Core Insights - Paychex's growth is driven by the increasing adoption of SaaS solutions among businesses, with new acquisitions and AI innovations expanding its market reach [1][9] - The company anticipates a 12.8% year-over-year increase in Q3 fiscal 2026 earnings, with fiscal 2026 and 2027 earnings projected to rise by 10.2% and 7.4% respectively [1][9] - Revenue growth is expected to be 16.5% in fiscal 2026 and 5.5% in fiscal 2027 [1][9] Revenue Growth Drivers - The revenue growth of Paychex is primarily fueled by the rising client adoption of cloud-based solutions, particularly in the Software-as-a-Service (SaaS) sector [2] - The company's offerings in management solutions and Professional Employer Organization (PEO) categories provide comprehensive services at competitive prices, enhancing growth opportunities [2] Client Retention and Support - The PEO solution, including the Paychex Flex platform, helps retain clients by enabling small businesses to offer competitive benefits comparable to larger corporations [3] - The Partner Plus program strengthens client relationships by providing access to expert advisory services from various professionals [4] Strategic Acquisitions and Innovations - The acquisition of Paycor in April 2025 has allowed Paychex to address the evolving needs of its customer base across different market segments [5] - Continuous investment in technology and innovation is a key strategy for gaining market share [5] Technological Advancements - Paychex has launched a GenAI-powered platform for real-time employment law and compliance, aiding clients in navigating complex legal requirements [6] - The introduction of a patent-pending AI-powered Knowledge Mesh system enhances the company's ability to manage unstructured data effectively [6]

We recently published 9 Stocks Jim Cramer Talked About.  Paychex, Inc. (NASDAQ:PAYX) is one of the stocks on Jim Cramer talked about. Paychex, Inc. (NASDAQ:PAYX)’s shares are down 17% year-to-date and has seen several price target cuts recently. The firm reported its second-quarter earnings on December 19th and posted $1.56 billion in revenue to slightly miss analyst estimates of $1.57 billion. Ahead of the earnings, BMO Capital had cut Paychex, Inc. (NASDAQ:PAYX)’s share price target to $121 from $140 an ...

Group 1 - The core viewpoint of the article emphasizes the market analysis of Paychex Inc., highlighting its performance and potential investment opportunities [1] Group 2 - The article discusses the financial metrics of Paychex Inc., including revenue growth and profitability indicators, which are crucial for assessing the company's market position [1] - It provides insights into the competitive landscape in the payroll and HR services industry, noting trends that could impact Paychex's market share [1] - The analysis includes projections for future performance based on current economic conditions and industry trends, suggesting areas for potential growth [1]

Paychex, Inc. (NASDAQ:PAYX) is one of the stocks that was on Jim Cramer’s radar. Cramer noted the company’s earnings and analyst sentiment toward it. The Mad Money host stated: “If you want to get a real read on employment, I always like to check in with Paychex. That’s the payroll processor and outsourced human resources play, mainly serves small and medium-sized businesses. This morning, Paychex reported a modest top and bottom-line beat, management raising the midpoint of the full-year earnings forecas ...

