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What this page is: Delvantic's full research page for Paychex Inc. (PAYX) — AI-driven forensic equity research: mechanical valuation models (DCF, EPV, anchored-PE, scenario) plus three independent AI lenses (Quality / Value / Sentiment). Everything below is rendered server-side; you are not missing content that requires JavaScript. All scores are predictions and research opinions, not financial advice.
Our current read (analysis of 2026-08-23): Designation Watch · Gem Score +10 (−100…+100 Quality+Value blend) · Quality 100 · Value -63 · Sentiment 12 (timing only, not weighted) · Composite fair value $109.13 vs $115.48 at analysis
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reference-name attribute you can cite):
profile-header/price-overview— company profile, live quote, market capextended-analysis— the core: three AI lens reads with findings, scores, and the analyst memofuture-predictions— our forward price-band predictionsmarket-narrative/ai-findings/gpt-critique— narrative context, cross-model findings, and an adversarial critique of our own analysis (near the end of the document)- Members-only sections (render as login gates for anonymous readers):
price-history,income-trend,key-metrics,financials(statement tables),insider-trading. The analysis above is public; the raw data tables require a free account.
More for machine readers: site briefing at
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any ticker resolves at delvantic.com/stock/TICKER ·
raw inputs are public-company filings and market data (via licensed data feeds);
every model, score, lens read, and prediction on this page is Delvantic's own analysis.
Paychex Inc.
PAYX NASDAQPaychex Inc. is a leading provider of human capital management solutions for small and medium-sized businesses. The company focuses on payroll processing, human resources outsourcing, benefits administration, and compliance services, helping employers manage complex workforce and regulatory requirements. Its platform supports functions such as time and attendance tracking, tax administration, retirement services, and insurance solutions, integrating these into a unified offering that simplifies HR operations. Paychex Inc. serves a broad range of industries across the United States and selected international markets, working with businesses that seek to streamline administrative tasks and improve workforce management efficiency. Headquartered in Rochester, New York, Paychex Inc. plays a significant role in the HR and payroll services market, acting as a critical intermediary between employers, employees, and government agencies by facilitating accurate payments, filings, and benefits delivery.
Price Overview
Price History (1 Year)
Revenue & Net Income Trend
| Period | Revenue | Net Income | Net Margin | YoY/QoQ |
|---|
Key Metrics
EPS (Diluted): 4.89
Total Equity: $3.74B
Shares: 359,938,650
Total Debt: $4.61B
Cash: $1.09B
EBITDA: $3.02B
Total Debt: $4.61B
Cash: $1.09B
Revenue: $6.51B
Revenue: $6.51B
Revenue: $6.51B
Total Equity: $3.74B
Tax Rate: 23.8%
Equity: $3.74B
Total Debt: $4.61B
Cash: $1.09B
Current Liabilities: $6.84B
Long-Term Debt: $4.61B
Total Debt: $4.61B
Total Equity: $3.74B
Shares: 359,938,650
Shares: 359,938,650
CapEx: -$234.90M
Shares: 359,938,650
