olivLaw · US equity research
Paychex, Inc. PAYX
Services-Engineering, Accounting, Research, Management · SIC 8700 · Vertical: Engineering, research and management services (SIC 87xx)
Paychex, Inc. (PAYX) is a human capital management company offering technology and advisory solutions for HR, payroll, benefits and insurance across the U.S. and parts of Europe. Total revenue rose 17% to $6.5 billion in fiscal 2026, and grew 6% to $1.6 billion in the first quarter of fiscal 2027. Guidance for fiscal 2027 points to total revenue growth of 5% to 6%.
At the close of 04 Nov 2026, Paychex, Inc. (PAYX) stock was 118.71 USD (+2.65% on the day), with market capitalisation 42.3 bn USD, P/E 23.5 on diluted EPS of 5.04 USD over the last 12 months, dividend yield 3.82%, beta 0.42, 52-week range 85.57–127.34 USD. Latest reported quarter (Q1 2027): revenue of 1.6 bn USD (+5.9% YoY), net income of 429.7 m USD (+12.0% YoY), diluted EPS 1.21 USD.
Data as of · AI analysis dated · Source: SEC filings and closing prices, computed by olivLaw.
Price history
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Technical reading
- RSI (14)
- 63.2
- strong (55–70)
- Bollinger (20, 2)
- 102.28 – 120.46
- in the upper half of the band · %B 0.90 · band width 16.3%
- SMA 50 / 200
- 112.29 / 103.52
- uptrend (price > SMA50 > SMA200)
- MACD (12, 26, 9)
- 1.64 / 0.82
- MACD above signal
Indicators describe past prices; on their own they do not predict direction. On our history the RSI ≤ 40 filter added no return (see the signals methodology).
Performance
| Company | S&P 500 | vs S&P 500 | Vertical median | |
|---|---|---|---|---|
| 1 month | +19.0% | −1.1% | +20.1 pp | — |
| 3 months | +0.4% | −0.5% | +0.8 pp | — |
| 6 months | +29.9% | +4.4% | +25.5 pp | — |
| Year to date | +5.8% | +12.3% | −6.5 pp | — |
| 1 year | +3.1% | +13.5% | −10.4 pp | −11.0% |
| 3 years | +7.5% | +76.4% | −68.9 pp | −19.1% |
| 5 years | −4.8% | +63.7% | −68.4 pp | — |
Price returns, dividends excluded.
Quarterly results
Latest quarter: Q1 2027 · 31 Aug 2026
Quarterly margins
Quarterly statements · USD
| Fiscal year | Q2 '25 | Q3 '25 | Q4 '25 | Q1 '26 | Q2 '26 | Q3 '26 | Q4 '26 | Q1 '27 |
|---|---|---|---|---|---|---|---|---|
| Revenue | 1.3 bn | 1.5 bn | 1.4 bn | 1.5 bn | 1.6 bn | 1.8 bn | 1.6 bn | 1.6 bn |
