PAYCHEX INC

PAYX
About the company

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.

Country: United StatesPrice: $99.31Market Cap: $35.4B

Investment snapshot

38%positive consensus
Scored 37d ago

Positive

5

BUY / PASS

Neutral / negative

5 / 5

NEUTRAL / FAIL

Median fair value

$69.14

-30.4% vs price

Models with upside

4 / 16

Positive margin of safety

Strongest signal

6 of 8 pass — Lynch and Sleep object

Key risk

Split decision: 5 FAIL · 5 NEUTRAL · 3 PASS · 2 BUY

Framework analysis

VerdictMeaning
BUYPositive purchase signal: the framework's buy requirements are met.
PASSThe company clears the framework's checklist or screen, but the framework does not produce a buy signal. For valuation frameworks this often means margin of safety is missing, insufficient, or unavailable; some screen-only frameworks have no intrinsic-value BUY state.
NEUTRALNeither a positive nor negative conclusion. It does not mean to hold an existing position.
FAILThe company does not clear the framework's requirements.
RankedRanked strategies do not use PASS: selected cohort is BUY, outside the cohort is FAIL, and unranked is NEUTRAL.
Scored from 10-K37d ago
MetricO'Shaughnessy

Systematic Factor Composite

Lynch

GARP

Buffett

Quality Compounder

Pabrai

Dhandho Framework

Akre

Three-Legged Stool

Schloss

Asset-Value Discipline

Neff

Low-P/E Total Return

Sleep

Scale Economies Shared

Templeton

Global Bargain Hunter

Marks

Risk-Aware Value

Munger

Quality Focus

Ackman

Activist Value

Dreman

Contrarian Value

Piotroski

F-Score

Greenblatt

Magic Formula

Graham

Defensive Value

VerdictFAILFAILNEUTRALFAILNEUTRALFAILNEUTRALBUYPASSFAILNEUTRALBUYPASSNEUTRALBUY · Rank #329 (Top 10.3%)PASS
Score
Analysis
Intrinsic ValueN/AN/AN/AN/AN/A
Margin of SafetyN/A-102.2%+11.7%-43.6%+12.2%N/AN/AN/A-48.6%-82.7%+12.6%+14.4%-40.5%N/A-94.6%-192.2%
Data As Of10-K (2026-08-25)10-K (2026-08-25)10-K (2026-08-25)10-K (2026-08-25)10-K (2026-08-25)10-K (2026-08-24)10-K (2026-08-24)10-K (2026-08-23)10-K (2026-08-23)10-K (2026-08-23)10-K (2026-08-23)10-K (2026-08-23)10-K (2026-08-23)10-K (2026-08-23)10-K (2026-08-23)10-K (2026-08-23)

Where It Passes

  • Growth75% pass✓ 11✗ 2▾

    6 of 8 pass — Lynch and Sleep object

    Basic earnings-growth PEG (dividends excluded)2.02
    ✗Lynch< 1.0 (ideally < 0.5)
    3-5 Year EPS CAGR10.0%
    ✓Lynch15-30% (Fast Grower); > 0% to pass
    Inventory Growth vs Revenue GrowthN/A (no inventory)
    ✓LynchInventory growth < Revenue growth
    3-5 Year Diluted EPS CAGR10.0% over 5 years
    ✓Neff7%-20% annualized
    Revenue growth vs. gross and operating margin trendgross margin 72.0% -> 74.3%, operating margin 41.2% -> 38.6%
    ✗SleepRevenue rising; gross margin flat or falling; operating margin holding
    5-year Revenue CAGR9.9%
    ✓SleepCAGR > 7%
    5-Year EPS CAGR10.0% CAGR over 5 years
    ✓Templeton> 0% (5-year EPS CAGR)
    Positive Net Income Frequency18/18 years positive
    ✓MarksPositive net income in >= 7 of last 10 years
    3yr Median Revenue Growth5.6%
    ✓Ackman>= 5%
    Positive EPS Growth Frequency4/5 years with positive EPS growth
    ✓AckmanPositive EPS growth in >= 3 of last 5 years
    EPS Growth Direction$1.48 (2008) -> $4.89 (2025)
    ✓DremanPositive over recent years
    EPS CAGR7.3% CAGR over 17 years
    ✓Dreman> 5% annualized
    EPS Growth (3-yr avg, 10-yr window)235.1%
    ✓Graham>= 33% growth
  • Cash Flow70% pass✓ 9✗ 3▾