Stock Price: $115.48
Net Income: $1.76B
Industry Benchmarks
Income Statement (Annual)
Last updated: Jul 28, 2026 12:24am (26d ago)| Metric | 2022 | 2023 | 2024 | 2025 | 2026 |
|---|---|---|---|---|---|
| Revenue | $4.6B | $5.0B | $5.3B | $5.6B | $6.5B |
| Cost of Revenue | $1.4B | $1.5B | $1.5B | $1.5B | $1.7B |
| Gross Profit | $3.3B | $3.6B | $3.8B | $4.0B | $4.8B |
| Operating Expenses | $1.4B | $1.5B | $1.6B | $1.8B | $2.3B |
| Operating Income | $1.8B | $2.0B | $2.2B | $2.2B | $2.5B |
| Net Income | $1.4B | $1.6B | $1.7B | $1.7B | $1.8B |
| EBITDA | $2.1B | $2.3B | $2.4B | $2.5B | $3.0B |
| EPS | $3.86 | $4.32 | $4.69 | $4.60 | $4.90 |
| EPS (Diluted) | $3.84 | $4.30 | $4.67 | $4.58 | $4.89 |
Balance Sheet (Annual)
Last updated: Jul 25, 2026 3:26am (29d ago)| Metric | 2022 | 2023 | 2024 | 2025 | 2026 |
|---|---|---|---|---|---|
| Cash & Equivalents | $370.0M | $1.2B | $1.5B | $1.6B | $1.1B |
| Total Current Assets | $6.6B | $7.5B | $7.3B | $8.9B | $8.6B |
| Total Assets | $9.6B | $10.5B | $10.4B | $16.6B | $16.2B |
| Current Liabilities | $5.3B | $5.8B | $5.3B | $7.0B | $6.8B |
| Long-Term Debt | $872.5M | $855.5M | $847.6M | $4.6B | $4.6B |
| Total Liabilities | $6.6B | $7.1B | $6.6B | $12.4B | $12.4B |
| Total Equity | $3.1B | $3.5B | $3.8B | $4.1B | $3.7B |
| Retained Earnings | $1.7B | $2.0B | $2.2B | $2.3B | $1.8B |
Cash Flow (Annual)
Last updated: Jul 28, 2026 12:24am (26d ago)| Metric | 2022 | 2023 | 2024 | 2025 | 2026 |
|---|---|---|---|---|---|
| Operating Cash Flow | $1.5B | $1.7B | $1.9B | $1.9B | $2.6B |
| Capital Expenditure | -$132.6M | -$143.0M | -$161.4M | -$191.8M | -$234.9M |
| Free Cash Flow | $1.4B | $1.6B | $1.7B | $1.7B | $2.3B |
| Acquisitions (net) | -$24.9M | -$2.7M | -$208.3M | -$3.0B | $-400,000 |
| Net Debt Issued / (Repaid) | — | — | $0 | $0 | -$400.0M |
| Dividends Paid | -$999.6M | -$1.2B | -$1.3B | -$1.4B | -$1.6B |
| Stock Buybacks | -$145.2M | $0 | -$169.2M | -$104.5M | -$611.0M |
| Net Change in Cash | -$894.7M | $1.2B | -$237.9M | $837.3M | -$1.2B |
Growth Trends (YoY %)
Last updated: Jul 28, 2026 12:24am (26d ago)| Metric | 2023 | 2024 | 2025 | 2026 |
|---|---|---|---|---|
| Revenue Growth | +8.6% | +5.4% | +5.6% | +16.9% |
| Gross Profit Growth | +9.2% | +6.9% | +6.1% | +20.0% |
| Operating Income Growth | +10.5% | +6.9% | +1.5% | +13.7% |
| Net Income Growth | +11.8% | +8.5% | -2.0% | +6.2% |
| EBITDA Growth | +10.2% | +7.5% | +2.4% | +21.4% |
Dividend History (Last 20)
Last updated: Jul 25, 2026 3:26am (29d ago)| Date | Dividend | Declaration | Record | Payment |
|---|---|---|---|---|
| 2026-07-28 | $1.19 | — | — | — |
| 2026-05-13 | $1.19 | — | — | — |
| 2026-01-28 | $1.08 | — | — | — |
| 2025-11-07 | $1.08 | — | — | — |
| 2025-07-21 | $1.08 | — | — | — |
| 2025-05-12 | $1.08 | — | — | — |
| 2025-02-07 | $0.98 | — | — | — |
| 2024-11-07 | $0.98 | — | — | — |
| 2024-08-08 | $0.98 | — | — | — |
| 2024-05-09 | $0.98 | — | — | — |
| 2024-02-12 | $0.89 | — | — | — |
| 2023-11-13 | $0.89 | — | — | — |
| 2023-08-09 | $0.89 | — | — | — |
| 2023-05-10 | $0.89 | — | — | — |
| 2023-02-08 | $0.79 | — | — | — |
| 2022-11-08 | $0.79 | — | — | — |
| 2022-08-10 | $0.79 | — | — | — |
| 2022-05-11 | $0.79 | — | — | — |
| 2022-01-28 | $0.66 | — | — | — |
| 2021-10-29 | $0.66 | — | — | — |
Deep Analysis
Narrative Economics
market-narrative step).
