Paychex (PAYX) · Q3 2026 results and valuation

At 9.2% growth a year (3-year revenue growth), the model's fair value is $134.86 a share — the stock trades 14% below it. Today's price assumes 7.2% growth a year.

1. Guidance

   Paychex updated its fiscal 2027 guidance to expect PEO and Insurance Solutions revenue growth to be in the range of 7% to 8%.

2. Key theme

   Paychex expects Q2 revenue growth of approximately 4% with an adjusted operating margin of approximately 40%.

   Source quote

   “We would expect Q2 revenue growth to be approximately 4% with an adjusted operating margin of approximately 40%.”

3. Figure

   Total revenue increased 6% to $1.6 billion in the first quarter, driven by growth in advisory solutions, particularly PEO.

   Source quote

   “For the first quarter, total revenue increased 6% to $1.6 billion, driven by the strength in our advisory solutions, particularly PEO.”

4. Figure

   PEO and insurance grew 12% to $368 million due to higher PEO worksite employees and increased PEO insurance volumes.

   Source quote

   “PEO and insurance growth in the quarter was 12% to $368 million, primarily driven by strong growth in PEO worksite employees and increased PEO insurance volumes.”

5. Figure

   WISE agentic payroll increased automated payroll processing by nearly 20% from January through August to enhance operational efficiency while maintaining high service quality and accuracy rates.

   Source quote

   “WISE agentic payroll continues to enhance operational efficiency, increasing automated payroll processing by nearly 20% from January through August, while also maintaining high service quality and accuracy rates.”

4 more

1. Figure

   WISE helped prevent approximately 90% of payroll errors for more than 50,000 businesses.

   Source quote

   “Based upon the results from more than 50,000 businesses, WISE helped prevent approximately 90% of those payroll errors.”

2. Figure

   PAYX returned $424 million to shareholders through cash dividends this quarter.

   Source quote

   “This quarter, we returned $424 million to shareholders through cash dividends.”

3. Figure

   The company reached over 450,000 employees, representing double-digit growth in that product during the first quarter of 2027.

   Source quote

   “We now have over 450,000 employees, double-digit growth in that product.”

4. Guidance

   Paychex delivered a quarter at the high end of the full year guidance range.

Script and answers carried a similar tone, so the script's message held up under questioning.

Sentences that drove the tone

“PEO remains a key growth driver and delivered industry-leading high single-digit worksite employee growth and delivered record retention.”

“With our multiple durable recurring revenue streams and businesses, industry-leading margins, strong free cash flow, disciplined capital allocation, we see continued opportunity to expand our earnings power through scale, mix,...”

“And so when you're growing your top line 6%, you're only growing your expenses 1%, you can see how it's easy to get double-digit earnings growth and the strong margin...”