| Cost of revenue | 379.1 m | 387.4 m | 393.9 m | 413.8 m | 412.2 m | 431.2 m | 417.3 m | 430.1 m |
| SG&A | 399.7 m | 429.8 m | 602.3 m | 584.3 m | 573.5 m | 585.7 m | 583.5 m | 581.2 m |
| Operating income | 538.1 m | 691.8 m | 431.1 m | 541.9 m | 571.9 m | 792.0 m | 604.7 m | 619.2 m |
| Depreciation & amortisation | 41.7 m ≈ | 43.1 m ≈ | 85.7 m | 109.3 m | 109.1 m ≈ | 111.0 m ≈ | 113.2 m | 109.8 m |
| Interest expense | 9.5 m | 22.6 m | 63.7 m | 68.2 m | 68.5 m | 68.1 m | 64.7 m | 65.1 m |
| Pre-tax income | 543.7 m | 685.8 m | 389.3 m | 497.5 m | 520.2 m | 739.0 m | 554.2 m | 565.0 m |
| Income tax | 130.3 m | 166.5 m | 92.1 m | 113.7 m | 124.8 m | 178.7 m | 133.6 m | 135.3 m |
| Net income | 413.4 m | 519.3 m | 297.2 m | 383.8 m | 395.4 m | 560.3 m | 420.6 m | 429.7 m |
| Diluted EPS | 1.14 | 1.43 | 0.82 ≈ | 1.06 | 1.10 | 1.56 | 1.17 ≈ | 1.21 |
| Operating cash flow | 295.0 m ≈ | 716.0 m ≈ | 343.8 m | 718.4 m | 444.9 m ≈ | 812.5 m ≈ | 580.9 m | 413.5 m |
| Capex | 47.0 m ≈ | 48.7 m ≈ | 60.5 m | 55.9 m | 62.1 m ≈ | 51.0 m ≈ | 65.9 m | 56.1 m |
| Dividends paid | 352.8 m ≈ | 353.0 m ≈ | 389.3 m | 389.1 m | 387.9 m ≈ | 388.0 m ≈ | 424.6 m | 424.1 m |
| Share repurchases | 500.0 k ≈ | 0 ≈ | 0 | 160.1 m | 126.5 m ≈ | 75.0 m ≈ | 249.4 m | 0 |
≈ derived quarter (cumulative difference / share-days average)
E/P over time
E/P = trailing-12-month diluted EPS / price at quarter end. E/P is the inverse of P/E and stays defined when earnings are negative.
Today's P/E sits at the 6 percentile of its own 32-quarter history (min 19.8, median 26.7, max 34.6; quarters with earnings only).
Fiscal years
| Fiscal year | 2019 | 2020 | 2021 | 2022 | 2023 | 2024 | 2025 | 2026 |
|---|---|---|---|---|---|---|---|---|
| Revenue | 3.8 bn | 4.0 bn | 4.1 bn | 4.6 bn | 5.0 bn | 5.3 bn | 5.6 bn | 6.5 bn |
| Revenue YoY | +11.7% | +7.1% | +0.4% | +13.7% | +8.6% | +5.4% | +5.6% | +16.9% |
| Net income | unavailable | unavailable | unavailable | 1.4 bn | 1.6 bn | 1.7 bn | 1.7 bn | 1.8 bn |
| Net income YoY | unavailable | unavailable | unavailable | unavailable | +11.8% | +8.5% | −2.0% | +6.2% |
| Diluted EPS | 2.86 | 3.04 | 3.03 | 3.84 | 4.30 | 4.67 | 4.58 | 4.89 |
| Diluted EPS YoY | +4.0% | +6.3% | −0.3% | +26.7% | +12.0% | +8.6% | −1.9% | +6.8% |
| net % | unavailable | unavailable | unavailable | 30.2% | 31.1% | 32.0% | 29.7% | 27.0% |