    7 of 10 pass — Oshaughnessy, Pabrai and Dreman object

    (Operating cash flow - capex) / market capitalization+6.57%; #1152/4487 (top 25.7%)
    ✗OshaughnessyTop 10% of eligible cross-section
    FCF Positive and Growing$2.3B
    ✓LynchPositive and growing
    Free Cash Flow Proxy$2.0B
    ✓BuffettPositive and growing
    P/E or FCF YieldP/E=20.3x, FCF Yield=6.6%
    ✗PabraiP/E < 15 or FCF Yield > 10%
    Operating Cash Flow - Capital Expenditures$2.3B
    ✓Neff> $0 (app proxy for a strong fundamental case)
    Positive Operating Cash Flow frequency18/18 years positive
    ✓SleepPositive OCF in >= 70% of available years
    FCF Positive18/18 years FCF positive
    ✓MarksPositive FCF in majority of recent years
    (OCF - CapEx) / Market Cap6.6%
    ✓Ackman>= 4%
    Price / FCF per Share15.2x
    ✓Ackman<= 25
    Price / (CFO / Shares)13.8x
    ✗Dreman< 8x
    Operating Cash Flow$2.6B
    ✓PiotroskiCFO > 0
    (CFO / Total Assets) vs ROACFO/Assets=15.81%, ROA=10.88%
    ✓PiotroskiCFO/Assets > ROA
  • Verdicts55% pass✓ 6✗ 5▾

    Split decision: 5 FAIL · 5 NEUTRAL · 3 PASS · 2 BUY

    Overall verdict
    ✗OshaughnessyFAIL (Rank #252/953 (Top 26.4%))✗LynchFAIL (4/7)•BuffettNEUTRAL (6/9)✗PabraiFAIL (1/3)•AkreNEUTRAL (4/6)✗SchlossFAIL (3/7)•NeffNEUTRAL (5/6)✓SleepBUY (5/6)✓TempletonPASS (4/8)✗MarksFAIL (3/5)•MungerNEUTRAL (3/4)✓AckmanBUY (8/9)✓DremanPASS (6/11)•PiotroskiNEUTRAL (F-Score 7)✓GreenblattRank #329✓GrahamPASS (4/9)

Where It Falls Short

  • Debt & Leverage9% pass✓ 1✗ 13▾

    10 of 11 flag PAYX's debt & leverage — Lynch, Buffett, Akre +7 more

    Total Debt / Equity1.22
    ✗Lynch< 0.33
    Cash - Long-term Debt$-3.5B
    ✗LynchPositive preferred
    Debt/Equity & Interest CoverageD/E: 1.22, IC: 9.4x
    ✗BuffettD/E < 0.5 AND Interest Coverage > 5x
    Debt Levels1.22
    ✗AkreDebt/Equity < 0.3✗MungerDebt/Equity < 0.5
    Total Debt / Shareholders' Equity1.22x
    ✗SchlossD/E < 1.00x✗Templeton< 1.0 (fixed cap; proxy for below-sector-median leverage)✗Dreman< 0.8
    Current Assets / Current Liabilities1.26x
    ✗SchlossCurrent ratio >= 1.50x (app cutoff)✗Dreman> 1.5
    Interest Coverage & Debt/EBITDAIC=9.4x, D/EBITDA=1.5x
    ✓MarksInterest Coverage > 3x; Debt/EBITDA < 4x
    Total Debt / Shareholders Equity1.22
    ✗Ackman<= 1.0
    LT Debt / Total Assets Change27.46% -> 28.17%
    ✗PiotroskiDecreased YoY
    LT Debt vs Net Current AssetsLT Debt $4.6B vs NCA $1.8B
    ✗GrahamLT Debt <= Net Current Assets
  • Valuation17% pass✓ 5✗ 21▾

