# Paychex (PAYX.US)

Canonical: https://gigainvestors.com/s/PAYX

Analysis as of: 2026-10-16T07:31:03.488Z. Financial observations: FY1997–FY2026.

Listing currency: USD. Reporting currency: USD.

## Verdict

A wonderful business at a fair price

Quality tests for Buy: pass (profit record: pass; earnings resilience is evidence only). Published buy qualification: yes.

Share price: $110.78 per share; close as of 2026-10-15.

Estimated value: low $82.76 per share, central $113.96 per share, high $133.30 per share. Buy at or below the central value $113.96 per share. Valuation as of 2026-10-16T07:31:03.488Z; scenarios are not confidence intervals.

Expected annual return: 10.2% at the stated quote. About 10.2% a year at today's price (required return 10.0%). required return 10.0% a year (10% floor; US 10-year bond 5.1% + 4 points).

## Checklist

### understandable: pass

- 0 revenue declines in the last 10 years (informational)

- Financial history: 10 years

- Years with declining revenue: 0

- Years with a net loss: 0

- Operating margin variation: 0.05×

Chart: Operating margin; fiscal year observations.

- FY2017: 0.39×

- FY2018: 0.38×

- FY2019: 0.36×

- FY2020: 0.36×

- FY2021: 0.36×

- FY2022: 0.40×

- FY2023: 0.41×

- FY2024: 0.41×

- FY2025: 0.40×

- FY2026: 0.39×

### moat: pass

- ROIC, median of available years: >100%

- ROIC, second-lowest year: 56.6%

- Typical minus recent gross margin: -1.6 pp

- Typical gross margin (annual median): 70.7%

- Recent gross margin (lower of latest and 3-year median): 72.4%

- Years with nonpositive capital: 0

- Capital spending / revenue: 3.1%

- ROIC including acquisitions, ten-year median: 40.2%

Chart: ROIC excluding acquisitions; fiscal year observations.

- FY2017: 53.3%

- FY2018: 64.2%

- FY2019: >100%

- FY2020: >100%

- FY2021: >100%

- FY2022: >100%

- FY2023: >100%

- FY2024: >100%

- FY2025: 56.6%

- FY2026: 71.9%

### economics: pass

- Owner earnings / net income, 5-yr: 1.04×

- Cash conversion uses consolidated totals: No

- Owner earnings, five-year total: $8.4B

- Net income, five-year total: $8.1B

- Return on incremental invested capital: >100%

- Working capital / revenue, annual change: -15.0 pp

- Working capital / revenue, change between three-year averages: -112.1 pp

- Working capital / revenue, final three-year average: 31.2%

Chart: Annual owner cash / profit; fiscal year observations.

- FY2022: 1.04×

- FY2023: 1.02×

- FY2024: 1.01×

- FY2025: 1.01×

- FY2026: 1.12×

### management: pass

- Historical market-dollar context (not the management verdict): 2017 to 2026 (9 years)

- buybacks leaned toward cheaper years (informational)

- ROIC first 3 years vs last 3 years: 64.2% vs 71.9%

- Per-share earnings: 2.25 to 4.67 (three-year endpoint medians)

- Management verdict uses per-share economic progress: Yes

- Ordinary dilution, 10-year annual growth: -0.1%

- Ordinary dilution, 5-year annual growth: -0.1%

- Market cap gain: $13B

- Cumulative retained earnings: $904M

- Diluted shares, 10-year annual growth: -0.1%

- Diluted shares, 5-year annual growth: -0.1%

- $1 test, starting fiscal year: FY2017

- $1 test, ending fiscal year: FY2026

- Per-share value growth: 9.5%

- Per-share value change: $2.41

- Per-share value, starting three-year median: $2.25

- Per-share value, ending three-year median: $4.67

- Buybacks concentrated in cheaper years (correlation): 0.77

- Average buyback yield: 0.6%

- Buyback history: 10 years

- Debt-funded buybacks: No

- Acquisition spending: $5.9B

- Cumulative net income, 10 years: $13B

- ROIC, first three-year median: 64.2%

- ROIC, last three-year median: 71.9%

Chart: Earnings per share; fiscal year observations.