Claude Reading
The raw numbers tell a cleaner story than the model chorus suggests. FY2026 revenue of $6.51B vs FY2025's $5.57B is +16.9%, but that's almost certainly the Paycor acquisition (closed April 2025) rather than organic acceleration — the prior four years compounded at ~9%, and organic PAYX has been a 5-7% grower. Operating margin actually compressed from 39.6% (FY25 op $2.21B/$5.57B) to 38.6% in FY26, and net margin fell from 29.8% to 27.0% — exactly what you'd expect from swallowing a lower-margin, indebted target. Debt jumped to $4.61B against just $1.09B cash; D/E of 1.23 is high for a business the market treats as a bond proxy. ROE of 47% looks glorious until you notice equity is only $3.74B against $41B market cap — this is a leverage-flattered number, not a quality signal.
The quarterly pattern is worth pausing on. Q4 FY25 (May 2025) revenue of $1.43B with NI of $297M/20.8% margin is a genuine anomaly — the three prior quarters ran 31-34% net margin. That's either Paycor deal costs, integration charges, or a one-time item, but the synthesis models don't flag it. If it's structural (integration drag persists), forward earnings estimates embedded in the 23.6x P/E are optimistic. If it's one-time, FY27 normalizes back toward 30%+ net margin and $1.9B+ NI, making the multiple ~22x forward — reasonable but not cheap. Float income is the other overhanging question: PAYX earns meaningful interest on client payroll balances, and every 100bp of Fed cuts probably clips $80-120M of high-margin revenue. Nobody in the prior stack quantified this.
The prior models are internally contradictory and I side against the Market Forces take. Calling PAYX "a deteriorating legacy business… avoid or short" is unserious — a business printing $2.32B FCF on $6.51B revenue (35.6% FCF margin) and 26.4% ROIC is not deteriorating, it's harvesting. The Narrative layer has this right: boring cash machine, thin justified premium. The synthesis composite fair value of $100 (implying -10% downside) is probably closer to correct than either extreme, but the methodology matters — a DDM on $4.54 dividend at 4% yield gets you $113; a 20x multiple on normalized $6.20 EPS gets you $124; an EV/EBITDA of 13x (below current 14.9x) on $2.8B EBITDA less net debt gets you ~$90. Fair value band is $95-120, and $115 sits right in the middle. The pre-flight thesis that the drop from $148 to $115 reflects float-income and growth-decel worries is the most useful frame in the stack.
A careful contrarian would push on three things. First, the 90.3% payout ratio is alarming — if earnings hiccup during Paycor integration, either the dividend growth stalls or they lever further. Second, insider activity is quietly one-sided: five sales, zero open-market buys, only awards and in-kind tax withholdings on the receive side. Not damning at these sizes, but no insider is stepping up at $115 after a 22% drawdown. Third, the ADP comparison matters — ADP trades at similar multiples with better scale and comparable moat; there's no obvious reason PAYX deserves a premium, and it has historically traded at a slight discount. I dissent mildly from the synthesis "fair value" verdict — I think $103-108 is a better anchor than $115, because the FY26 margin compression is real and float income is a genuine headwind into 2026. Not a short, not a buy here; a $100-105 entry gets you a 4.3% yield and a defensible 8-10% total return profile. At $115 you're paying full freight for a business whose organic growth is decelerating while its balance sheet just got worse.
