Paychex Stock Hits Key Support – Buying Opportunity?
Paychex (PAYX) stock should be on your watchlist. Here is why – it is currently trading in the support zone ($109.61 – $121.15), levels from which it has bounced meaningfully before. In the last 10 years, Paychex stock received buying interest at this level 3 times and subsequently went on to generate 20.6% in average peak returns.
| Peak Return | Days to Peak Return | |
|---|---|---|
| 11/15/2023 | 9.9% | 34 |
| 1/3/2024 | 10.4% | 140 |
| 7/8/2024 | 41.5% | 333 |
Yet, a support zone alone isn’t enough; rebounds are more likely when fundamentals, sentiment, and market conditions line up. How does that look for PAYX?
Modest rebound likely on innovation, valuation, and support.
Paychex’s Q1 FY26 results surpassed EPS expectations, coupled with raised FY26 adjusted EPS guidance, indicating operational strength. Strategic AI investments align with key industry tailwinds in HCM, enhancing service offerings. Despite a 2025 stock decline and elevated debt from the Paycor acquisition, which introduces risk, the stock appears undervalued by some analyses near current levels. Analyst consensus leans ‘Hold,’ with average targets suggesting upside, although some recent price targets have been trimmed. Macroeconomic headwinds affecting employment creation pose ongoing challenges.
How Do PAYX Financials Look Right Now?
- Revenue Growth: 5.6% LTM and 6.5% last 3-year average.
- Cash Generation: Nearly 30.7% free cash flow margin and 39.6% operating margin LTM.
- Recent Revenue Shocks: The minimum annual revenue growth in the last 3 years for PAYX was 5.4%.
- Valuation: PAYX stock trades at a PE multiple of 27.6
| PAYX | S&P Median | |
|---|---|---|
| Sector | Industrials | – |
| Industry | Human Resource & Employment Services | – |
| PE Ratio | 27.6 | 23.5 |
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| LTM* Revenue Growth | 5.6% | 6.0% |
| 3Y Average Annual Revenue Growth | 6.5% | 5.4% |
| Min Annual Revenue Growth Last 3Y | 5.4% | 0.1% |
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| LTM* Operating Margin | 39.6% | 18.8% |
| 3Y Average Operating Margin | 40.5% | 18.3% |
| LTM* Free Cash Flow Margin | 30.7% | 13.4% |
*LTM: Last Twelve Months | For more details on PAYX fundamentals, read Buy or Sell PAYX Stock.
And What If The Support Breaks?
Paycom isn’t immune to deep drops. It lost about 51% in the Dot-Com crash and 53% during the Global Financial Crisis. The 2018 correction wasn’t as harsh but still saw a near 17% dip. Covid hit it for around 44%, and the recent inflation shock caused a 23% pullback. Even with solid fundamentals, when the market shakes, PAYX can take significant hits. It’s a reminder that risk is always there.
But the risk is not limited to major market crashes. Stocks fall even when markets are in good shape – think events like earnings, business updates, outlook changes. Read PAYX Dip Buyer Analyses to see how the stock has recovered from sharp dips in the past.
Still not sure about PAYX stock? Consider the portfolio approach.
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