DCF Studio

    PAYX · NMS · Technology

    Paychex, Inc.

    Also onShortfallConsensus DriftCrosscheck

    Implied value per share

    USD 111.03

    Market price

    USD 115.49

    Implied upside

    -3.9%

    10-year forecast · Perpetuity growth terminal value · Mid-year discounting · Base case · Price 2026-11-02 · Accounts to 2026-05-31

    Value Per Share

    Perpetuity growth
    USD 111.03-3.9%
    Exit multiple
    USD 125.83+9.0%
    Market price
    USD 115.49

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (USD). Outflows negative.

    0bn1bn3bnFY27FY28FY29FY30FY31FY32FY33FY34FY35FY36
    Nominal FCFFDiscounted to todayUSD
    LineFY27FY28FY29FY30FY31FY32FY33FY34FY35FY36CAGR
    RevenueUSD 6.9bnUSD 7.2bnUSD 7.6bnUSD 8.0bnUSD 8.3bnUSD 8.6bnUSD 9.0bnUSD 9.3bnUSD 9.5bnUSD 9.8bn+4.0%
    EBITUSD 2.7bnUSD 2.9bnUSD 3.0bnUSD 3.2bnUSD 3.3bnUSD 3.5bnUSD 3.6bnUSD 3.7bnUSD 3.8bnUSD 3.9bn+4.0%
    NOPATUSD 2.2bnUSD 2.3bnUSD 2.4bnUSD 2.5bnUSD 2.6bnUSD 2.7bnUSD 2.8bnUSD 2.9bnUSD 3.0bnUSD 3.1bn+4.0%
    Add depreciation & amortisationUSD 299.1mUSD 315.4mUSD 331.5mUSD 347.2mUSD 362.4mUSD 376.8mUSD 390.4mUSD 403.1mUSD 414.7mUSD 425.0m+4.0%
    Less capital expenditureUSD -222.5mUSD -249.1mUSD -277.1mUSD -306.2mUSD -336.2mUSD -366.9mUSD -398.1mUSD -429.6mUSD -461.0mUSD -492.0m+9.2%
    Capex, % of revenue3.2%3.4%3.6%3.8%4.0%4.2%4.4%4.6%4.8%5.0%-
    Less increase in working capitalUSD -68.4mUSD -73.0mUSD -71.8mUSD -70.0mUSD -67.5mUSD -64.5mUSD -60.8mUSD -56.5mUSD -51.6mUSD -46.2m-4.3%
    Free cashflow to firmUSD 2.2bnUSD 2.3bnUSD 2.4bnUSD 2.5bnUSD 2.6bnUSD 2.7bnUSD 2.8bnUSD 2.8bnUSD 2.9bnUSD 3.0bn+3.5%
    Discount factor0.96170.88940.82250.76070.70350.65060.60170.55640.51460.4759-
    Present valueUSD 2.1bnUSD 2.0bnUSD 2.0bnUSD 1.9bnUSD 1.8bnUSD 1.7bnUSD 1.7bnUSD 1.6bnUSD 1.5bnUSD 1.4bn-
    Present Value Of The ForecastUSD 17.7bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate4.89%US 10-year Treasury (^TNX), 2026-11-02
    Equity risk premium4.23%Damodaran, January 2026
    Beta0.863Reported 0.796, pulled toward 1.0 (Blume)
    Cost of equity8.55%Risk-free + beta x equity risk premium
    Cost of debt5.60%Interest expense / average total debt
    Market capitalisationUSD 41.1bn89.9% of capital
    Total debtUSD 4.6bn10.1% of capital, book value as a proxy
    Tax rate21.0%Effective, capped at statutory
    WACC8.13%E/V x Re + D/V x Rd x (1 - t)

    Terminal Value

    Perpetuity growth is intrinsic. The exit multiple defaults to the company's current EV/EBITDA, so it answers a different question - what the shares are worth if today's rating holds and EBITDA grows as forecast.

    Perpetuity growth at 2.50%

    Value per shareUSD 111.03

    59% of EV

    Forecast FCFF, final year
    USD 3.0bn
    Capex at depreciation, working capital in reinvestment
    USD 3.2bn
    Less reinvestment at g/ROIC (8.2% of NOPAT)
    USD -265.0m
    Capitalised
    USD 3.0bn
    ROIC (reported)
    30.6%
    Terminal value, undiscounted
    USD 54.1bn
    Terminal value, discounted
    USD 25.8bn
    Enterprise value
    USD 43.5bn
    Less net debt
    USD 3.5bn
    Equity value
    USD 40.0bn

    Exit at 15.1x EBITDA

    Value per shareUSD 125.83

    64% of EV

    Terminal value, undiscounted
    USD 65.3bn
    Terminal value, discounted
    USD 31.1bn
    Enterprise value
    USD 48.8bn
    Less net debt
    USD 3.5bn
    Equity value
    USD 45.3bn

    Spread between methods: 13%.

    Sensitivity

    Value per share (USD) by discount rate and long-run growth.

    Long-run growth
    Discount rate1.50%2.00%2.50%3.00%3.50%
    6.13%151.46162.43176.52195.24221.21
    7.13%122.66128.96136.70146.39158.85
    8.13%102.58106.43111.03116.58123.40
    9.13%87.7990.2493.1096.49100.52
    10.13%76.4578.0479.8882.0284.53

    Outlined: this model. Green text: above today's price of 115.49. Shading: distance from this model's own value.

    Priced In

    What each input would have to be to justify the current price, one at a time.

    InputActualModelImplied
    Revenue growth, a year9.2%4.1%4.6%
    EBIT margin41.2%40.0%41.5%
    Discount rate-8.1%7.9%
    Download as Excel

    Live formulas, not pasted numbers - edit a driver and the workbook reprices.

    Yahoo Finance and RBA data. General information, not advice. Methodology.