Financial Performance - Total service revenue for the second quarter increased by 17% to $1,503.3 million compared to $1,280.8 million in the prior year period[119]. - Total revenue for the six months ended November 30, 2025, rose by 18% to $3,097.6 million from $2,635.4 million in the prior year[119]. - Adjusted operating income for the second quarter was $649.0 million, reflecting a 21% increase from $538.1 million in the prior year[119]. - Net income for the second quarter decreased by 4% to $395.4 million compared to $413.4 million in the prior year[120]. - Diluted earnings per share for the second quarter was $1.10, down 4% from $1.14 in the prior year[120]. - Management Solutions revenue increased by 21% to $1,166.4 million for the second quarter compared to $962.9 million in the prior year[120]. - Operating income increased by 6% to $571.9 million for the second quarter, while adjusted operating income grew by 21% to $649.0 million[126]. - Adjusted net income for the first half of 2025 was $895.4 million, an 8% increase from $832.2 million in the first half of 2024[130]. - Adjusted diluted earnings per share rose to $2.48 in the first half of 2025, up 8% from $2.30 in the first half of 2024[130]. - EBITDA for Q2 2025 was $681.3 million, reflecting an 18% increase from $579.1 million in Q2 2024[130]. - Adjusted EBITDA for the first half of 2025 reached $1,378.5 million, an 18% increase from $1,164.9 million in the first half of 2024[130]. Expenses and Costs - Total expenses for the second quarter increased by 27% to $985.7 million compared to $778.8 million in the prior year[120]. - Total expenses rose by 27% to $985.7 million for the second quarter, driven by increased compensation-related expenses and acquisition-related costs[125]. - Acquisition-related costs amounted to $77.1 million for the second quarter, reflecting expenses related to the integration of Paycor[128]. Client Funds and Interest - Interest on funds held for clients rose by 51% to $54.3 million in the second quarter, up from $36.1 million in the prior year[120]. - Funds held for clients increased by 26% to $5,353.2 million for the three months ended November 30, 2025, compared to $4,252.3 million in the prior year[121]. - Average interest rates earned on funds held for clients remained stable at 3.5% for both the current and prior year periods[121]. - Interest on funds held for clients increased by 51% to $54.3 million for the second quarter, attributed to higher average investment balances from the Paycor acquisition[124]. - The average interest rate earned on combined funds held for clients and corporate cash equivalents was 3.7%, slightly down from 3.8% in the prior year[157]. Acquisitions - The acquisition of Paycor was completed on April 14, 2025, enhancing the company's HR technology and advisory solutions[117]. - Management Solutions revenue reached $1.2 billion for the second quarter, reflecting a 21% increase year-over-year, with Paycor contributing approximately 17% to this growth[124]. Tax and Rates - The effective income tax rate remained stable at 24.0% for the second quarter compared to the prior year[120]. - The effective income tax rate was 24.0% for the second quarter, consistent with the prior year period[129]. - The Federal Funds rate decreased to a range of 3.50% to 3.75% effective December 11, 2025, down from 4.00% as of November 30, 2025[123]. - The Federal Funds rate was in the range of 3.75% to 4.00% as of November 30, 2025, and was subsequently decreased to a range of 3.50% to 3.75% effective December 11, 2025[160]. Investments and Cash Flow - Total corporate investments, including cash and restricted cash, amounted to $1.6 billion as of November 30, 2025[132]. - The company had $2.0 billion in unused capacity under unsecured credit facilities as of November 30, 2025[132]. - Long-term borrowings totaled $5.0 billion, with short-term borrowings at $18.2 million as of November 30, 2025[132]. - Net cash provided by operating activities for the six months ended November 30, 2025, was $1,163.3 million, an increase of $322.2 million compared to $841.1 million in the prior year[149]. - Net cash used in investing activities increased to $926.4 million from $302.7 million, reflecting a change of $623.7 million[149]. - Cash dividends per common share increased to $2.16 from $1.96, representing a growth of approximately 10.2%[149]. - The total investment portfolio is expected to average approximately $7.4 billion for the fiscal year ending May 31, 2026, with 40% in short-term securities and 60% in AFS securities[163]. - As of November 30, 2025, the fair value of AFS securities was $4.5 billion, with a weighted-average yield-to-maturity of 3.6%[165]. - The net unrealized losses on the combined funds held for clients and corporate AFS securities were $9.0 million as of November 30, 2025, down from $53.6 million as of May 31, 2025[164]. - A 25-basis-point change in taxable interest rates is expected to affect earnings by approximately $5.5 million to $6.0 million after taxes over a twelve-month period[162]. - As of November 30, 2025, $1.9 billion of AFS securities had fair values below amortized cost, attributed to changes in interest rates rather than credit risk[167]. Accounting and Risk Factors - Recently adopted accounting pronouncements are discussed in Note A of the Notes to Consolidated Financial Statements (Unaudited) in Item 1 of Form 10-Q[172]. - Recently issued accounting pronouncements are also detailed in Note A of the Notes to Consolidated Financial Statements (Unaudited) in Item 1 of Form 10-Q[172]. - Market risk factors are addressed under Item 2 – Management's Discussion and Analysis of Financial Condition and Results of Operations[173].