    10 of 12 flag PAYX's valuation — Oshaughnessy, Lynch, Pabrai +7 more

    Revenue / market capitalization+0.1842; #3732/5203 (top 71.7%)
    ✗OshaughnessyTop 10% of eligible cross-section
    Net income / market capitalization+4.98%; #1589/6251 (top 25.4%)
    ✗OshaughnessyTop 10% of eligible cross-section
    (Operating cash flow - capex) / market capitalization+6.57%; #1152/4487 (top 25.7%)
    ✗OshaughnessyTop 10% of eligible cross-section
    Trailing six-month price return through the evaluation date+7.81%; #2341/6203 (top 37.7%)
    ✗OshaughnessyTop 10% of eligible cross-section
    Basic earnings-growth PEG (dividends excluded)2.02
    ✗Lynch< 1.0 (ideally < 0.5)
    P/E or FCF YieldP/E=20.3x, FCF Yield=6.6%
    ✗PabraiP/E < 15 or FCF Yield > 10%
    Price / Book Value per Share9.46x
    ✗SchlossP/B <= 0.80x (app cutoff)✗Templeton< 1.5x✗Dreman< 1.2x
    Price / Tangible Book Value per ShareN/A (non-positive TBVPS)
    ✗SchlossP/TBV <= 1.00x (app cutoff)
    Book Value per Share Change+28.2%
    ✓SchlossLatest BVPS >= earliest BVPS over >= 3 years (app rule)
    Price / Diluted EPS20.3x
    ✗NeffP/E <= 15x (app proxy for a P/E 40%-60% below the market)
    (EPS CAGR % + Dividend Yield %) / P/E0.72
    ✓Neff> 0.7 (Neff's published traditional edge)
    Price / EPS20.3x
    ✗Templeton< 12x (fixed ceiling; proxy for the market's cheapest 40%)✗Dreman< 12x
    Price vs. Trailing Low108% of trailing low ($92.12)
    ✓Templeton<= 120% of trailing low (certified split-adjusted live window)
    P/B or P/E vs. Historical AverageP/E=20.3x, P/B=9.5x
    ✗MarksP/E < 15 or P/B < 2.0
    Discount to Intrinsic Value-40.5% (IV=$70.70 vs Price=$99.31)
    ✗Marks>= 20% below intrinsic value
    Valuation ReasonablenessP/E=20.3x, OE Yield=5.6%
    ✓MungerP/E < 25 or Owner Earnings Yield > 5%
    Price / FCF per Share15.2x
    ✓Ackman<= 25
    Price / (CFO / Shares)13.8x
    ✗Dreman< 8x
    EBIT / Enterprise Value6.5%
    ✗Greenblatt> 10%
    Earnings Yield + ROC AssessmentEY=6.5%, ROC=197.1%
    ✗GreenblattBoth EY > 10% and ROC > 25%
    Price / 3-yr avg EPS21.1x
    ✗Graham<= 15x
    Price-to-Book Ratio9.5x
    ✗Graham<= 1.5x
    P/E x P/B199.30
    ✗Graham<= 22.5
  • Valuation models36% pass✓ 4✗ 7▾

    Models split on PAYX at $99.31 — fair values range $33.99–$116.01

    Lynch fair value$49.12
    ✗Lynch-102.2% margin vs $99.31
    Buffett fair value$112.47
    ✓Buffett+11.7% margin vs $99.31
    Pabrai fair value$69.14
    ✗Pabrai-43.6% margin vs $99.31
    Akre fair value$113.12
    ✓Akre+12.2% margin vs $99.31
    Templeton fair value$66.84
    ✗Templeton-48.6% margin vs $99.31
    Marks fair value$54.36
    ✗Marks-82.7% margin vs $99.31
    Munger fair value$113.69
    ✓Munger+12.6% margin vs $99.31
    Ackman fair value$116.01
    ✓Ackman+14.4% margin vs $99.31
    Dreman fair value$70.70
    ✗Dreman-40.5% margin vs $99.31
    Greenblatt fair value$51.03
    ✗Greenblatt-94.6% margin vs $99.31
    Graham fair value$33.99
    ✗Graham-192.2% margin vs $99.31
  • Profitability47% pass✓ 21✗ 10▾