| Free cash flow | 1.1 bn | 1.3 bn | 1.1 bn | 1.5 bn | 1.6 bn | 1.7 bn | 1.7 bn | 2.3 bn |
Reported results vs expectations
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Balance sheet & financial health
Fiscal year 2026 · 31 May 2026
- Cash
- 1.1 bn USD
- Financial debt
- 4.6 bn USD
- Net debt
- 3.5 bn USD
- Equity
- 3.7 bn USD
- Total assets
- 16.2 bn USD
- Debt / equity
- 1.22x
- Current ratio
- 1.26x
- ROE
- 44.8%
- ROA
- 10.8%
- FCF margin
- 35.7%
Financial statements (source on every figure)
Revenue and net income (USD)
Margins
Income statement · USD
| Line | 2021 | 2022 | 2023 | 2024 | 2025 | 2026 | Source (latest year) |
|---|---|---|---|---|---|---|---|
| Revenue | 4.1 bn | 4.6 bn | 5.0 bn | 5.3 bn | 5.6 bn | 6.5 bn | SEC (XBRL)· 17 Jul 2026verified |
| Cost of revenue | 1.3 bn | 1.4 bn | 1.5 bn | 1.5 bn | 1.5 bn | 1.7 bn | SEC (XBRL)· 17 Jul 2026verified |
| Gross profit | 2.8 bn ≈ | 3.3 bn ≈ | 3.6 bn ≈ | 3.8 bn ≈ | 4.0 bn ≈ | 4.8 bn ≈ | SEC (XBRL)· 17 Jul 2026derived |
| SG&A | 1.3 bn | 1.4 bn | 1.5 bn | 1.6 bn | 1.8 bn | 2.3 bn | SEC (XBRL)· 17 Jul 2026verified |
| Operating income | 1.5 bn | 1.8 bn | 2.0 bn | 2.2 bn | 2.2 bn | 2.5 bn | SEC (XBRL)· 17 Jul 2026verified |
| Depreciation & amortisation | 192.0 m | 191.8 m | 176.6 m | 176.5 m | 209.5 m | 442.6 m | SEC (XBRL)· 17 Jul 2026verified |
| EBITDA | 1.7 bn ≈ | 2.0 bn ≈ | 2.2 bn ≈ | 2.4 bn ≈ | 2.4 bn ≈ | 3.0 bn ≈ | SEC (XBRL)· 17 Jul 2026derived |
| Interest expense | 35.8 m | 36.6 m | 36.7 m | 37.3 m | 105.4 m | 269.5 m | SEC (XBRL)· 17 Jul 2026verified |
| Pre-tax income | 1.4 bn | 1.8 bn | 2.0 bn | 2.2 bn | 2.2 bn | 2.3 bn | SEC (XBRL)· 17 Jul 2026verified |
| Income tax | 336.7 m | 431.8 m | 490.9 m | 527.6 m | 518.6 m | 550.8 m | SEC (XBRL)· 17 Jul 2026verified |
| Net income | — | 1.4 bn | 1.6 bn | 1.7 bn | 1.7 bn | 1.8 bn | SEC (XBRL)· 17 Jul 2026verified |
| Diluted EPS | 3.03 | 3.84 | 4.30 | 4.67 | 4.58 | 4.89 | SEC (XBRL)· 17 Jul 2026verified |
| Weighted average diluted shares | 362.1 m | 363.1 m | 362.3 m | 362.1 m | 362.0 m | 360.0 m | SEC (XBRL)· 17 Jul 2026verified |
| Dividend per share | 2.52 | 2.77 | 3.26 | 3.65 | 4.02 | 4.43 | SEC (XBRL)· 17 Jul 2026verified |
≈ computed by olivLaw from the reported lines of the same year: Revenue − Cost of revenue; Operating income + Depreciation & amortisation.