Paychex, Inc. (NASDAQ:PAYX) reported upbeat earnings for its fiscal second-quarter on Friday.The company posted an 18% year-over-year increase in total revenue to $1.557 billion. Adjusted diluted earnings per share were $1.26, up from $1.14 a year earlier, while GAAP diluted earnings per share were $1.10, slightly lower than the $1.14 reported last year. Adjusted EPS beat estimates by 3 cents; sales missed by $10 million."We are proud of the significant progress we've made on key strategic priorities, enabl ...

Paychex, Inc. (NASDAQ:PAYX) reported upbeat earnings for its fiscal second-quarter on Friday.The company posted an 18% year-over-year increase in total revenue to $1.557 billion. Adjusted diluted earnings per share were $1.26, up from $1.14 a year earlier, while GAAP diluted earnings per share were $1.10, slightly lower than the $1.14 reported last year. Adjusted EPS beat estimates by 3 cents; sales missed by $10 million."We are proud of the significant progress we've made on key strategic priorities, enabl ...

Core Insights - Paychex reported revenue of $1.56 billion for the quarter ended November 2025, reflecting an 18.3% increase year-over-year and a surprise of +0.22% over the Zacks Consensus Estimate of $1.55 billion [1] - Earnings per share (EPS) for the quarter was $1.26, up from $1.14 in the same quarter last year, with an EPS surprise of +1.61% compared to the consensus estimate of $1.24 [1] Financial Performance Metrics - Average investment balance for funds held for clients was $5.35 billion, exceeding the three-analyst average estimate of $5.22 billion [4] - Average interest rates earned on funds held for clients was 3.5%, slightly above the three-analyst average estimate of 3.4% [4] - Average investment balance for corporate cash equivalents and investments was $1.68 billion, surpassing the $1.55 billion average estimate based on two analysts [4] - Average interest rates earned on corporate cash equivalents and investments was 3.9%, below the two-analyst average estimate of 4.1% [4] - Revenue from Management Solutions was $1.17 billion, slightly below the $1.18 billion average estimate from five analysts, but represented a +21.1% year-over-year change [4] - Revenue from interest on funds held for clients was $54.3 million, exceeding the $45.65 million estimated by five analysts, marking a +50.4% change year-over-year [4] - Total service revenue was $1.5 billion, slightly below the $1.51 billion estimated by five analysts, with a +17.4% year-over-year change [4] - Revenue from PEO and Insurance Solutions was $336.9 million, above the five-analyst average estimate of $330.83 million, representing a +6% year-over-year change [4] Stock Performance - Shares of Paychex have returned +0.7% over the past month, underperforming the Zacks S&P 500 composite's +3% change [3] - The stock currently holds a Zacks Rank 4 (Sell), indicating potential underperformance relative to the broader market in the near term [3]

I last covered Paychex ( PAYX ) in September following the release of their Q1 2026 earnings, when the stock traded for about $126 and appeared about 12% undervalued. I rated the stock a BUY due toI have a masters degree in Analytics from Northwestern University and a bachelors degree in Accounting. I have worked in the investment arena for over 10 years starting as an analyst and working my way up to a management role. Dividend investing is a personal hobby and I look forward to sharing my thoughts with th ...

Core Viewpoint - Paychex (PAYX) was previously rated a BUY due to being approximately 12% undervalued when the stock was trading around $126 following the release of Q1 2026 earnings [1] Company Summary - The analyst has a master's degree in Analytics and a bachelor's degree in Accounting, with over 10 years of experience in the investment arena, starting as an analyst and advancing to a management role [1] - The analyst expresses a personal interest in dividend investing and aims to share insights with the Seeking Alpha community [1] Analyst's Position - The analyst currently holds no stock, option, or similar derivative position in any of the companies mentioned but may initiate a long position in PAYX within the next 72 hours [2] - The article reflects the analyst's own opinions and is not influenced by compensation from Seeking Alpha [2]