Paychex Trades 27.7% Below GF Value Ahead of Q1 Print
Paychex reports Sept. 23 with EPS seen at $1.32, up 8.2% year over year. A 3.96% yield and an 80% payout ratio put dividend coverage in focus.
Alpha Score of 48 reflects weak overall profile with poor momentum, strong value, strong quality. Based on 3 of 4 signals — score is capped at 90 until remaining data ingests.
Paychex reports fiscal first-quarter results before the market opens Wednesday, September 23, 2026. Consensus among analysts tracked by GuruFocus calls for earnings of $1.32 a share, up 8.2% year over year, on revenue of $1.63 billion, a 5.8% gain. The company has beaten analyst expectations on both lines in each of the last two years.
The report lands with the dividend in the foreground. Paychex yields 3.96%, paid out of an 80% earnings ratio that GuruFocus describes as a "moderately aggressive distribution of earnings." Management has raised the payout at a 10.8% annual pace over three years. Balancing that high ratio is strong cash flow and expanding operating margins, which underpin the dividend's sustainability, GuruFocus said. For income holders the print functions as a direct check on dividend coverage.
Paychex sells payroll processing, tax administration, HR administration, benefits and retirement services to small and midsize businesses across the United States and parts of Europe. A software-industry name with a $40.77 billion market cap, it holds a strong foothold in payroll outsourcing across a diverse client base.
GuruFocus's GF Value puts fair value at $158.46, 27.7% above the current $114.53 trading price, a level it calls modest undervaluation. The trailing P/E of 23.42x sits below the five-year median of 28.26x. The GF Score is 94 out of 100, with profitability and momentum each at a perfect 10, growth at 9, valuation at 8 and financial strength at a moderate 5. Financial strength at 5 reflects the relatively high payout ratio and asset growth outrunning revenue growth, GuruFocus said. The 8/10 valuation score, GuruFocus said, leaves room for capital appreciation alongside the income stream.
The ownership picture is two-sided. GuruFocus tracks 10 premium gurus holding Paychex shares, with 3 adding to positions and 5 trimming in recent quarters. Insiders sold about $3.8 million of stock over the past year and reported no significant buying in the last three months. The selling could reflect liquidity needs or portfolio rebalancing rather than a negative read on the company, GuruFocus said.
PAYX carries an Alpha Score of 49 out of 100 on AlphaScala's scale, labeled Mixed, with the full breakdown on the PAYX stock page.
GuruFocus assesses the payout as "reasonably safe," citing cash flow generation and expanding operating margins behind the 3.96% yield and the 80% earnings ratio.
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