Balance sheet · USD
| Line | 2021 | 2022 | 2023 | 2024 | 2025 | 2026 | Source (latest year) |
|---|---|---|---|---|---|---|---|
| Cash | 995.2 m | 370.0 m | 1.2 bn | 1.5 bn | 1.6 bn | 1.1 bn | SEC (XBRL)· 17 Jul 2026verified |
| Current assets | 6.2 bn | 6.6 bn | 7.5 bn | 7.3 bn | 8.9 bn | 8.6 bn | SEC (XBRL)· 17 Jul 2026verified |
| Property, plant & equipment, net | 395.8 m | 401.3 m | 396.3 m | 411.7 m | 511.5 m | 588.9 m | SEC (XBRL)· 17 Jul 2026verified |
| Goodwill | 1.8 bn | 1.8 bn | 1.8 bn | 1.9 bn | 4.5 bn | 4.5 bn | SEC (XBRL)· 17 Jul 2026verified |
| Intangibles (excl. goodwill) | 275.8 m | 224.6 m | 187.4 m | 194.5 m | 1.9 bn | 1.7 bn | SEC (XBRL)· 17 Jul 2026verified |
| Total assets | 9.2 bn | 9.6 bn | 10.5 bn | 10.4 bn | 16.6 bn | 16.2 bn | SEC (XBRL)· 17 Jul 2026verified |
| Accounts payable | 89.0 m | 105.7 m | 84.7 m | 104.3 m | 129.8 m | 154.8 m | SEC (XBRL)· 17 Jul 2026verified |
| Short-term debt | 7.4 m | 8.7 m | 10.2 m | 18.7 m | 18.6 m | 0 | SEC (XBRL)· 17 Jul 2026verified |
| Long-term debt | 797.3 m | 797.7 m | 798.2 m | 798.6 m | 4.5 bn | 4.6 bn | SEC (XBRL)· 17 Jul 2026verified |
| Current liabilities | 4.9 bn | 5.3 bn | 5.8 bn | 5.3 bn | 7.0 bn | 6.8 bn | SEC (XBRL)· 17 Jul 2026verified |
| Total liabilities | 6.3 bn | 6.6 bn | 7.1 bn | 6.6 bn | 12.4 bn | 12.4 bn | SEC (XBRL)· 17 Jul 2026verified |
| Equity | 2.9 bn † | 3.1 bn † | 3.5 bn † | 3.8 bn † | 4.1 bn † | 3.7 bn † | SEC (XBRL)· 17 Jul 2026verified |
† equity attributable to the parent's shareholders: in these years the issuer no longer reports the total including non-controlling interests.
Cash flow · USD
| Line | 2021 | 2022 | 2023 | 2024 | 2025 | 2026 | Source (latest year) |
|---|---|---|---|---|---|---|---|
| Operating cash flow | 1.3 bn | 1.6 bn | 1.7 bn | 1.9 bn | 1.9 bn | 2.6 bn | SEC (XBRL)· 17 Jul 2026verified |
| Capex | 118.4 m | 133.8 m | 143.0 m | 161.4 m | 191.8 m | 234.9 m | SEC (XBRL)· 17 Jul 2026verified |
| Free cash flow | 1.1 bn ≈ | 1.5 bn ≈ | 1.6 bn ≈ | 1.7 bn ≈ | 1.7 bn ≈ | 2.3 bn ≈ | SEC (XBRL)· 17 Jul 2026derived |
| Investing cash flow | -460.6 m | -1.5 bn | 211.7 m | -260.9 m | -3.4 bn | -1.2 bn | SEC (XBRL)· 17 Jul 2026verified |
| Financing cash flow | -636.4 m | -979.3 m | -711.4 m | -1.9 bn | 2.3 bn | -2.7 bn | SEC (XBRL)· 17 Jul 2026verified |
| Dividends paid | 908.7 m | 999.6 m | 1.2 bn | 1.3 bn | 1.4 bn | 1.6 bn | SEC (XBRL)· 17 Jul 2026verified |
| Share repurchases | 155.7 m | 145.2 m | 0 | 169.2 m | 104.5 m | 611.0 m | SEC (XBRL)· 17 Jul 2026verified |
≈ computed by olivLaw from the reported lines of the same year: Operating cash flow − Capex.
Computed indicators
Growth
Profitability
Returns
Balance sheet
Liquidity
Cash
Efficiency
Market and valuation
1 indicators that do not apply to the sector.
Valuation
olivLaw classification
Score: 70 / 100
A scoring methodology on indicators and valuation, not investment advice.
Closing price
04 Nov 2026Source: olivLaw, closing series
Market cap: 42.3 bn USD
Key indicators
Coverage and freshness
Score by group
- Valuation68
- Returns65
- Quality96
- Balance sheet59
- Growth53
Estimated value range
The combined range = the median of the valid methods' low, central and high values; it is not a probability interval and does not cover every result. Envelope of all methods: 58.21 – 161.61 USD.
Valuation assumptions are editorial choices, not measured; beta is not measured.