- FY2017: $2.25

- FY2018: $2.58

- FY2019: $2.86

- FY2020: $3.04

- FY2021: $3.03

- FY2022: $3.84

- FY2023: $4.30

- FY2024: $4.67

- FY2025: $4.58

- FY2026: $4.89

### accounting: pass

- Sloan accruals: -4.9%

- Receivables to sales index (DSRI): 0.96×

- Restructuring years, last five: 0

- Stock compensation / operating cash flow: 3.8%

- Earnings backed by cash: Yes

- Operating cash / earnings: 1.45×

- Accounting red flags: 0

- Goodwill and intangibles / equity: 1.66×

Chart: Sloan accruals; fiscal year observations.

- FY2017: -2.1%

- FY2018: -4.6%

- FY2019: -2.7%

- FY2020: -4.0%

- FY2021: -1.8%

- FY2022: -1.2%

- FY2023: -1.3%

- FY2024: -2.0%

- FY2025: -1.8%

- FY2026: -4.9%

## Holders

- [Thomas Gayner](https://gigainvestors.com/MKL): tracked 13F investor; follow the investor page for holding quarter and amounts.

- [Christopher Bloomstran](https://gigainvestors.com/SA): tracked 13F investor; follow the investor page for holding quarter and amounts.

## Price story

Down 30% since May 2025 · "Paychex (PAYX) Beats EPS Estimates, But Slow Growth Weighs on Shares" (finance.yahoo.com, Sep 2026) · sales +16.9%

Story as of 2026-10-16T09:59:22.033Z; price observation 2026-10-15.

Price needs cash profits to grow 5.9% a year for ten years

- 2025-06-25: Paychex Miss Fourth-Quarter Sales Views, Issues Upbeat Outlook ([finance.yahoo.com](https://finance.yahoo.com/news/paychex-miss-fourth-quarter-sales-144501676.html))

- 2025-09-30: Paychex's higher first-quarter expenses cloud profit forecast boost ([finance.yahoo.com](https://finance.yahoo.com/news/paychexs-higher-first-quarter-expenses-140154534.html))

- 2025-10-01: Paychex Weakness Tied to Lagging Core Revenue, Softer Paycor Recurring Growth, Morgan Stanley Says ([finance.yahoo.com](https://finance.yahoo.com/news/paychex-weakness-tied-lagging-core-145533599.html))

- 2026-03-26: Paychex Stays Conservative With Fiscal Q4 Revenue Guidance Below Estimates, RBC Says ([finance.yahoo.com](https://finance.yahoo.com/markets/stocks/articles/paychex-stays-conservative-fiscal-q4-152838137.html))

- 2026-07-01: Paychex Inc. (PAYX) Reports Strong Results as AI Platform Supports Future Growth ([finance.yahoo.com](https://finance.yahoo.com/markets/stocks/articles/paychex-inc-payx-reports-strong-155815968.html))

- 2026-09-26: Paychex (PAYX) Beats EPS Estimates, But Slow Growth Weighs on Shares ([finance.yahoo.com](https://finance.yahoo.com/markets/stocks/articles/paychex-payx-beats-eps-estimates-200343227.html))

### Sales · FY2025–2026

sales +16.9%; source https://www.sec.gov/Archives/edgar/data/723531/000119312526307785/payx-20260531.htm; observed 2026-07-17.

- FY2017: $3.2B 

- FY2018: $3.4B 

- FY2019: $3.8B 

- FY2020: $4.0B 

- FY2021: $4.1B 

- FY2022: $4.6B 

- FY2023: $5.0B 

- FY2024: $5.3B 

- FY2025: $5.6B 

- FY2026: $6.5B 

### Gross margin · FY2026

gross margin 74.3%; source https://www.sec.gov/Archives/edgar/data/723531/000119312526307785/payx-20260531.htm; observed 2026-07-17.

