Paychex, Inc. (PAYX)

In April 2025, Paychex completed the acquisition of Paycor HCM, contributing to a 21% increase in sales in its Management Solutions operations. On September 30, 2025, Paychex reported its Q1 FY2026 earnings, with revenue increasing by 16.8% year-over-year to $1.54 billion. Adjusted diluted earnings per share (EPS) rose by 5% to $1.22, exceeding consensus estimates, although GAAP EPS decreased by 10%. Operating expenses increased by 29% to $998 million, largely due to the Paycor acquisition. Despite strong fundamentals, Paychex's stock has underperformed the S&P 500 year-to-date and over the past year. Management raised its fiscal 2026 adjusted EPS growth guidance to 9-11%. Institutional investors have shown varied activity; for instance, J. Safra Sarasin Holding AG decreased its holdings by 48.4% in Q2 2025, while Select Equity Group L.P. and Neuberger Berman Group LLC significantly increased their positions in Q1 2025. Analyst ratings during this period included "sector perform" from Royal Bank of Canada, and "market perform" and "neutral" from BMO Capital Markets and UBS Group, respectively, with some target price reductions.

Paychex's business model is tied to the employment needs of its small to medium-sized business clients. Many businesses experience seasonal fluctuations in their workforce, leading to varying demands for payroll processing, onboarding of temporary staff, and compliance with labor laws. Paychex offers scalable solutions designed to help businesses manage these changing workforce sizes and associated payroll complexities. While Paychex itself aims for consistent revenue through its subscription-based model, the demand for its services from certain client segments will naturally align with their seasonal hiring and employment cycles.

Paychex, Inc. is a provider of human capital management (HCM) solutions, offering services to small and medium-sized businesses. It operates within the Industrials sector, providing integrated solutions for human resources, payroll, and employee benefits outsourcing. Its major products and services include payroll processing, payroll tax administration, employee payment services, regulatory compliance, HR solutions, retirement services administration, business insurance, and time and attendance systems. Paychex also offers recruiting and applicant tracking software through its cloud-based platform, Paychex Flex.

Headquartered in Rochester, New York, Paychex, Inc. serves approximately 800,000 payroll clients and over 740,000 clients across the United States and Europe. The company maintains more than 100 offices and has a presence in countries such as Brazil, Denmark, Germany, Norway, and Sweden. Within the U.S., Paychex has numerous office locations, including Allentown, Auburn, Baton Rouge, High Point, Phoenix, Sarasota, St. Petersburg, and Tempe.

Paychex maintains a strong brand reputation, evidenced by its inclusion in several Forbes lists in 2025, such as "#310 America's Best Employers For Company Culture," "#17 America's Best Employers By State," and "#1044 Global 2000". The company was also recognized as one of the "Best Places to Work in Rochester" in 2016. In August 2024, Paychex launched Paychex Flex® Perks, a digital marketplace offering a variety of employee benefits, including financial wellness solutions and voluntary lifestyle benefits, integrated into its cloud-based platform.

Institutional investors hold a substantial majority of Paychex, Inc. stock, with ownership ranging from 79% to 83.47%. Major institutional owners include The Vanguard Group, Inc. (9.0% of shares outstanding), BlackRock, Inc. (7.6%), Capital Research and Management Company (7.26%), and State Street Global Advisors, Inc. (3.91%). The largest individual shareholder is B. Golisano, the company's founder, who holds approximately 10% of shares outstanding. Insiders, including company management, collectively own around 10-11% of the company's shares.