Method ranges (USD per share)
— — Mid · ▏ Price
Valuation methods
- DCF (discounted cash flow)84.96 – 139.92 (Mid 105.98)WACC 8.8% · starting FCFF 2.2 bn USD · terminal value share of EV 75%The WACC × g sensitivity gives the method's bounds; these are not probabilities.Reverse DCF: starting growth implied by the price (fading linearly to terminal growth, everything else fixed): 13.9%
- Peers: EV/EBITDA92.24 – 129.79 (Mid 122.57)12 companies used · median multiple 15.7x · quartiles 12.1x – 16.5xACCS, ACM, ASTH, BAH, BWMN, FCN, IQV, IT, MG, ONT, TTEK, WLDN
- Peers: P/E74.52 – 161.61 (Mid 124.40)13 companies used · median multiple 24.7x · quartiles 14.8x – 32.0xACM, AERT, ASTH, BAH, FCN, IQV, IT, MEDP, MG, TTEK, VCIG, WLDN, ZTG
- Dividend discount (DDM)58.21 – 78.29 (Mid 66.78)
Classification (SIC) comparables group by industry code, not by economic activity; the direct group is an editorial selection by activity. Members' multiples are on their own trailing twelve months, at their own latest close.
Assumptions (illustrative, editorial)
- Risk-free rate
- 4.3%
- Equity risk premium
- 5.0%
- Beta (default)
- 1.00
- Cost of equity
- 9.3%
- Terminal growth
- 2.5%
Factor scorecard
Neutral profile · Score 70/100
| Factor | Value | Score | Weight used |
|---|---|---|---|
| ROIC · Quality | 25.5% | 95 (vs peers) | 10% |
| Net margin · Quality | 27.4% | 95 (vs peers) | 6% |
| FCF conversion · Quality | 111.7% | 100 (on a fixed band) | 6% |
| Revenue CAGR 3Y · Growth | 9.2% | 76 (on a fixed band) | 8% |
| EPS CAGR 3Y · Growth | 4.4% | 29 (on a fixed band) | 8% |
| Net debt / EBITDA · Balance sheet | 1.3x | 43 (vs peers) | 10% |
| Interest coverage · Balance sheet | 9.7x | 100 (on a fixed band) | 6% |
| Current ratio · Balance sheet | 1.3x | 40 (on a fixed band) | 4% |
| P/E (TTM) · Valuation | 23.5x | 71 (vs peers) | 10% |
| EV/EBITDA · Valuation | 15.2x | 71 (vs peers) | 10% |
| FCF yield · Valuation | 4.8% | 60 (on a fixed band) | 8% |
| Shareholder yield (distributions) · Returns | 4.9% | 70 (on a fixed band) | 6% |
| Payout ratio (FCF) · Returns | 80.6% | 56 (on a fixed band) | 4% |
Score groups
- Balance sheet59/100 · 3/3 factors with a value
- Growth53/100 · 2/2 factors with a value
- Quality96/100 · 3/3 factors with a value
- Returns65/100 · 2/2 factors with a value
- Valuation68/100 · 3/3 factors with a value
Memo
Paychex, Inc. (PAYX). Latest full fiscal year: 2026; data up to 2026-08-31.
Figures computed from the financial statements: revenue 6.5 bn USD in 2026; YoY growth 16.9%; net margin 27.4%; ROE 47.1%; net debt/EBITDA 1.3x.
The estimated value range is 79.74–134.85 USD per share (median of 4 methods, agreement: high); assumptions are illustrative. Against the central value of 114.27 USD, the price of 118.71 USD leaves a potential of -3.7% (value / price − 1) and a margin of safety of -3.9% (1 − price / value). The range is the median of the methods' low, central and high values, not a probability interval.
olivLaw score 70/100, methodological classification: neutral profile (score, margin of safety and method agreement together; not a judgement of the right price). Not investment advice.
Text generated deterministically from the figures shown; no language model. Not investment advice.