- FY2017: 70.8% 

- FY2018: 69.9% 

- FY2019: 68.8% 

- FY2020: 68.3% 

- FY2021: 68.7% 

- FY2022: 70.6% 

- FY2023: 71.0% 

- FY2024: 72.0% 

- FY2025: 72.4% 

- FY2026: 74.3% 

## Owner memo

Memo as of 2026-10-16T08:06:05.509Z.

### How it makes money

Operates in software application; annual sales are USD 6.5 billion.

- Source: https://www.sec.gov/Archives/edgar/data/723531/000119312526307785/payx-20260531.htm (filed 2026-07-17); FY2026: revenue 6512000000; grossProfit 4837500000; margin = grossProfit / revenue.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-10-16); PAYX.US: Paychex, Inc., together with its subsidiaries, provides human capital management solutions (HCM) for human resources, payroll processing, employee benefits, and insurance services for small to medium-sized businesses in the United States, Europe, Canada, India, and Israel. It offers technology and advisory solutions; and payroll tax administration services. The company also provides retirement solutions, such as plan implementation, ongoing compliance with government regulations, employee and employer reporting, participant and employer online access, electronic funds transfer, and other administrative services; HCM solutions from recruiting and hiring to retirement; and talent management and talent acquisition services. In addition, it offers payroll solutions, including calculation, preparation, and delivery of employee payroll checks; production of internal accounting records and management reports; preparation of federal, state, and local payroll tax returns; and collection and remittance of clients' payroll obligations. Further, the company provides workforce management solutions; benefits administration solutions; digital marketplace for earned wages, financial wellness solutions, and voluntary lifestyle benefits; administrative services organization HR outsourcing solutions; solutions to payroll and non-payroll customers; retirement and funding solutions; and insurance services for property and casualty coverage, such as workers' compensation, business-owner policies, cyber security protection, and commercial auto, as well as health and benefits coverage, including health, dental, vision, and life. Additionally, it offers payroll, HR, employee benefits administration, retirement, insurance, risk management outsourcing, and access to professionally trained HR representatives, virtually and on-site. It markets and sells its solutions primarily through its direct sales force. Paychex, Inc. was founded in 1971 and is headquartered in Rochester, New York.

### Why customers stay

Margins ranged from 72% to 74.3% during 2024–26; it earns over 100% on its capital.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-07-17); FY2024: grossProfit / revenue = 72%.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-07-17); FY2025: grossProfit / revenue = 72.4%.

- Source: https://www.sec.gov/Archives/edgar/data/723531/000119312526307785/payx-20260531.htm (filed 2026-07-17); FY2026: grossProfit / revenue = 74.3%.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-07-17); 10-year return on capital observations [[2017,0.5329268131540356],[2018,0.6424052010475362],[2019,1.110522933659521],[2020,1.1664891121588727],[2021,1.094359434909285],[2022,1.541773346891182],[2023,1.6630651697532186],[2024,1.292668574582548],[2025,0.5655783009472458],[2026,0.7186550909217209]]; median 1.102441184284403. ROIC follows the displayed moat series; financial companies use return on tangible equity.

### Where the cash goes

Paid dividends in 10 of 10 years; bought back USD 611 million of shares.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-07-17); FY2017: growth capex 0; upkeep 94300000; owner earnings 849900000. Growth capex / owner earnings = 0.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-07-17); FY2018: growth capex 16000000; upkeep 138000000; owner earnings 933700000. Growth capex / owner earnings = 0.017136125093713185.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-07-17); FY2019: growth capex 0; upkeep 123800000; owner earnings 1092100000. Growth capex / owner earnings = 0.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-07-17); FY2020: growth capex 0; upkeep 127000000; owner earnings 1180800000. Growth capex / owner earnings = 0.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-07-17); FY2021: growth capex 0; upkeep 114600000; owner earnings 1174900000. Growth capex / owner earnings = 0.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-07-17); FY2022: growth capex 0; upkeep 132600000; owner earnings 1452000000. Growth capex / owner earnings = 0.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-07-17); FY2023: growth capex 0; upkeep 143000000; owner earnings 1590900000. Growth capex / owner earnings = 0.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-07-17); FY2024: growth capex 0; upkeep 161400000; owner earnings 1705500000. Growth capex / owner earnings = 0.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-07-17); FY2025: growth capex 0; upkeep 191800000; owner earnings 1675000000. Growth capex / owner earnings = 0.

