| Factor | Score | Distribution | Value | Avg | Rank |
|---|---|---|---|---|---|
Valuation | 40 | 23.0x | 17.3x | Bottom tier | |
Growth | 53 | 14.0% | 7.1% | Around median | |
Quality | 93 | 23.2% | 4.5% | Top tier | |
Safety | 70 | 1.2x | 2.6x | Top tier | |
Capital Return | 93 | 3.92% | 0.06% | Top tier | |
Momentum | 71 | -19.8% | -1.6% | Top tier | |
Sentiment | 62 | 12 | 3 | Around median |
The floor: what the company is worth if growth stopped today
54% of today's price is what a buyer pays for growth that has not happened yet.
10-year US Treasury yield 4.96% as of 2026-10-22. Estimates computed from company data and analyst targets, not investment advice.
Ten ratios that matter, each compared against its sector median and average — so you can see whether a number is rich or cheap relative to peers in the same sector.
Paychex provides human capital management solutions to small and medium-sized businesses and generates revenue from payroll, human resources, benefits, retirement, and insurance services, in addition to advisory solutions such as ASO and PEO. Its model is based on recurring revenue and long-term customer relationships, while the PEO segment adds greater value by managing human resources, benefits, and insurance for employees at client worksites. The company also earns income from investing funds held for clients, which totaled $50 million in the first quarter of fiscal 2027, up 5%.
In the first quarter of fiscal 2027, total revenue rose 6% to $1.6 billion, while gross profit according to EDGAR data was approximately $1.2 billion and net income was $429.7 million. Management Solutions revenue grew 4% to $1.2 billion, while PEO and Insurance Solutions revenue jumped 12% to $368 million, driven by growth in PEO worksite employees and higher insurance volumes. Operating margin increased 280 basis points to 38%, and adjusted operating margin rose approximately 130 basis points to 42%.
Diluted earnings per share were $1.21 in the first quarter of fiscal 2027, up 14%, while adjusted diluted earnings per share rose 10% to $1.34. According to EDGAR data, fiscal 2026 revenue was $6.5 billion, gross profit was $4.8 billion, and net income was $1.8 billion, while trailing twelve-month revenue in fiscal 2027 increased to $6.8 billion. The company ended the first quarter with approximately $1 billion in cash, restricted cash, and corporate investments, compared with total borrowings of approximately $4.6 billion.
The average analyst price target is $111.17, within a narrow range of $107 to $115, with a “Neutral” consensus; the average target is approximately 14.7% below the 52-week range high of $130.32, while the low end of that range is $85.45. Following the September 23, 2026 results, coverage cited a price-to-earnings multiple between 20.9 and 21.5 times and a price-to-sales ratio of 5.70 times, figures that reflect a valuation that is not low for a company expecting annual revenue growth between 5% and 6%. Margin expansion and PEO growth balance this valuation, but BMO's reduction of its target to $113 and the focus on converting earnings into cash flow explain part of the revaluation and caution in the consensus.
Figures in the text are as of 2026-09-25; the live price is shown at the top of the page.
Total revenue increased 6% to $1.6 billion, with Management Solutions growing 4% to $1.2 billion and PEO and Insurance Solutions growing 12% to $368 million. The strongest momentum came from growth in PEO worksite employees, higher insurance volumes, and ASO-to-PEO conversions that exceeded management's expectations by two times. Operating margin increased to 38% and adjusted operating margin to 42%, while diluted earnings per share rose 14% to $1.21 and adjusted earnings per share increased 10% to $1.34.
Management views PEO as its solution with the highest client lifetime value and strongest retention, and the segment recorded record retention in the first quarter of fiscal 2027. Moving a client from ASO to PEO increases revenue by approximately 3.5 times, while internal conversions exceeded the company's expectations by two times. Referrals from HCM teams to PEO increased approximately 50% year over year, with high-single-digit growth in worksite employees and an increase in new sales from outside the client base as well.
Automated analysis for informational purposes only — not investment advice.
WISE is powered by more than 50 trillion proprietary data points covering payroll, human resources, benefits, and workforce workflows. In an Intelligent Pay Cycle test involving more than 50 thousand companies, the platform helped prevent approximately 90% of targeted payroll errors, while automated payroll processing increased approximately 20% between January and August 2026. Paychex increased the number of AI-powered agents and features from approximately 600 one quarter earlier to more than 2,000 and expanded the tools to more than 10 thousand employees.
The company reaffirmed its expectation for total revenue growth between 5% and 6% in fiscal 2027 and raised the PEO and Insurance Solutions growth range to 7%–8%. It expects revenue from funds held for clients between $200 million and $210 million, after incorporating a 25-basis-point increase in the federal funds rate. For the second quarter of fiscal 2027, it expects revenue growth of approximately 4% and an adjusted operating margin of approximately 40% due to the comparison with two nonrecurring items in the prior period.
The first risk is the expected slowdown in reported growth to approximately 4% in the second quarter of fiscal 2027, alongside Management Solutions performance that was slightly below management's expectations in the first quarter. The second is that PEO strength will become clearer after the October 2026 and January 2027 enrollment seasons, amid healthcare cost inflation and the possibility of changes in plan selections, particularly in the Florida program. The third is that investment in artificial intelligence increased fivefold year over year while WISE Hire and Paycor WISE Pro remain in the early stages of launch, in addition to a price-to-earnings multiple between 20.9 and 21.5 times and a “Neutral” analyst consensus.
Paychex ended the first quarter of fiscal 2027 with approximately $1 billion in cash, restricted cash, and corporate investments, compared with total borrowings of approximately $4.6 billion. Cash flow from operations was $414 million and was affected by the timing of client and company tax payments, while coverage on September 23, 2026 cited free cash flow of $357.4 million. The company returned $424 million to shareholders through cash dividends during the quarter, and its trailing twelve-month return on equity was 47%.