What supports the thesis
- ROIC: 25.5%
- Net margin: 27.4%
- FCF conversion: 111.7%
- Revenue CAGR 3Y: 9.2%
- Interest coverage: 9.7x
- P/E (TTM): 23.5x
- EV/EBITDA: 15.2x
- Shareholder yield (distributions): 4.9%
What contradicts it
- EPS CAGR 3Y: 4.4%
Versus the vertical median
Engineering, research and management services (SIC 87xx) · same major group (2-digit SIC) · compared with 39 companies
The size band was not applied: too few companies would have remained; the vertical includes much smaller or larger companies.
Multiples and returns vs the median
Price rebased to 100 (monthly, 5 years)
Companies in the vertical
| Market cap | P/E | ROE | Net margin | Revenue YoY | 1A / 3A | |
|---|---|---|---|---|---|---|
| RTORentokil Initial PLC | 61.1 bn | 130.4 | 8.7% | 6.8% | +4.4% | −13% / −12% |
| IQVIqvia Holdings Inc. | 43.5 bn | 32.0 | 21.7% | 8.1% | +5.9% | +15% / +23% |
| PAYXPaychex, Inc. | 42.3 bn | 23.5 | 47.1% | 27.4% | +16.9% | +3% / +7% |
| INCYIncyte Corporation | 25.0 bn | 65.2 | 7.8% | 6.7% | +21.2% | +18% / +126% |
| MEDPMedpace Holdings, Inc. | 18.4 bn | 36.4 | 117.9% | 18.2% | +20.0% | +11% / +143% |
| CRLCharles River Laboratories International, Inc. | 15.6 bn | 385.5 | 1.2% | 1.0% | −0.9% | +83% / +66% |
| ITGartner, Inc. | 13.1 bn | 14.8 | 365.8% | 14.8% | +3.7% | −11% / −52% |
| TTEKTetra Tech Inc | 10.5 bn | 24.7 | 24.3% | 8.6% | +4.7% | +18% / +29% |
| BAHBooz Allen Hamilton Holding Corporation | 10.5 bn | 13.7 | 70.0% | 7.1% | −6.4% | +6% / −29% |
| ACMAecom | 8.8 bn | 31.3 | 12.3% | 1.9% | +0.2% | −34% / −23% |
| FCNFti Consulting, Inc | 5.4 bn | 24.7 | 15.2% | 5.9% | +2.4% | +22% / −10% |
| NEONeogenomics, Inc. | 2.2 bn | — | -3.9% | -4.1% | +10.1% | +42% / −6% |
| ASTHAstrana Health, Inc. | 2.2 bn | 48.3 | 5.1% | 1.1% | +56.4% | +72% / +19% |
| ABSIAbsci Corp | 1.8 bn | — | -57.7% | -7,756.4% | −38.2% | +231% / +528% |
| WLDNWilldan Group, Inc. | 1.1 bn | 17.4 | 21.2% | 8.8% | unavailable | −26% / +271% |
| OABIOmniab, Inc. | 755.6 m | — | -16.5% | -108.1% | −29.3% | +186% / +18% |
| BWMNBowman Consulting Group Ltd. | 744.2 m | 105.3 | 2.9% | 1.4% | +14.9% | +19% / +39% |
| MGMistras Group, Inc. | 644.7 m | 32.1 | 8.8% | 2.8% | −0.8% | +69% / +206% |
| ONTOnterris, Inc. | 566.4 m | — | -2.5% | -1.4% | +19.3% | −37% / −48% |
| EVHEvolent Health, Inc. | 542.7 m | — | -79.0% | -24.1% | −26.6% | +14% / −83% |
| AERTAeries Technology, Inc. | 282.0 m | 20.9 | — | 3.6% | −0.3% | +35% / −68% |
| ONMDOnemednet Corporation | 269.2 m | — | — | -584.2% | +111.4% | −75% / −89% |
| SUPXSuperx Ai Technology Limited | 209.8 m | — | -101.8% | -527.7% | +1,878.6% | −84% / unavailable |
| FCFranklin Covey Co. | 195.7 m | 106.3 | 4.0% | 0.8% | −7.0% | +10% / −55% |
| MXCTMaxCyte, Inc. | 143.5 m | — | -20.4% | -114.8% | −14.5% | −21% / −71% |
1- and 3-year price returns: for PAYX from daily closes (the same as the performance table), for the other companies from month-end closes.
