Is Paychex (PAYX) Undervalued After Recent Share Price Weakness?

Paychex (PAYX) has been treading water lately, with shares roughly flat over the month but down almost 17% in the past 3 months, even as earnings and revenue continue to grow.

See our latest analysis for Paychex.

That recent 90 day share price return of negative 16.6 percent looks more like momentum fading than building, even though the five year total shareholder return of just over 41 percent still underscores Paychex’s longer term compounding power.

If Paychex’s pause has you wondering what else is out there, this could be a good moment to explore fast growing stocks with high insider ownership as potential next wave candidates.

With earnings still climbing, a modest valuation discount to analyst targets, and shares stuck in reverse, is Paychex now quietly trading below its true worth, or has the market already nailed its future growth potential?

Most Popular Narrative Narrative: 16.5% Undervalued

With Paychex last closing at $112.06 versus a most popular narrative fair value of about $134.14, the story leans toward a meaningful discount rooted in detailed growth and margin assumptions.

The pending acquisition of Paycor is expected to strengthen Paychex's competitive position by expanding its customer base and offering a more comprehensive HCM portfolio, which could drive revenue growth through cross-selling opportunities.

Read the complete narrative.

Curious how steady double digit profit growth, rising margins, and a rich future earnings multiple can still point to undervaluation? The full narrative unpacks the exact revenue runway, earnings trajectory, and discount rate math that turn those assumptions into today’s fair value target.

Result: Fair Value of $134.14 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, softer organic growth from Paycor and macro driven payroll softness could easily derail those upbeat earnings assumptions and compress the valuation story.

Find out about the key risks to this Paychex narrative.

Build Your Own Paychex Narrative

If you see Paychex’s story differently or want to stress test the numbers yourself, you can build a custom narrative in just minutes: Do it your way.

A great starting point for your Paychex research is our analysis highlighting 3 key rewards and 2 important warning signs that could impact your investment decision.

Looking for more investment ideas?

Before you move on, lock in your next opportunity by scanning targeted stock lists on Simply Wall Street that many investors will only notice after the move is over.

• Capture early-stage potential by reviewing these 3577 penny stocks with strong financials that already show financial strength instead of just speculation.
• Position ahead of the innovation curve by focusing on these 26 AI penny stocks reshaping entire industries with real revenue momentum.
• Strengthen your long term returns by targeting these 15 dividend stocks with yields > 3% that combine income today with room for future growth.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com