GPT Reading
What jumps out to me in the raw data is that Paychex is still fundamentally a superb cash machine, but it has crossed from “clean compounder” into “integration case.” The five-year annual line is not broken: revenue rose from $4.61B in FY2022 to $6.51B in FY2026, operating income from $1.84B to $2.51B, and free cash flow to $2.32B, which is an exceptional 35.6% of revenue. Gross margin remains 74.3%, operating margin 38.6%, and ROIC 26.4%, all of which say the underlying franchise remains very strong. But the quality of the most recent growth clearly changed. FY2026 revenue growth of 16.9% was far above the prior run rate, while net income rose only 6.0% from $1.66B to $1.76B and operating margin slipped about 100 bps. That is not the profile of a business enjoying organic operating leverage; it is the profile of a larger but somewhat lower-quality earnings base. The quarterly progression reinforces that: revenue stepped up from the $1.26-1.44B zone in FY2024/FY2025 quarters to $1.51B in February 2025, but the May 2025 quarter printed only $297.2M of net income on $1.43B of revenue, a sharp drop to a 20.8% margin from the low-30s pattern before it. I read that as a real warning flag, even if not necessarily a permanent one.
The second thing I see is that valuation is no longer obviously defensive once you account for the balance sheet and payout structure. At $115.48, the stock trades at 23.6x earnings, 6.4x sales, and 14.9x EV/EBITDA for a business whose recent earnings growth is low single digits and whose dividend payout ratio is 90.3%. That payout may be manageable because operating cash flow is $2.56B and capex is only $234.9M, but it leaves less room for error now that debt sits at $4.61B against $1.09B cash. For a company long valued as a steady payroll utility, that leverage matters more than usual: equity is just $3.74B, so the 47.1% ROE is not a sign of magical economics so much as a thin capital base. None of this makes Paychex fragile; current ratio is 1.26 and free cash flow is ample. But it does make the stock less deserving of a “set-and-forget premium” than it was when the balance sheet was cleaner and margin trends were monotonically upward.
On Opus specifically, I agree with the core claim that FY2026’s 16.9% revenue growth should not be read as a true reacceleration in the legacy business. The Delvantic AI Findings concludes that the jump is “almost certainly” acquisition-driven, and the mismatch between +16.9% revenue growth and only +6.0% net income growth strongly supports that. I also agree with Opus that the “deteriorating legacy business… avoid or short” market-forces output is wrong on its face. A company earning $2.32B of FCF on $6.51B of revenue with 38.6% operating margins is not in decline; it is a mature franchise absorbing a deal. I further agree with the point on leverage-flattered ROE and with the skepticism toward the insider tape; the activity shown is mostly sales, gifts, awards, and tax-related movements, with no visible open-market conviction buying at this level. Where I disagree is with Opus’s framing of fair value as narrowly $103-108. That sounds more precise than the data justify. If I normalize earnings power somewhere between the FY2026 reported $1.76B and a cleaner run-rate closer to the prior margin structure, the current 23.6x multiple is not obviously egregious for a sticky, high-return, 3.9%-yielding franchise. It is rich enough to cap upside, but not rich enough for me to force a low-$100s anchor absent evidence that the May-quarter margin damage is recurring.
I also disagree with one part of Opus’s risk emphasis: the idea that float income should be treated as a central valuation overhang on the limited evidence we have here. Opus argues every 100 bps of rate cuts could remove $80-120M of high-margin revenue. That may be directionally sensible for the business model, but it is not demonstrated by the data in this briefing, and I would not lean on an unverified sensitivity to drive a 10% valuation haircut. The data we do have show a company still converting revenue into cash at elite levels and maintaining gross margins above 74%. The bigger proven issue is not macro float compression; it is whether the new consolidated business can hold operating margin near the high-30s and restore quarterly net margins from 20.8% back toward the 30%-plus range seen in the preceding three reported quarters. If that rebound happens, $115 is basically fair. If it does not, Opus’s $103-108 range will prove too generous, not too harsh.
A skeptic of both my view and Opus’s would say we are both still giving Paychex too much credit for historical stability. The annual revenue and profit line looks strong, but a 90.3% payout ratio, materially higher debt, and a post-acquisition margin step-down may mark the end of its premium-quality phase rather than a temporary digestion period. They would also note that at $41.1B market cap, investors are still paying a full software-like multiple for what is, in practice, a mature payroll processor with limited organic growth and no clear reason to command a premium if earnings growth remains around 2-6%. That critique is fair. My conclusion is simply that the raw numbers support “fully valued with watch items,” not “clear bargain” and not “structural unraveling.”