olivLaw engine forecast
The world engine ran after the company's latest material disclosure. Probabilities are of TOUCHING a level within the horizon (not closing there) and sit next to the random walk (p_rw), the no-information benchmark.
Valuation scenarios (editable assumptions)
Illustrative scenarios
Illustrative: not forecasts and without probabilities. Each case is one coherent set of assumptions, computed on today's figures.
Estimated price (USD)
| Estimated price | Bear | Base | Bull |
|---|---|---|---|
| 1 years | 73.88 Total return -35% · Per year -35% | 130.33 Total return 14% · Per year 14% | 195.93 Total return 70% · Per year 70% |
| 3 years | 78.56 Total return -24% · Per year -9% | 155.28 Total return 45% · Per year 13% | 255.32 Total return 132% · Per year 32% |
| 5 years | 83.55 Total return -13% · Per year -3% | 185.01 Total return 81% · Per year 13% | 332.71 Total return 214% · Per year 26% |
- Exit P/E± 38.82
- Net margin± 27.17
- Annual revenue growth± 21.35
- Annual dilution± 2.28
AI analysis
AI-generatedAI-generated analysis (Claude) from cited public sources; it may contain errors. Not investment advice. As of 27 Oct 2026 · Model: claude-haiku-5-5.
In brief
Paychex, Inc. (PAYX) is a human capital management company offering technology and advisory solutions for HR, payroll, benefits and insurance across the U.S. and parts of Europe. Total revenue rose 17% to $6.5 billion in fiscal 2026 1, and grew 6% to $1.6 billion in the first quarter of fiscal 2027 3. Guidance for fiscal 2027 points to total revenue growth of 5% to 6% 3.
SWOT
Strengths
- The company offers a broad set of integrated HCM solutions and a large proprietary dataset that underpins its WISE engine 1.
- Its network of compliance and HR specialists gives an advisory edge that purely technology rivals may find hard to match 1.
- High operating margins and strong client retention support the company's capacity to invest in technology 13.
Weaknesses
- Costs related to the Paycor acquisition and its integration raised expenses considerably in fiscal 2026 1.
- Long-term borrowings increased after the acquisition, making the company more sensitive to financing conditions 3.
- Reliance on a few SaaS platforms and third-party providers for some services can create operational vulnerabilities 1.
Opportunities
Risks
- Technology riskhigh
The company must continually update its platforms and integrate AI; failure to do so could weaken competitiveness 1.
- Cybersecurity riskhigh
The company holds sensitive client and employee data, and an attack or breach could bring financial and legal consequences 1.
- Acquisition integration riskmedium
Integrating Paycor generated significant costs, and future acquisition results could differ from expectations 12.
- PEO co-employment riskmedium
As co-employer in the PEO business, the company may be exposed to risks tied to its clients' employees 1.
- Interest rate risklow
Income on client funds depends on interest rates; unfavorable changes could reduce this income 13.
Investment thesis
What would need to be true (bull case)
- If revenue growth in Management Solutions and PEO is sustained, the company could exceed its fiscal 2027 growth guidance 3.
- A large client base and high retention could provide a stable stream of recurring revenue 1.
- If agentic AI solutions are adopted widely, they could improve client productivity and the company's margins 13.