- Source: https://www.sec.gov/Archives/edgar/data/723531/000119312526307785/payx-20260531.htm (filed 2026-07-17); FY2026: growth capex 0; upkeep 234900000; owner earnings 1967800000. Growth capex / owner earnings = 0.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-07-17); Dividend observations: [[2017,662300000],[2018,739700000],[2019,826800000],[2020,889400000],[2021,908700000],[2022,999600000],[2023,1175000000],[2024,1315300000],[2025,1448500000],[2026,1589600000]]. Zero only counted when supported by a complete cash-flow statement.

- Source: https://www.sec.gov/Archives/edgar/data/723531/000119312526307785/payx-20260531.htm (filed 2026-07-17); FY2026: cash repurchases 611000000 USD.

### Are managers owners

Insiders own 10.2% of the company.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-10-16); PAYX.US SharesStats.PercentInsiders = 10.174999999999999 percentage points; cache date 2026-10-16.

### What could break it

"Our clients could have insufficient funds to cover payments we made on their behalf" (SEC filing, Jul 2026)

- Source: https://www.sec.gov/Archives/edgar/data/723531/000119312526307785/payx-20260531.htm (filed 2026-07-17); Our clients could have insufficient funds to cover payments we made on their behalf

### What the price says

The price assumes cash profits grow 5.9% yearly over ten years; actual growth was 9.9%.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-07-17); Ten-year compound average after fade. Initial solved rate 0.08777214488636653. Price 110.78; FX 1; discount 0.1; same compounder ten-year fade to terminal 0.03. FY2016 owner earnings/share 2.1357241379310343 → FY2026 5.466111111111111. Closing-price date 2026-10-15.