Grok Reading
grok-critique step) alongside the other Big-3 seats, when a
report is run on this ticker.
Advanced Analysis Forensic deep-dive · separate lenses
Paychex runs a genuinely elite small-business payroll and HR services franchise. Gross margin has climbed from 70.6% in FY22 to 74.3% in FY26, revenue grew from $4.61B to $6.51B (a step-up in FY26 that likely reflects the Paycor acquisition), and FCF expanded from $1.37B to $2.32B. Operating margin sits at 38.6% - down from a peak of 41.2% in FY24, likely due to acquisition integration - but is still among the best in software/services. Net income of $1.76B on $6.51B revenue is a 27% net margin, and OCF/NI of 1.18x with accruals at -2.2% of assets confirms the earnings are real cash.
Verify before trusting this (5)
- Paycor acquisition terms, debt paydown schedule, and expected synergies to validate the FY26 margin dip is temporary
- Organic vs acquired revenue growth in FY26 to separate underlying growth from M&A
- Client retention rate and per-client revenue trends in SMB payroll segment
- Funds-held-for-clients float and its contribution to earnings given rate environment
- Any customer/segment concentration and competitive positioning vs ADP, Rippling, Gusto
Composite fair value sits at $100.08 and the signal-adjusted FV at $103.66, versus a $115.48 price - that's roughly -10% to -12% upside on the synthesis. The DCF ($116.34) essentially matches spot and the anchored P/E ($115.83) is the same story, while the EPV floor at $51.80 is a runaway low-end that I'd largely discount as a no-growth stress case rather than a realistic anchor. Stripping that out, the credible deserved range is roughly $100-$116, centered near $103-$105.
Verify before trusting this (4)
- Paycor integration synergies and revenue attach in next 2-3 quarters
- Management PEO and HR services segment growth vs core payroll deceleration
- FY26 guidance on organic revenue growth and operating margin recovery post-deal
- Any one-off Paycor deal costs distorting reported FCF
The macro tape is mildly risk-off (VIX 18.7, S&P off its high, 10y at 4.69%, market PE 26.6), which is a headwind for equities broadly. But PAYX is exactly the kind of low-beta, cash-generative, dividend-paying defensive that absorbs a risk-off day rather than getting mauled by it. There is no high-multiple story to de-rate and no cult holders to unwind, so the macro pressure lands soft on this specific name. The active narrative is a 'steady compounder' with minimal intensity and durable framing. That means sentiment is not pushing the stock hard in either direction: no euphoric bid to fade, no breaking story to punish. The recent news flow is benign - a routine director non-renewal and an affirmed $1.19 dividend - which reinforces the sleepy, utility-like perception. Momentum is quietly positive (recent 16.9% vs 11.1% long-term), suggesting a mild rotational bid into defensives as risk comes off, partially offsetting the general tape drag. Net: sentiment pressure is close to balanced, with a faint defensive tailwind offsetting a faint macro/rates headwind.
Verify before trusting this (4)
- Whether the risk-off regime deepens beyond 1 day and drives a broader defensive rotation that PAYX participates in
- Any shift in analyst target revisions or downgrades citing SMB saturation or ADP/fintech pressure
- Upcoming earnings tone - a soft SMB employment print could activate the dormant commoditization bear narrative
- VIX trajectory - a sustained move above 22 typically accelerates rotation into names like PAYX
This lens hasn't been run for this ticker yet.
When we made this prediction on Jul 28, 2026, PAYX was $115.48. We expect it to be $119.00 by Jan 2027, and we consider it great value under $92.00. This is an early model (v0.6.0) — the direction is more reliable than the exact price. Made Jul 28, 2026.
Blue is our prediction, starting the day we made it. Grey is a slower route to the same place — the same destination, taking longer. Black is the actual price, so you can see how we are doing.