowdown, not a stable new base, making margin targets difficult to achieve.
- FY27 total revenue growth is guided to 5% to 6%.
- Trailing-twelve-month revenue growth was 16.9%.
- Peer ADP's trailing-twelve-month revenue growth was 6.9%.
- Trailing operating margin declined 1.0 percentage point year-over-year.
- Operating expenses grew 27.6% versus 16.9% revenue growth.
| KPI | Status | Rationale |
|---|---|---|
| PEO & HR Solutions Worksite Employee (WSE) Growth | high single-digit growth in Q4 FY2026 - Accelerating | The growth in worksite employees, a key volume metric for the PEO and HR outsourcing business, accelerated through fiscal 2026. Management commentary indicates the trend improved from 'mid-single-digit' growth in the first half of the year to 'high-single-digit' growth in Q3 and Q4, driven by strong demand and record retention. |
| New Business Bookings (Qualitative Trend) | Q4 FY2026 bookings were stronger than Q3 FY2026. - Accelerating | New business bookings, a leading indicator of future revenue, showed significant acceleration throughout the fiscal year. Management commentary highlighted that momentum improved each quarter, culminating in a record performance in the second half of the year, driven by broad-based demand and cross-selling into the Paycor client base. |
| Payroll Clients | approximately 800,000 (As of May 31, 2026) | Indicates the scale and penetration of the company's core payroll processing business. |
| Payroll Client Retention | in the range of 82% to 83% of beginning client base (Fiscal 2026) | Measures customer satisfaction and the stickiness of the company's services, which is a key indicator of revenue stability. |
| HR Solutions (ASO and PEO) Worksite Employees | 2,600,000 (As of May 31, 2026) | Represents the scale of the company's HR outsourcing business, a key growth area. |
Organic Momentum vs. Headline Deceleration
BULL VIEW
Accelerating organic growth and record Q4 bookings are leading indicators that the new 5-6% guided growth rate is a durable floor for a more profitable business model.
CORE TENSION
Can accelerating organic momentum establish a durable 5-6% growth floor, offsetting the market's focus on the headline deceleration from 16.9% TTM growth?
PREVAILING SENTIMENT
The latest evidence favors the bull view. Management's specific commentary on accelerating organic growth and record Q4 bookings provides a credible forward-looking counterpoint to the lagging headline numbers.
BEAR VIEW
The sharp drop from 16.9% TTM growth to a 5-6% guide, which is below peer ADP's recent growth, signals a loss of momentum that will challenge margin expansion plans.
| Timeline | Event & Metric To Watch |
|---|---|
August 28, 2026 | Quarterly Dividend Payment Watch: Paychex will make its next quarterly cash dividend payment of $1.19 per share. |
9/28/2026 | Guidance Miss on Decelerating Growth Watch: Q1 revenue growth relative to the 5-6% guided range and any revisions to full-year FY27 guidance. |
9/28/2026 | Q1 Earnings Report Watch: Paychex is scheduled to report its Q1 FY2027 earnings. |
11/2/2026 | Paylocity Earnings Report Watch: Peer Paylocity (PCTY) is scheduled to report earnings. |
11/3/2026 | Paycom Earnings Report Watch: Peer Paycom Software (PAYC) is scheduled to report earnings. |
November 2026 | Negative Competitive Read-Throughs Watch: Revenue growth, bookings, and pricing commentary from ADP, PAYC, and INTU during their November earnings reports. |
No set date | Small Business Employment Weakness Watch: The monthly Paychex Small Business Employment Watch report for signs of a reversal in the recent positive trend. |
| Date | Event | Stock Impact |
|---|---|---|
2026-06-24 | Q4 and Full-Year 2026 Results Details: Paychex reported fourth quarter and full-year 2026 results, announced the launch of its WISE AI engine, and returned $2.2 billion to shareholders in fiscal 2026. | -1.3% $97.99 -> $96.72 |
2026-05-01 | Quarterly Dividend Increased Details: The Board of Directors declared a 10% increase to the quarterly cash dividend, raising it to $1.19 per share. | -0.2% $91.45 -> $91.31 |
2026-03-25 | Q3 Fiscal 2026 Results Details: The company reported third quarter results, which was followed by a 3.0% positive two-day stock reaction versus -1.0% for the S&P 500. | +3.3% $89.46 -> $92.40 |
2026-02-26 | New AI Solutions Unveiled Details: The company announced new AI-driven advancements within its Paycor and Paychex Flex platforms, including enhancements to the Paycor Smart Scheduler and new auto-adjustments for time-off balances. | +2.7% $90.07 -> $92.46 |
2026-01-24 | Analyst Consensus Rating Update Details: A consensus of seventeen research firms rated the stock as "Reduce," with three sell ratings, thirteen hold ratings, and one buy rating. | -0.9% $104.74 -> $103.76 |
Position Sizing
4% - 6%
NORMAL POSITION
Sizing is volatility-based: PAYX trades at roughly 30% annualized options-implied volatility versus about 15% for the S&P 500 (2.0x the market), around the 52nd percentile of its own trailing year. A 4% - 6% position keeps a single-name swing of that size within a diversified portfolio's risk budget.
Diversification Alternatives
ADP - Automatic Data Processing, Inc.
Large-Enterprise ExposureADP's revenue is 3.3 times that of Paychex, giving it superior scale and a stronger data network effect to serve the largest and most complex corporate clients.
INTU - Intuit (INTU)
Software-Centric ModelIntuit's business model is more focused on software-centric solutions for the price-sensitive, do-it-yourself small business segment, a different profile than Paychex's service-and-tech focus.
A high-margin, recurring-revenue service provider monetizing the increasing complexity of HR and payroll compliance for small and mid-sized businesses.
Paychex operates as an essential partner for businesses, providing the critical infrastructure for payroll, HR, and benefits. Its business model is built on a large, sticky client base, which it monetizes through price increases and cross-selling higher-value advisory services like PEO and retirement. The recent acquisition of Paycor expands its reach into larger enterprise clients, while the launch of its AI engine, WISE, aims to drive future efficiency and create new value-added services.
Sustained high single-digit growth in PEO worksite employees, evidence of successful cross-selling of ASO and retirement services into the Paycor client base, and margin expansion attributed to AI-driven productivity gains.
A significant decline in payroll client retention, deceleration in organic growth, or signs of increased price competition from tech-only providers impacting margins.
Minor quarterly fluctuations in small business employment indices or short-term stock price movements unrelated to fundamental business performance.
Repricing Catalyst
Successful integration of the Paycor acquisition to accelerate upmarket growth and the tangible monetization or margin benefits from the new WISE AI platform.
Paychex — Investor Video Playlist
Industry Resources
| Industrials Resources |
| IndustryWeek |
| Manufacturing.net |
| Aviation Week |
| Human Resource & Employment Services Resources |
| HR Magazine (SHRM) |
| HR Dive |
| Personnel Today |
External Quote Links
| Y Finance | Barrons |
| TradingView | Morningstar |
| SeekingAlpha | ValueLine |
| Motley Fool | Robinhood |
| CNBC | Etrade |
| MarketWatch | Unusual Whales |
| YCharts | Perplexity Finance |
| FinViz |
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