Paychex
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 …
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.Priced within the modelled range
Other models: USD 68.78–88.80 (median 81.10). The recommended value is in line with them.
Why: Free cash flow is positive and in line with earnings, and the dividend is small, so a cash-flow DCF fits best.
Details and the full model are below.
Market price within modeled range
Free-cash-flow DCF using Fiscal year 2026 reported free cash flow, with cash, debt, and shares from the latest report. Base assumptions are 6.54% growth, 2.7% terminal growth, and 10% discount. Low/high cases vary growth by 2 and terminal growth/discount by 1 percentage point; this illustrative range is not a statistical confidence interval or investment advice.
Assumptions: growth 6.54%, discount rate 10%, terminal growth 2.70% (sector defaults). See a worked example.
Blended growth assumption: 6.5% (sector default 6.2%, own revenue history 9.0%, analyst revenue consensus 5.5%).
5-year outlook: relative outlook of about 8.6% a year (High confidence), anchored to a 7% market return and adjusted for how this company ranks against others. A ranking aid, not a prediction. See the full forecast.
Analyst consensus expects revenue growth of 5.5% a year; the growth assumption used is 6.5%.
Adjust assumptions
Why this model: Free cash flow is positive and in line with earnings, and the dividend is small, so a cash-flow DCF fits best.
Compare models- Recommended: Free-cash-flow DCF — USD 97.03 (-18.8%)
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EPS-based Gordon proxy
— USD 68.78 (-42.4%)
Not used: Treats all earnings as if paid out and ignores the cash kept for reinvestment, so it overstates value for companies that retain most profit.
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DCF (trailing free cash flow)
— USD 97.03 (-18.8%)
Not used: Not chosen: Free-cash-flow DCF ranks ahead of it for this company.
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FCFF (steady state)
— USD 81.10 (-32.1%)
Not used: Assumes only the long-run terminal growth rate from today, so it ignores the near-term growth expected.
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EV/EBITDA (12x)
— USD 88.80 (-25.7%)
Not used: Used only when free cash flow is far below earnings even after averaging three years; a fixed 12x multiple also ignores sector differences.
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Fade DCF (10-year growth fade)
— USD 96.46 (-19.3%)
Not used: An alternative growth path (fading over 10 years) shown for comparison; the automatic choice does not use it.
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EV/Sales (Rule of 40)
— USD 178.09 (+49.0%)
Not used: Used only for technology and communication companies whose cash-flow value is far below the price.
| Bear USD 69.66 | -71.5% |
| Base USD 97.03 | -23.2% |
| Bull USD 145.76 | 18.0% |
Margin = (value − price) / value, so it is measured against the value and reads lower than the upside to value, which is measured against the price. Positive means the price is below that case.
At USD 119.50 the market implies about this annual free-cash-flow growth for 5 years (terminal 2.7%, discount 10.0%).
Compare: the market implies 11.2% a year, this model assumes 6.5%. The market expects more than this model does, which is why it reads as overvalued.
How the Free-cash-flow DCF value changes with growth (rows) and discount rate (columns). Green cells are above the current price.
| Growth \ Discount | 8.0% | 9.0% | 10.0% | 11.0% | 12.0% |
|---|---|---|---|---|---|
| 2.5% | 114.46 | 94.78 | 80.48 | 69.64 | 61.12 |
| 4.5% | 125.84 | 104.18 | 88.46 | 76.53 | 67.17 |
| 6.5% | 138.08 | 114.29 | 97.03 | 83.94 | 73.67 |
| 8.5% | 151.23 | 125.14 | 106.22 | 91.88 | 80.63 |
| 10.5% | 165.34 | 136.78 | 116.08 | 100.38 | 88.07 |
Track record: see the methodology page for how this model has performed historically, including its limits. Treat it as a screen, not a forecast.
Price history and fair value
No chartable saved daily price history is available for this range. The chart uses stored EODHD prices only and will appear after history is saved.
More detail: quality, peers, price history, dividends and financials
Quality score: 100 / 100
Five equal checks on reported history: profitability, cash generation, revenue growth, balance sheet and margins. It describes business quality, not whether the price is attractive.
| Profitability | 5 of 5 years profitable | 20 / 20 |
| Cash generation | free cash flow positive in 5 of 5 years | 20 / 20 |
| Growth | revenue +7.2% a year | 20 / 20 |
| Balance sheet | net debt 1.3x EBITDA | 20 / 20 |
| Margins | EBITDA margin 46% | 20 / 20 |
Peers in Industrials
Same-sector companies with a valuation, most undervalued first. Compare the margin of safety, yield and quality score side by side.
| Company | Price | Margin of safety | P/E | P/B | Yield | Quality |
|---|---|---|---|---|---|---|
| PAYX (this company) | USD 119.50 | -44.7% | 23.6 | 11.5 | 3.8% | 100 |
| EZJ.L easyJet plc | GBP 6.88 | 74.3% | 10.6 | 1.5 | 1.7% | 78 |
| WAWI.OL Wallenius Wilhelmsen ASA | NOK 160.80 | 64.6% | 7.1 | 2.2 | 0.3% | 100 |
| IAG.L International Consolidated Airlines Group S.A. | GBP 4.37 | 58.9% | 8.0 | 3.5 | 1.8% | 92 |
| TPK.L Travis Perkins plc | GBP 6.54 | 54.7% | – | 0.8 | 2.1% | 46 |
| SRP.L Serco Group plc | GBP 2.77 | 46.2% | 19.7 | 3.3 | 1.5% | 82 |
| DFDS.CO DFDS A/S | DKK 157.30 | 45.9% | – | 0.6 | – | 64 |
| DG.PA VINCI SA | EUR 111.75 | 42.2% | 12.9 | 2.1 | 4.2% | 90 |
| HAFNI.OL Hafnia Limited | NOK 89.00 | 40.8% | 7.2 | 1.8 | 1.2% | 100 |
| Peer median | 9.3 | 1.9 | ||||
Dividends
Paid in the last 12 months: USD 5.73 per share · yield 4.79% at the current price.
| Year | Dividends per share |
|---|---|
| 2026 (so far) | 4.650 |
| 2025 | 4.220 |
| 2024 | 3.830 |
| 2023 | 3.460 |
| 2022 | 3.030 |
| 2021 | 2.600 |
Annual financial statement
Saved annual report · Fiscal year 2026 · SEC EDGAR annual filings · period ended 31 May 2026
| Revenue | USD 6,512,000,000 |
|---|---|
| EBITDA | USD 2,953,100,000 |
| EBIT | USD 2,510,500,000 |
| Net income | USD 1,760,100,000 |
| Free cash flow | USD 2,321,800,000 |
| Capital expenditures | USD -234,900,000 |
| Debt | USD 4,556,100,000 |
| Cash | USD 1,088,200,000 |
| Working capital | USD 1,772,700,000 |
| Shares outstanding | 360,000,000 |
| Reported dividends per share | USD 4.4300 |