MeritValue

PAYCHEX INC

PAYXdata completeness 100%19 fiscal years on file
The thesis, from the filings

PAYCHEX INC earns about 29% on invested capital, far above its ~9% cost of capital, with a roughly flat share count — a real edge showing up in the numbers. The estimate methods put fair value between $47.71 and $78.22 a share.Whether it’s worth owning at today’s price is the last question — and yours to answer, below.

i. The business — what you’d actually own
FigureFY 2022FY 2023FY 2024FY 2025FY 2026
Revenue$4.55B1$4.91B2$5.13B3$5.41B3$6.3B3
Net income$1.39B4$1.56B5$1.69B6$1.66B6$1.76B6
Operating cash flow$1.59B7$1.71B8$1.9B9$1.9B9$2.56B9
Capital expenditure$133.8M10$143M11$161.4M12$191.8M12$234.9M12
Free cash flow (derived)$1.46B7$1.56B8$1.74B9$1.71B9$2.32B9
Total debt$1.6B13$1.61B14$1.62B15$9.92B16$9.11B16
Cash & equivalents$370M17$1.22B18$1.47B19$1.63B19$1.09B19
Diluted shares363.1M362.3M362.1M362.0M360.0M

Superscripts are receipts. Each links to the SEC filing the number came from (full list at the bottom).

ii. Your slice — ownership made literal
If you owned
shares
Net assets behind them
$103.75
your share of equity
Profit it earned you last year
$48.89
Free cash flow it threw off
$64.49
Debt you’d be carrying
$253.12

10 shares is a claim on $103.75 of net worth that earned you $48.89 and generated $64.49 of cash last year, against $253.12 of debt.

iii. Is this a good business?
Moat signal · return on invested capital
29% avg · 5y
FY22 33%FY23 41%FY24 44%FY25 13%FY26 15%

It earned about 29% on invested capital, year after year, against a ~9% cost of capital — the footprint of real pricing power. Competition usually drags returns like this back down; here it hasn't.

seeing a moat in the numbers →
Management signal · capital allocation
−1% shares · 5y

Share count is roughly flat over 5 years — little dilution, little buyback. Total debt has risen 468% over the same window.

reading capital allocation →

Signals, not verdicts — read from the filings above. Numbers don’t prove a moat; they show its footprint. You decide.

iv. What it’s worth — engine v0.1.0

The 3 estimate methods that apply put fair value between $47.71 and $78.22 a share. They rest on different assumptions, so where they diverge is the story; the Graham Number is a stricter floor, not a target.

DCF · Growth Exit 10Y
$78.22
assumptions (10)
  • riskFreeRate4.7%
  • equityRiskPremium5.0%
  • beta100.0%
  • equityWeight85.0%
  • costOfDebtSpread1.5%
  • taxRate21.0%
  • terminalGrowth2.5%
  • projectionYears10
  • fcfGrowth6.0%
  • fcfBase$1.74B
DCF · Growth Exit 5Y
$67.19
assumptions (10)
  • riskFreeRate4.7%
  • equityRiskPremium5.0%
  • beta100.0%
  • equityWeight85.0%
  • costOfDebtSpread1.5%
  • taxRate21.0%
  • terminalGrowth2.5%
  • projectionYears5
  • fcfGrowth6.0%
  • fcfBase$1.74B
Earnings Power Value
$47.71
assumptions (8)
  • riskFreeRate4.7%
  • equityRiskPremium5.0%
  • beta100.0%
  • equityWeight85.0%
  • costOfDebtSpread1.5%
  • taxRate21.0%
  • normalizedEarnings$1.66B
  • growthAssumed0.0%
Graham Number
$33.79
assumptions (1)
  • grahamMultiplier2250.0%

Different models answer different questions — which to trust when →

v. The price question — last, on purpose
Is today’s price fair?
See live price ↗
Type a price. The ledger answers.
Or set your own belief
FCF growth, next 5 years6.0%
Discount rate (WACC)8.93%
Terminal growth2.5%
At your growth, a share is worth $67.19
The three cases
Bear0.0%$46.62
Base6.0%$67.19
Bull11.0%$87.9

Bear/base/bull growth = 0% / filed history / history + 5pp. Type a price to see the return each case implies.

Default growth 6.0%= this company’s own filed history (median-to-median FCF CAGR, clamped 0–20%). Your adjustments are recorded anonymously. They become the “what do owners actually believe” dataset.

Sources — the receipts
  1. 10-K · period ending 2022-05-31 · accession 0000950170-24-082958 (RevenueFromContractWithCustomerExcludingAssessedTax)
  2. 10-K · period ending 2023-05-31 · accession 0000950170-25-095300 (RevenueFromContractWithCustomerExcludingAssessedTax)
  3. 10-K · period ending 2024-05-31 · accession 0001193125-26-307785 (RevenueFromContractWithCustomerExcludingAssessedTax)
  4. 10-K · period ending 2022-05-31 · accession 0000950170-24-082958 (ProfitLoss)
  5. 10-K · period ending 2023-05-31 · accession 0000950170-25-095300 (ProfitLoss)
  6. 10-K · period ending 2024-05-31 · accession 0001193125-26-307785 (NetIncomeLoss)
  7. 10-K · period ending 2022-05-31 · accession 0000950170-24-082958 (NetCashProvidedByUsedInOperatingActivities)
  8. 10-K · period ending 2023-05-31 · accession 0000950170-25-095300 (NetCashProvidedByUsedInOperatingActivities)
  9. 10-K · period ending 2024-05-31 · accession 0001193125-26-307785 (NetCashProvidedByUsedInOperatingActivities)
  10. 10-K · period ending 2022-05-31 · accession 0000950170-24-082958 (PaymentsToAcquirePropertyPlantAndEquipment)
  11. 10-K · period ending 2023-05-31 · accession 0000950170-25-095300 (PaymentsToAcquirePropertyPlantAndEquipment)
  12. 10-K · period ending 2024-05-31 · accession 0001193125-26-307785 (PaymentsToAcquirePropertyPlantAndEquipment)
  13. 10-K · period ending 2022-05-31 · accession 0000950170-23-032988 (LongTermDebtNoncurrent)
  14. 10-K · period ending 2023-05-31 · accession 0000950170-24-082958 (LongTermDebtNoncurrent)
  15. 10-K · period ending 2024-05-31 · accession 0000950170-25-095300 (LongTermDebtNoncurrent)
  16. 10-K · period ending 2025-05-31 · accession 0001193125-26-307785 (LongTermDebtNoncurrent)
  17. 10-K · period ending 2022-05-31 · accession 0000950170-24-082958 (CashAndCashEquivalentsAtCarryingValue)
  18. 10-K · period ending 2023-05-31 · accession 0000950170-25-095300 (CashAndCashEquivalentsAtCarryingValue)
  19. 10-K · period ending 2024-05-31 · accession 0001193125-26-307785 (CashAndCashEquivalentsAtCarryingValue)