    8 of 15 flag PAYX's profitability — Oshaughnessy, Lynch, Buffett +5 more

    Net income / market capitalization+4.98%; #1589/6251 (top 25.4%)
    ✗OshaughnessyTop 10% of eligible cross-section
    Basic earnings-growth PEG (dividends excluded)2.02
    ✗Lynch< 1.0 (ideally < 0.5)
    3-5 Year EPS CAGR10.0%
    ✓Lynch15-30% (Fast Grower); > 0% to pass
    ROE47.1%
    ✓Lynch> 15%
    Net Income Positive (10+ years)18/18 years positive
    ✓BuffettPositive every year for 10+ years
    ROE (up to 5-year arithmetic mean)44.3%
    ✓Buffett> 15% arithmetic mean (app rule)
    Operating Margin (10-yr trend)38.6% (latest)
    ✓BuffettStable or rising over 10 years
    Free Cash Flow Proxy$2.0B
    ✓BuffettPositive and growing
    Earnings Variance (10-yr CoV)0.44
    ✗BuffettCoV < 0.3
    Retained Earnings Effectiveness
    ✗Buffett$1 retained -> > $1 market value created
    Margin of SafetyP/E=20.3x, P/B=9.5x
    ✗PabraiP/B < 1.5 or P/E < 15
    Return on Equity43.9% (3-yr avg)
    ✓AkreROE > 20% (3-year avg)
    Positive Diluted-EPS Years10/10 years positive
    ✓Schloss>= 70% positive over 5-10 observed years (app rule)
    3-5 Year Diluted EPS CAGR10.0% over 5 years
    ✓Neff7%-20% annualized
    Revenue growth vs. gross and operating margin trendgross margin 72.0% -> 74.3%, operating margin 41.2% -> 38.6%
    ✗SleepRevenue rising; gross margin flat or falling; operating margin holding
    5-Year EPS CAGR10.0% CAGR over 5 years
    ✓Templeton> 0% (5-year EPS CAGR)
    Operating Margin Trend41.2% (2023) -> 38.6% (2025)
    ✗TempletonNon-negative operating-margin trend over 3 years
    Discount to Intrinsic Value-40.5% (IV=$70.70 vs Price=$99.31)
    ✗Marks>= 20% below intrinsic value
    Positive Net Income Frequency18/18 years positive
    ✓MarksPositive net income in >= 7 of last 10 years
    Operating Income / Revenue38.6%
    ✓Ackman>= 15%
    Net Income / Shareholders Equity47.1%
    ✓Ackman>= 15%
    Pre-Tax Income / Revenue35.5%
    ✓Dreman>= 8%
    Net Income / Shareholders' Equity47.1%
    ✓Dreman> 12%
    Net Income / Total Assets10.88%
    ✓PiotroskiROA > 0
    ROA Change YoY10.01% -> 10.88% (delta: +0.88%)
    ✓PiotroskiCurrent ROA > Prior ROA
    (CFO / Total Assets) vs ROACFO/Assets=15.81%, ROA=10.88%
    ✓PiotroskiCFO/Assets > ROA
    Gross Margin Change YoY72.4% -> 74.3%
    ✓PiotroskiImproved YoY
    EBIT / Enterprise Value6.5%
    ✗Greenblatt> 10%
    Earnings Yield + ROC AssessmentEY=6.5%, ROC=197.1%
    ✗GreenblattBoth EY > 10% and ROC > 25%
    Positive EPS (10 years)18/18 years positive
    ✓GrahamPositive EPS every year for 10 years
    EPS Growth (3-yr avg, 10-yr window)235.1%
    ✓Graham>= 33% growth
  • Efficiency50% pass✓ 7✗ 4▾

    4 of 8 pass — Akre, Dreman, Piotroski +1 more object

    ROIC (3-5 yr avg)39.8%
    ✓Buffett> 10%
    ROIC - WACC+29.8%
    ✓BuffettPositive (WACC = 10%)
    ROIC (high and growing)FY2023: ROIC=37.3%; FY2024: ROIC=19.2%; FY2025: ROIC=23.9%
    ✓AkreLatest 3 consecutive FYs: ROIC > 15% in each
    Reinvestment Rate x ROIC2.3% (RR=10% x ROIC=23.9%)
    ✗AkreReinvestment Rate * ROIC > 10%
    ROIC (5-year)5/5 years above 12% (latest 23.9%)
    ✓SleepROIC > 12% in a majority of years
    Return on Invested Capital23.9%
    ✓Munger> 15%
    Current Assets / Current Liabilities1.26
    ✗Dreman> 1.5
    Current Ratio Change YoY1.28 -> 1.26
    ✗PiotroskiIncreased YoY
    Revenue / Total Assets Change YoY0.34x -> 0.40x
    ✓PiotroskiImproved YoY
    EBIT / (NWC + Net Fixed Assets)197.1%
    ✓Greenblatt> 25%
    Current Ratio1.26
    ✗Graham>= 2.0

Business & financials

Company Profile

Industry: Business Services
SIC Sector: Engineering & Management Services
Size: Large Cap($35.4B)
Revenue: $6.5B+16.9% YoY
Net Income: $1.8B+6.2% YoY

Financial Snapshot

Operating Margin38.6%
Return on Equity47.1%
Debt / Equity1.22
Current Ratio1.26
EPS (Diluted)$4.89+6.8% 1y
Buybacks (1y)$611.0M
Buybacks (2y)$715.5M
Shares Retired1.3% / 1.2% 2y

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Shareholder Return

Fiscal 2025

Retired 1.3% of shares last year, 1.2% over two.

