PAYX Value Scorecard - Paychex

Value Scorecard · run 2026-10-18

13 value checks: 12 scored 1 to 5, plus moat evidence

40/60

moderate value score

Earnings & returns

EPS Trend

4/5

Diluted EPS: $4.30 (2023), $4.67 (2024), $4.58 (2025), $4.89 (2026). It rose every year but one and ended above 2023; the framework scores that as 4.

ROE Trend

5/5

ROE (net income / common equity): 44.6% (2023), 44.5% (2024), 40.1% (2025), 47.1% (2026). Median 44.5%, lowest 40.1%; the framework scores a median above 20% as 5.

ROIC

5/5

ROIC of 26.9%: operating income of $2.51B divided by $9.33B of capital (total assets $16.17B minus current liabilities $6.84B), fiscal year to May 31, 2026, as filed in the 10-K (SEC EDGAR). The framework scores above 20% as 5.

Profit Margins

5/5

Net margin of 27.4%; the framework scores above 20% as 5; gross margin 74.4%, operating margin 38.5%.

Balance sheet & cash

Debt-to-Equity

3/5

Debt-to-equity of 1.25; the framework scores 0.8-1.5 as 3 (total debt $4.62B, total cash $934.20M).

Free Cash Flow

4/5

Free cash flow (operating cash flow minus capital expenditure): $1.56B (2023), $1.74B (2024), $1.71B (2025), $2.32B (2026). It rose every year but one and ended above 2023; the framework scores that as 4.

Retained Earnings

2/5

Retained earnings, as filed in the 10-Ks (SEC EDGAR): $2.02B (2023), $2.21B (2024), $2.28B (2025), $1.81B (2026). It ended at or below 2023; the framework scores that as 2.

Valuation models

Graham IV

1/5

IV = EPS x (8.5 + 2g) x (4.4 / Y) = $5.04 x (8.5 + 2 x 2.3) x (4.4 / 4.5) = $64.56. Current price $111.63; price is 72.9% above the model value.

DCF Value

3/5

FCF/share = $5.301, stage 1 growth = 11.1% for 5 years, terminal growth = 3%, discount rate = 10%. Stage 1 PV = $27.31, PV of terminal value = $81.98, DCF value = $109.29. Current price $111.63; price is 2.1% above the model value.

Margin of Safety

2/5

Graham value $64.56 (price is 72.9% above the model value); DCF value $109.29 (price is 2.1% above the model value).

Price-to-Book

1/5

P/B of 10.72; the framework scores above 5.0 as 1.

Business quality

Moat Evidence

Not scored

A moat (a brand, a network, switching costs, patents, scale, a licence) is not a number in the filings, so Valerius doesn’t score it. Below are the figures and the words moat analysis starts from, from the company’s own 10-K filings. The conclusion is yours.

Return on capital, each year

Above 15% in 10 of 10 years (2017-2026); lowest 23.0%, highest 59.5%.

Gross margin, each year

Between 67.6% and 73.4% over 9 years (a range of 5.8 points).

Competition, in the company’s own words · 10-K filed Jul 17, 2026

We remain focused on serving customers based upon the growth potential that we believe exists in the markets we serve. Census data indicates that in the U.S., there are over 6 million employer firms in our target markets. The market for HCM solutions is highly competitive and fragmented. We compete with one primary national competitor as well as other national, international, regional, local, and online payroll

The opening of the company’s “Markets and Competition” section in its 10-K, quoted word for word, not summarized or edited. It is the company’s own description, not Valerius’s view, and may include the company’s expectations. Open the filing.

Return on capital = operating income / (total assets − current liabilities), the ROIC row’s definition; 15% is the framework’s return threshold. Gross margin = gross profit / revenue. Both from each year’s 10-K via SEC EDGAR. Moat analysis commonly looks at whether returns and margins held up over many years. These figures don’t say whether the company has an advantage, what it is, or whether it will last.

Capital Allocation

5/5

Capital allocation, 2023-2026: dividends or buybacks paid in every year (pass); $6.41B paid out against $7.33B of free cash flow (pass); total debt $865.70M to $4.61B, up 432.3%, 1.5x EBITDA (pass: at most 2x EBITDA); shares outstanding 0.36B to 0.36B, down 1.4% (pass). 4 of 4 tests passed; the framework scores that as 5.

Filings

Company notices to the SEC

Not scored

Three kinds of event the company reported to the SEC in the last 5 years, from its filings on SEC EDGAR.

These are events the company reported to the SEC. An auditor change or a late filing can have many causes; each date links to the filing, where the company explains it. Valerius does not score these.

How the Graham and DCF values were calculated

  Graham Formula:
    IV = EPS x (8.5 + 2g) x (4.4 / Y)
    EPS = $5.04, g = 2.3%, Y = 4.5
    IV = $64.56
    Current price $111.63 vs Graham value $64.56 — price is 72.9% above the model value.

  DCF:
    FCF/share = $5.301
    Stage 1 growth = 11.1% for 5 years | terminal growth = 3.0% | discount rate = 10.0%
      Y1: $5.890 → PV $5.354
      Y2: $6.543 → PV $5.408
      Y3: $7.270 → PV $5.462
      Y4: $8.077 → PV $5.516
      Y5: $8.973 → PV $5.572
    Stage 1 PV sum = $27.31
    Terminal value at end of Y5 = $132.03
    PV of terminal value = $81.98
    DCF value = $109.29
    Current price $111.63 vs DCF value $109.29 — price is 2.1% above the model value.

Data from yfinance summary figures and financial statements, and from the company’s 10-K filings via SEC EDGAR; computed at a price of $111.63. Every score is calculated from the figures by the framework’s fixed rules, and the explanation beside it is generated from the same figures: Graham value, DCF value, margin of safety, ROIC, profit margins, debt-to-equity, price-to-book, EPS trend, ROE trend, free cash flow, retained earnings and capital allocation. No AI is involved in this scorecard. The moat is shown as evidence, without a score. Read each score with the figures beside it. Intrinsic value calculations are model outputs based on stated assumptions, not predictions.

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