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Paychex, Inc.
NASDAQ: PAYX Technology IT 🔎 Screen
S&P 500 Nasdaq 100
$36.2B
Market Cap
34.5
P/E
3.59
PEG
15.4%
ROCE
41.8%
ROE
1.12
D/E
39.6%
OPM
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🌏 Global Investor Returns
Currency-adjusted total returns for PAYX including FX impact
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📈 Price History
Ratio Health
Excellent
Good
Average
Poor
By Category
Shareholding
About

Paychex, Inc., together with its subsidiaries, provides human capital management solutions (HCM) for payroll, employee benefits, human resources (HR), and insurance services for small to medium-sized businesses in the United States, Europe, and India.

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📈 Growth Pattern
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⭐ Superinvestors Holding PAYX
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Manager Shares Value % of Fund Period
Jim Simons Renaissance Technologies LLC 1.17M $107.4M 0.17% Mar 2026
Steve Cohen Point72 Asset Management 10.8K $995K 0.00% Mar 2026

SEC Form 13F data. 45-day lag from quarter end.

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Good quarter Investor Presentation One-Pager? Q3 2026
Revenue
$1.81B
+20% YoY
Operating Income
$792.0M
+14% YoY
Operating Margin (GAAP)
43.8%
-2.0pp YoY
Adjusted Operating Income
$863.2M
+22% YoY
Adjusted Operating Margin
47.7%
+0.8pp YoY
Adjusted Diluted EPS
$1.71
+15% YoY
Diluted EPS
$1.56
+9% YoY
What Went Right
  • Total revenue grew 20% to $1.8B, beating expectations.
  • Adjusted operating income up 22% with 80 bps margin expansion to 47.7%.
  • PEO worksite employee growth high single digits with record retention.
  • Paycor integration on track; bookings re-accelerated to pre-acquisition levels.
What to Watch
  • GAAP operating margin declined 200 bps to 43.8% due to Paycor amortization.
  • Interest expense increased $45.5M to $68.1M from acquisition debt.
  • Macro environment remains uncertain with low hire/low fire conditions.
  • PEO & Insurance Solutions growth had some timing benefits that will reverse in Q4.
Management Guidance
  • Q4 FY26 revenue growth expected ~12% YoY.
  • Q4 FY26 adjusted operating margin expected 41%-42%.
  • FY26 interest on funds held for clients raised to $200M-$210M.
  • All other FY26 guidance reaffirmed (no specific numbers provided).
Investor Lens
The thesis is stronger after this call. Paychex delivered strong double-digit revenue growth, accelerating organic growth, and expanding adjusted margins. The Paycor integration is progressing ahead of plan with re-accelerating bookings and cross-sell momentum in PEO, ASO, and retirement. AI investments are starting to show productivity gains. The main risk is macro uncertainty, but balanced by durable model and strong cash flows. The raised interest guidance and commitment to shareholder returns add confidence.
From investor presentation · AI-generated analysis · Not investment advice
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📈 STRONG Strong Q3 with 20% revenue growth and 22% adjusted op income growth.
Revenue
Total revenue was $1,808.9M, up 20% YoY. Management Solutions grew 23% to $1.4B (Paycor contributed ~19pp). PEO & Insurance Solutions grew 9% to $397.5M, driven by high single-digit worksite employee growth and strong enrollment.
Profitability
Operating income increased 14% to $792.0M. Adjusted operating income increased 22% to $863.2M. Diluted EPS grew 9% to $1.56; adjusted diluted EPS grew 15% to $1.71.
Margins
GAAP operating margin was 43.8% (down 200 bps YoY) due to acquisition-related amortization. Adjusted operating margin improved 80 bps to 47.7%, driven by productivity and cost discipline.
Balance Sheet
Cash, restricted cash, and investments totaled $1.8B, with total borrowings of ~$5B. Free cash flow increased 27% YoY. After quarter close, $400M debt tranche from Oasis acquisition was repaid.
Key Risks
1) Timing benefits in PEO & Insurance Solutions are expected to reverse in Q4, lowering sequential growth. 2) Macro environment remains uncertain with low hire/low fire conditions. 3) Competition in HCM and pressure on HR advisory pricing from AI-only providers.
Outlook
Q4 FY26 revenue growth expected ~12%, with adjusted operating margin of 41%-42%. FY26 interest income guidance raised to $200M-$210M. No formal FY27 guidance yet, but management expressed comfort with consensus back-half organic growth.
Generated by AI · Q3 2026 results · Not investment advice
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📊 Analysis Methodology

This comprehensive investment analysis was conducted using The Finmagine™ Stock Analysis & Ranking Methodology, a proprietary framework that systematically evaluates stocks across five critical dimensions: Financial Health, Growth Prospects, Competitive Positioning, Management Quality, and Valuation.

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Financial Model
Projections are built from each company's audited annual financials (Income Statement, Balance Sheet, Cash Flow) over the last 5 fiscal years. Forward assumptions — revenue growth %, EBITDA margin, D&A (USD millions), interest expense, tax rate, and capex — are AI-generated using historical context and refreshed twice a year: after the December results season and after the September/Q4 results season.

DCF Valuation
Fair Value = Σ(FCFt / (1+WACC)t) + Terminal Value. Terminal Value uses the Gordon Growth Model: FCF5 × (1+g) / (WACC−g). Default WACC: 10% (US risk-free ~4.5%, equity risk premium ~5.5%). Default terminal growth: 3% (long-run US nominal GDP proxy).

CAGR Tracker
Expected 5-year CAGR = (DCF Fair Value / Current Price)1/5 − 1. Assumes fair value is reached in exactly 5 years — a mechanical estimate only.

Data Sources & Limitations
Financial statements sourced from public filings. Prices updated daily. Forward assumptions are AI-generated. All monetary values in USD millions. Non-US ADR companies may have currency conversion inaccuracies. Models are point-in-time and do not update intra-quarter or account for M&A, macro shocks, or extraordinary items.

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Investment Risk:
Investing in securities, including US equities and ETFs, involves inherent risks including the potential loss of principal. All investments are subject to market fluctuations, economic conditions, regulatory changes, and other factors that may affect their value. Past performance is not indicative of future results. This analysis is provided for informational and educational purposes only and should not be construed as investment advice under any circumstances.

No Investment Recommendation:
This analysis does not constitute, nor should it be interpreted as, an offer, solicitation, or recommendation to buy, sell, or hold any securities or financial products. Investors are strongly advised to conduct their own independent research and due diligence and to consult with a licensed financial advisor or an SEC-registered investment adviser before making any investment decisions, taking into account their individual financial situation, risk tolerance, and investment objectives.

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Conflict of Interest Disclosure:
The author and/or analyst may currently hold or have previously held positions in the securities discussed. Any such positions are not intended to influence the objectivity or independence of the analysis. This research is produced independently and is not sponsored, endorsed, or commissioned by any company or institution.

Information Sources:
The analysis is based on publicly available information including SEC filings (10-K, 10-Q), annual reports, management commentary, and publicly available financial data. Information is believed to be accurate as of the date of publication but may be subject to change without notice. Readers are encouraged to independently verify all information before acting upon it.

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