Stock analysis · Bull Rankings model

PAYX analysis

Paychex, Inc.Software - Application. Scored on the same transparent 7-signal model behind the daily rankings.

PAYX
Paychex, Inc. · Software - Application
FCF$2.3bB
Rev+16.5%B+
D/E1.23C
P/E23.5xB+
PEG1.93C+
71.5Score
$114.39$40.7B
1Y Target$106.57Analyst consensus · 14 analysts
5Y Target$156.03Compound horizon
10Y Target$231.46Long-dated conviction
FCF$2.3bTTM
B
FCF $2.3b — solid, comfortably covers operations and capital return
Rev+16.5%TTM YoY
B+
Revenue +16.5% — above sector median, healthy trajectory
D/E1.23
C
D/E 1.23 — more levered than most Technology peers (≈90th pctile)
P/E23.5x
B+
P/E 23.5 — below the Technology median (≈40th pctile)
PEG1.93
C+
PEG 1.93 — modest premium; above fair value

Forward price target — the 1-year figure is the analyst consensus where the stock is covered; the 5- and 10-year figures compound our earnings estimate from there. The DCF below is a separate cross-check on intrinsic value (what it's worth today), not another target.

Quality-growth score · 71.5
Quality0.89
Growth0.87
Value0.47
Why this score
  • Raising its dividend
  • Durable high returns
Entry · Margin of safety
52-week rangeMid-range
23% off the 12-month high
vs DCF fair value9% aboveest. fair value ~$105
What the price assumes: free cash flow compounding at ~7% a year for the next decade — vs the ~7% a year our model projects from current growth and analyst estimates.
Quality signals · context only
Gross profitability29% · Bgross profit ÷ total assets (Novy-Marx)
ROIC23.9% · Areturn on invested capital — not score-weighted
Why now
Paychex’s payroll processing platform is entrenched with SMBs across the U.S., Europe and India, and its 27.9% profit margin combined with a 16.5% revenue growth YoY fuels a high‑ROE engine (47.1% ROE) that can keep compounding earnings as more firms outsource HR functions. The bull case hinges on the continued migration of SMB payroll to cloud‑based HCM, which should sustain double‑digit growth and keep returns elite.
Moat
The moat lives in Paychex’s integrated HCM suite that bundles payroll, benefits, and compliance for SMBs, creating high switching costs because employers rely on a single provider for regulatory reporting and employee payments. This stickiness, together with a 47.1% ROE driven by pricing power in a fragmented SMB market, limits competitors from stealing share without costly integration efforts.
Risk
The bear case points to a modestly elevated valuation—PE of 23.4 versus sector averages—while growth is slowing to 16.5% YoY and the debt‑to‑equity ratio sits at 1.23, raising concerns that any earnings miss could force higher leverage. A breach of the 52‑week low ($85.45) would confirm that the market is pricing in a slowdown, undermining the dividend‑raising narrative.
Horizon
1-3 yr $106.57 (14-analyst consensus) — fundamentals + valuation re-rating. 5 yr $156.03 at ~6% CAGR — compounding case rests on the competitive position widening. 10 yr $231.46 if current growth sustains into durable earnings power.
Not investment advice. The Bull Rankings publishes a quantitative ranking model and accompanying analysis for general informational purposes only. Nothing on this page is a recommendation to buy, sell, or hold any security; nothing is personalized to your circumstances, risk tolerance, or tax situation. Investing carries the risk of loss — invest at your own risk and consider consulting a licensed financial professional before acting on anything you read here. See terms and methodology for full disclosures.
Trend
+5.5 over 22 daily scores
From 66.0 (Jun 22) → 71.5 (now)

One point per daily model run. The range autoscales, so a flat-looking line can still hide 1–2 point moves — read the From → To values for the actual range.

Shares to buy
17
Position size
$1,945
3.9% of portfolio
Stop price
$85.79
25% below $114.39
$ at risk if stopped
$486.16
budget $500.00 · 1% of portfolio

Math only — share count is floor(portfolio × risk% ÷ (price × stop%)). Doesn't account for commissions, slippage, gap risk, or position-correlation across your book. Inputs persist locally; never sent to the server. Not investment advice.

Paychex, Inc. (PAYX): score, valuation & FAQ

Paychex, Inc. (PAYX) is a Software - Application company that scores 71.5 out of 100 on the Bull Rankings quality-growth model — a solid, above-average reading. The score blends three pillars — quality (durable returns, healthy margins, low leverage), growth (revenue and earnings), and value (valuation versus sector peers) — into one number, refreshed daily; it is a screen, not a buy recommendation.

Its strongest graded signals are Rev (B+) and P/E (B+). On valuation, PAYX sits about 9% above our discounted-cash-flow fair value — the current price implies roughly 7% annual free-cash-flow growth over the next decade.

Is PAYX a good stock to buy?

Bull Rankings scores PAYX 71.5 out of 100 on its quality-growth model, which is a solid, above-average reading. That is driven by Rev (B+) and P/E (B+). A score is a quantitative screen of Paychex, Inc.'s fundamentals, not personalised financial advice — weigh it against your own time horizon and risk tolerance, and read the risk factors below before acting.

Why does PAYX score 71.5 on Bull Rankings?

The quality-growth score blends three pillars — quality (returns on capital, margins, leverage, earnings quality), growth (revenue and earnings expansion), and value (valuation versus sector peers). PAYX earns its highest marks on Rev (B+) and P/E (B+). Each pillar is graded against sector-aware thresholds, then combined into the single 0–100 score.

Is PAYX overvalued or undervalued?

Based on $114.39, PAYX sits about 9% above our discounted-cash-flow fair value — the current price implies roughly 7% annual free-cash-flow growth over the next decade. It trades at a 23.5x× P/E (graded B+). Discounted-cash-flow estimates are sensitive to growth and discount-rate assumptions, so treat this as a cross-check, not a price target.

What are the main risks of investing in PAYX?

The bear case points to a modestly elevated valuation—PE of 23.4 versus sector averages—while growth is slowing to 16.5% YoY and the debt‑to‑equity ratio sits at 1.23, raising concerns that any earnings miss could force higher leverage. A breach of the 52‑week low ($85.45) would confirm that the market is pricing in a slowdown, undermining the dividend‑raising narrative.

New to these metrics? The guides explain free cash flow, how the score works, and more in the learn hub — or run another name through the screener.

Bull Rankings is an automated fundamentals screen for research and education. It is not investment advice, and nothing here is a recommendation to buy or sell any security. Do your own research and consider consulting a licensed financial adviser.

More Technology stocks by score

All Technology rankings →

Analyze another ticker →