What would break the thesis
What to watch
- Pace of Management Solutions revenue growth and whether guidance is confirmedQ2 2027
- Client adoption of WISE and WISE Hire features2027
- Interest income on client funds relative to the revised outlookQ2 2027
Products, market & competition
AI-generatedAI-generated analysis (Claude) from cited public sources; it may contain errors. Not investment advice. As of 27 Oct 2026 · Model: claude-haiku-5-5.
The business
The strategy centers on growing the customer base, expanding share of wallet, driving technology innovation and pursuing acquisitions 1. The Paycor acquisition, completed April 14, 2025, expanded the upmarket presence and cross-sale opportunities 1. The WISE AI engine powers about 600 AI features and agents, according to the filing 1.
Segments
Market context
The filing states there are over 6 million employer firms in the company's target markets in the U.S. 1. The HCM market is described as highly competitive and fragmented, with one primary national competitor and many national, regional and online providers 1.
Demand for HR outsourcing is described as growing amid rising regulatory complexity, and competition turns on breadth of offering, technology, ease of use and service model 1. The company argues that combining technology with HR advisory differentiates its offer 1.
Trends
- Agentic artificial intelligencemixed
The company is extending WISE toward agentic AI and launched WISE Hire, an agentic recruiting solution 13. If clients adopt these features widely, they could support productivity and retention.
- Regulatory and medical cost pressuretailwind
Federal, state and local regulatory complexity and medical inflation are cited as pressures on employers 1. These could increase demand for the company's compliance and HR outsourcing services.
- Interest rates and client funds incomemixed
Interest income on client funds rose in fiscal 2026 on higher average balances and realized gains 1. If rates decline, income from this source could be affected.
- Talent shortage and workforce dynamicstailwind
A tight labor market and difficulty attracting qualified people are described as major employer challenges 1. These conditions could sustain demand for recruiting and talent management tools.
Competitive position
The company names one primary national competitor, alongside national, international, regional, local and online payroll providers, and in-house payroll and HR departments 1. Competition also comes from retirement, insurance and benefits consulting firms and regional PEOs 1.
The company says its broad offering combined with industry advisory support differentiates it from rivals 1. Competition is based on breadth of offering, technology, integration with third-party applications, service model and price 1.
- Primary national competitor
The filing refers to one primary national competitor without naming it 1.
- National and international payroll providers
Payroll providers of varying scale compete in local and online markets, unnamed in the filing 1.
- Retirement and insurance providers
Providers of retirement and insurance solutions that offer HR services are included among competitors 1.
- National and regional PEOs
National and regional professional employer organizations are cited as competitors for HR outsourcing 1.
Links, dependencies and risks
Who the company is tied to, from its own SEC filings (customers, suppliers, production, partners, competitors, countries, regulation), from the 5 %+ holders' statements (13D/13G) and from what other companies say about it. Click a node for its evidence; on a listed company the graph moves to it.
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News & filings
In the press
No news in our archive over the last 180 days.
SEC filings
- Current report16 Oct 2026Shareholder vote
- Quarterly report24 Sept 2026
- Current report23 Sept 2026
- Proxy statement04 Sept 2026
- Current report21 Jul 2026Departure or appointment of officers · Financial statements and exhibits
- Annual report17 Jul 2026
- Current report24 Jun 2026Results of operations · Financial statements and exhibits
- Quarterly report26 Mar 2026
- Current report25 Mar 2026Results of operations · Financial statements and exhibits
- Current report26 Jan 2026Material agreement · Termination of a material agreement · Creation of a direct financial obligation
Sources
- [1] Form 10-K, fiscal year ended 2026-05-31 · SEC / Paychex, Inc. · 17 Jul 2026
- [2] Form 10-Q, quarter ended 2026-08-31 · SEC / Paychex, Inc. · 24 Sept 2026
- [3] Form 8-K, results release (exhibit 99.1) · SEC / Paychex, Inc. · 23 Sept 2026
Figures computed by olivLaw from SEC filings and closing prices; the qualitative analysis is AI-generated from cited sources. Not investment advice.