## Monthly share-price history (USD per share)

- 2016-10: $55.20 per share

- 2016-11: $58.95 per share

- 2016-12: $60.88 per share

- 2017-01: $60.29 per share

- 2017-02: $61.42 per share

- 2017-03: $58.90 per share

- 2017-04: $59.28 per share

- 2017-05: $59.23 per share

- 2017-06: $56.94 per share

- 2017-07: $57.85 per share

- 2017-08: $57.03 per share

- 2017-09: $59.96 per share

- 2017-10: $63.79 per share

- 2017-11: $67.31 per share

- 2017-12: $68.08 per share

- 2018-01: $68.25 per share

- 2018-02: $65.13 per share

- 2018-03: $61.59 per share

- 2018-04: $60.57 per share

- 2018-05: $65.58 per share

- 2018-06: $68.35 per share

- 2018-07: $69.02 per share

- 2018-08: $73.25 per share

- 2018-09: $73.65 per share

- 2018-10: $65.49 per share

- 2018-11: $70.76 per share

- 2018-12: $65.15 per share

- 2019-01: $70.80 per share

- 2019-02: $77.02 per share

- 2019-03: $80.20 per share

- 2019-04: $84.31 per share

- 2019-05: $85.79 per share

- 2019-06: $82.29 per share

- 2019-07: $83.05 per share

- 2019-08: $81.70 per share

- 2019-09: $82.77 per share

- 2019-10: $83.64 per share

- 2019-11: $86.12 per share

- 2019-12: $85.06 per share

- 2020-01: $85.77 per share

- 2020-02: $77.48 per share

- 2020-03: $62.92 per share

- 2020-04: $68.52 per share

- 2020-05: $72.28 per share

- 2020-06: $75.75 per share

- 2020-07: $71.92 per share

- 2020-08: $76.47 per share

- 2020-09: $79.77 per share

- 2020-10: $82.25 per share

- 2020-11: $93.15 per share

- 2020-12: $93.18 per share

- 2021-01: $87.32 per share

- 2021-02: $91.07 per share

- 2021-03: $98.02 per share

- 2021-04: $97.49 per share

- 2021-05: $101.14 per share

- 2021-06: $107.30 per share

- 2021-07: $113.82 per share

- 2021-08: $114.47 per share

- 2021-09: $112.45 per share

- 2021-10: $123.28 per share

- 2021-11: $119.20 per share

- 2021-12: $136.50 per share

- 2022-01: $117.76 per share

- 2022-02: $119.06 per share

- 2022-03: $136.47 per share

- 2022-04: $126.73 per share

- 2022-05: $123.83 per share

- 2022-06: $113.87 per share

- 2022-07: $128.28 per share

- 2022-08: $123.34 per share

- 2022-09: $112.21 per share

- 2022-10: $118.31 per share

- 2022-11: $124.03 per share

- 2022-12: $115.56 per share

- 2023-01: $115.86 per share

- 2023-02: $110.40 per share

- 2023-03: $114.59 per share

- 2023-04: $109.86 per share

- 2023-05: $104.93 per share

- 2023-06: $111.87 per share

- 2023-07: $125.47 per share

- 2023-08: $122.23 per share

- 2023-09: $115.33 per share

- 2023-10: $111.05 per share

- 2023-11: $121.97 per share

- 2023-12: $119.11 per share

- 2024-01: $121.73 per share

- 2024-02: $122.62 per share

- 2024-03: $122.80 per share

- 2024-04: $118.81 per share

- 2024-05: $120.16 per share

- 2024-06: $118.56 per share

- 2024-07: $128.02 per share

- 2024-08: $131.20 per share

- 2024-09: $134.19 per share

- 2024-10: $139.33 per share

- 2024-11: $146.27 per share

- 2024-12: $140.22 per share

- 2025-01: $147.67 per share

- 2025-02: $151.67 per share

- 2025-03: $154.28 per share

- 2025-04: $147.12 per share

- 2025-05: $157.91 per share

- 2025-06: $145.46 per share

- 2025-07: $144.33 per share

- 2025-08: $139.46 per share

- 2025-09: $126.76 per share

- 2025-10: $117.03 per share

- 2025-11: $111.69 per share

- 2025-12: $112.18 per share

- 2026-01: $103.13 per share

- 2026-02: $93.65 per share

- 2026-03: $92.12 per share

- 2026-04: $92.63 per share

- 2026-05: $96.98 per share

- 2026-06: $98.33 per share

- 2026-07: $116.84 per share

- 2026-08: $127.34 per share

- 2026-09: $98.50 per share

- 2026-10: $106.25 per share

## Annual estimated value (USD per share)

- FY2017: low $28.54 per share, central $36.96 per share, high $43.10 per share

- FY2018: low $31.13 per share, central $39.77 per share, high $46.32 per share

- FY2019: low $35.49 per share, central $44.08 per share, high $51.17 per share

- FY2020: low $44.42 per share, central $59.85 per share, high $69.76 per share

- FY2021: low $46.76 per share, central $62.94 per share, high $73.34 per share

- FY2022: low $54.20 per share, central $74.39 per share, high $86.75 per share

- FY2023: low $61.56 per share, central $86.18 per share, high $100.50 per share

- FY2024: low $68.31 per share, central $94.79 per share, high $110.61 per share

- FY2025: low $70.63 per share, central $95.53 per share, high $111.29 per share

- FY2026: low $81.57 per share, central $112.05 per share, high $130.94 per share

Historical values use today's bond yield for every fiscal year

Historical values use today's FX rate into trading currency for every fiscal year

Historical values use current restated fundamentals and current commodity classification; they are not point-in-time estimates

## Sources

[Original 10-K filing](https://www.sec.gov/Archives/edgar/data/723531/000119312526307785/payx-20260531.htm); period 2026-05-31, filed 2026-07-17.

Estimates depend on assumptions and are not guarantees or investment advice. Underlying data remains subject to its source licenses; public reading does not grant bulk redistribution rights.