Paychex Inc.
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+ FollowMarket Cap$40.36B
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Earnings Call Q1 2027
September 23, 2026 - AI Summary
Q1 fiscal ’27 results were strong; profitability expanded
- Total revenue: +6% YoY to ~$1.6B
- Operating income / EPS: Operating margin +280 bps to 38%; adjusted operating margin +~130 bps to ~42%
- Diluted EPS: $1.21 (+14% YoY); adjusted diluted EPS: $1.34 (+10% YoY)
- Expenses: up only ~1% YoY despite continued investment; offset by AI/productivity efficiencies
- Cash flow from ops: $414M (timing of client & corporate tax payments)
- Capital return: $424M dividends in the quarter; ~47% ROE (12-month rolling)
Guidance updated modestly—PEO is the main driver
- Full-year fiscal ’27 guidance reaffirmed, but with updated segment expectations
- PEO & Insurance Solutions revenue growth: now 7%–8% (up from prior guidance) due to stronger PEO momentum
- Interest on funds held for clients: now $200M–$210M (includes latest +25 bps Fed funds rate impact)
- Management Solutions (rest of the portfolio) color: if Q1 strength continues, PEO trends toward the high end while Management Solutions trends toward the low end (investors should expect a mix shift favoring PEO)
- Macro assumption: “stable demand” and flat employment levels
Big surprise / “what’s working”: advisory-driven go-to-market + AI execution exceeded expectations
- CEO emphasized AI as embedded “intelligence” (WISE) plus advisers “in the loop,” not standalone tools
- WISE scale: 2,000+ agents/features deployed; 50 trillion proprietary workforce data points
- Early KPI proof: Intelligent Pay Cycle pilot (50,000+ businesses) helped prevent ~90% of payroll errors
- Operational efficiency: agentic payroll processing automation up ~20% (Jan–Aug) while maintaining quality/accuracy
- Go-to-market execution exceeded plan: ASO → PEO upgrades were double expectations; HCM sales referrals into PEO were up ~50% YoY
- New AI products launched/announced: WISE Hire (agentic recruiting for SMBs) and embedding WISE into Microsoft ecosystem
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$167.42
41.1% upside
Current Fair Value
41.1% upsideUndervalued by 41.1% based on the discounted cash flow analysis.
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Share Statistics
| Market cap | $40.36 Billion |
|---|---|
| Enterprise Value | $44.46 Billion |
| Annual dividend | $4.65 |
| Dividend yield | 4.15% |
| Earnings per Share | $4.9 |
| Beta | 0.85 |
| Outstanding Shares | 355,800,000 |
Return
| Return on Equity | 48.74% |
|---|---|
| Return on Assets | 11.53% |
| Return on Invested Capital | 25.01% |
Valuation & Multiples
| P/E Ratio | 22.2 |
|---|---|
| PEG | 185.65 |
| Price to Sales | 6.59 |
| Price to Book Ratio | 11.87 |
| Enterprise Value to Revenue | 6.73 |
| Enterprise Value to EBIT | 19.07 |
| Enterprise Value to Net Income | 24 |
| Total Debt to Enterprise | 0.11 |
| Debt to Equity | 1.27 |
Revenue Sources
No data
Last Earnings Call
Report Date
September 29, 2026
EPS Estimate
$1.32
Consensus analyst estimateRevenue Estimate
$1.63 B
Consensus analyst estimateNext Earnings Call
Expected Date
December 18, 2026
EPS Estimate
$1.30
Consensus analyst estimateRevenue Estimate
$1.62 B
Consensus analyst estimateInstitutional Put/Call Ratio
Compares institutional put options with call options. At 0.00, the ratio is below 1, so institutions hold more calls than puts.
| Put/Call Ratio | 0.0000▼ 89.33% |
|---|---|
| Total Calls | -▼ 100.00% |
| Total Puts | 1,000▼ 99.94% |
Institutional Ownership
Holdings and activity of institutional investors.
| Ownership % | 5.79%▼ 79.99% |
|---|---|
| Total Invested | $2.03B▼ 93.26% |
| Investors Holding | 636▼ 942.00% |
About Paychex Inc.
14,300 employees
CEO: Martin Mucci
Paychex, Inc. is a leading provider of integrated human capital management solutions for human resources, payroll, benefits, and insurance services. By combining its innovative software-as-a-service technology and mobility platform with ...