Buybacks
$611.0M
Dividends
$1.6B

What drove EPS

A buyback raises earnings per share without the company earning more. This splits each year's change into the two.

FY22
12.0% = 11.8% + 0.2%
FY23
8.6% = 8.5% + 0.1%
FY24
−1.9% = −2.0% + 0.0%
FY25
6.8% = 6.2% + 0.5%
Earnings Fewer shares More shares

Share count is the denominator the filer used for diluted EPS, recovered as net income ÷ EPS — not the balance-sheet count, which is a point-in-time figure and would put the timing difference into this split. Years with a loss are omitted: a smaller share count makes a loss per share larger, so the decomposition inverts.

Company Financials

Annual data (10-K) · Last 5 years

MetricFY 2025FY 2024FY 2023FY 2022FY 2021
Market Cap$35.4B$51.0Best.$40.8Best.$37.8Best.$37.3Best.
Revenue$6.5B↑17%$5.6B↑6%$5.3B↑5%$5.0B↑9%$4.6B
Operating Income$2.5B↑14%$2.2B↑2%$2.2B↑7%$2.0B↑10%$1.8B
Net Income$1.8B↑6%$1.7B↓2%$1.7B↑9%$1.6B↑12%$1.4B
EPS (Diluted)$4.89↑7%$4.58↓2%$4.67↑9%$4.30↑12%$3.84
Gross Margin74.3%↑3%72.4%↑1%72.0%↑1%71.0%↑1%70.6%
Operating Margin38.6%↓3%39.6%↓4%41.2%↑1%40.6%↑2%39.9%
ROE47.1%↑17%40.1%↓10%44.5%44.6%↓1%45.1%
Total Debt$4.6B↓8%$4.9B↑520%$798.6M↓1%$808.4M$806.4M
Shareholders' Equity$3.7B↓10%$4.1B↑9%$3.8B↑9%$3.5B↑13%$3.1B
Current Ratio1.26↓2%1.28↓6%1.37↑5%1.30↑4%1.25
Debt / Equity1.22↑2%1.20↑471%0.21↓9%0.23↓11%0.26
Operating Cash Flow$2.6B↑34%$1.9B$1.9B↑11%$1.7B↑7%$1.6B
Free Cash Flow$2.3B↑36%$1.7B↓2%$1.7B↑11%$1.6B↑7%$1.5B

Score history

Historical Score Timeline

Industry peers

Industry Peers

Similar companies in Business Services

PAYX vs Peers — Financial Grading

Revenue$6.5BMedian
Net Income$1.8BTop 25%
ROE47.1%Median
D/E1.22Median
Op. Margin38.6%Top 25%
Curr. Ratio1.26Median
CompanyMarket CapPriceRevenueNet IncomeROED/EOp. MarginCurr. RatioGrahamBuffettLynchGreenblattPiotroskiDreman
Mastercard IncMA$514.8B$568.26$32.8B$15.0B193.5%2.4657.6%1.032/95/94/70/3F-Score 83/11
AUTOMATIC DATA PROCESSING INCADP$103.7B$261.80$21.9B$4.4B73.2%0.8224.2%1.054/95/93/70/3F-Score 65/11
ELECTRONIC ARTS INC.EA$52.9B$209.70$7.5B$887.0M13.1%0.2215.4%1.051/94/93/70/3F-Score 66/11
Rubrik, Inc.RBRK$23.4B$113.80$1.3B$348.8M67.1%—-26.2%1.691/90/90/70/3F-Score 42/11
Grab Holdings LtdGRAB$12.7B$3.10$3.4B$268.0M4.0%0.311.9%1.752/92/92/70/3F-Score 44/11
COMMVAULT SYSTEMS INCCVLT$6.1B$148.08$1.2B$70.7M942.8%—6.3%1.951/92/94/70/3F-Score 65/11
ROBERT HALF INC.RHI$3.8B$36.88$5.4B$133.0M10.4%—1.4%1.534/95/91/70/3F-Score 54/11
CSG SYSTEMS INTERNATIONAL INCCSGS$2.3B$80.04$1.2B$55.9M19.7%1.909.7%1.441/93/94/71/3F-Score 64/11