Paychex Inc
PAYXWithin bandExpectations · fairHeld by 2 superinvestors.
SEC 10-K · fundamentals
Business quality
as of 2026-05-31- Revenue growth
- +16.5%
- Net margin
- 27.9%
- ROE
- 47.1%
- FCF margin
- 36.8%
Valuation · value band
In fair-value range
Zero-growth floor
$47
Central IV
$81
Optimistic top
$117
Paychex Inc (PAYX): Two methods value the business — a conservative owner-earnings DCF and a growth-credited Greenwald estimate, $47–$117 / sh. Today’s price sits inside both (price $115 as of 2026-07-20).
The middle figure is the main read. The right end is the optimistic case under the same conservative caps — not an absolute ceiling.
Revenue growth 6% (lower of historical trend and fundamental cap, capped by moat) · moat 20 yr · discount 10.5% · Zero-growth downside $47
Price as of 2026-07-20 · yahoo · DGS10 4.5% @ 2026-07-17.
Method & numbers
A conservative intrinsic-value band (zero-growth floor to growth-capped DCF) plus a tangible asset floor — not investment advice, not a buy/sell signal, and not a price target.
Owner-earnings DCF $49.69 – $101.08 · Greenwald $74.31 – $116.73 (neutral $96.69) · zero-growth base $60.41 · reproduction $1.75
Moat Franchise (moat) · terminal value 24% of present value · owner-earnings yield 4% vs 10Y 4.5%.
Graham earnings-power value (normalized NOPAT)$47.68 – $60.41 / sh
Normalized NOPAT = average operating margin over the years shown × latest-year revenue × (1 − normalized tax); then + D&A − maintenance capex (write A). Unlevered (pre-interest, attributable to all capital). Capitalized at the 9–11% rate band (read as a WACC proxy). Enterprise → equity bridge applied: + cash − total debt.
Years: 2025, 2024, 2023, 2022, 2021
v1 simplifications: Maintenance capex (degraded) deducted in full cash (write A): EPV = (NOPAT + D&A − maintenance capex) / WACC; no tax shield on the capex term. Maintenance-capex methods diverge by 245% (> 50%); estimate is degraded. Share-based compensation is left as a real expense (not added back). Operating margin is below its multi-year average (cyclical/declining): normalized margin capped at the latest year — no peak-margin capitalization (audit #2).
Buffett owner-earnings value$46.54 – $56.89 / sh
Owner earnings = average net income + average D&A − maintenance capex (zero-growth floor; no ΔNWC). Levered (starts from net income, already after interest — an equity-holder stream). Capitalized at the 9–11% rate band (read as a cost-of-equity proxy). No enterprise→equity bridge: the capitalized result is already equity value (subtracting debt would double-count interest).
Years: 2025, 2024, 2023, 2022, 2021
v1 simplifications: Owner earnings = net income + D&A − maintenance capex (degraded); the working-capital change is excluded (maintenance ΔNWC ≈ 0; growth ΔNWC is carried in growth value, not double-counted). Maintenance-capex methods diverge by 245% (> 50%); estimate is degraded. One-time items are not separately normalized (multi-year averaging smooths them partially). Share-based compensation is left as a real expense (not added back); see the SBC/OE disclosure. Capitalized at the 9–11% band as a cost-of-equity proxy; no leverage premium applied (net cash or debt within the no-charge range).
Asset floor: Reproduction value = tangible net assets + acquired-intangible reset proxy, ÷ diluted shares; tangible net assets alone are negative for this asset-light franchise (no R&D history to capitalize).
Moat reading: Franchise test compares earnings power (EPV) against reproduction value (tangible net assets + capitalized R&D). EPV well above reproduction value signals a moat; near it, a commodity; below it, value destruction. A directional reading, not a verdict.
Assumes a wide moat · competitive-advantage period ≈ 20 years (earnings intact, ROIC stable over history).
Growth value: if the moat holds for 20 yr at ROIIC ≈ 76%, $13.90–$56.31 / sh (neutral $36.28). Conservative, not a forecast.
Window FY 2025, 2024, 2023, 2022, 2021 · discount band 9%–11% · normalized tax 21% (Average effective tax rate over 5 year(s), capped at the statutory 21%.) · diluted shares.
Owner-earnings DCF: growth g₁ 6% · OE FY 2025, 2024, 2023, 2022, 2021 · Discount band: 9.05%–12.00% (DGS10 +4.5% to a 12% strict end, as of 2026-07-17). No enterprise→equity bridge: owner earnings already flow to shareholders (post-interest), so no net cash is added and no debt subtracted — matching the engine owner-earnings lamp. Two-method midpoint gap 17%.
What the price is betting
Today's price pencils in about 10.4% a year in owner-earnings for the next few years. Revenue actually grew 8.4% a year.
About its own track record.
Roughly, the price needs its historical revenue growth to run about 20 more years to hold up.
SEC 13F · holders
Superinvestors Holding This Security
2 holders · $27.0M combined · this quarter +0 opened / -0 exited
- Value$13.8MWeight (prev→now)0.1% → 0.1% ▼
- Value$13.2MWeight (prev→now)0.3% → 0.3% ▼
SEC 13F · notes
Written summary
Written summary
Paychex Inc (PAYX) is held by 2 of the superinvestors tracked on Compounder, with a combined $27.0M in reported 13F value. The largest position belongs to Thomas Gayner, where it makes up 0.1% of the portfolio.
Other notable holders by value include Fred Martin (0.3% of its book).
Over the latest quarter, 0 of the tracked filers opened a new position in PAYX, 0 added to existing ones, 1 trimmed, and 0 sold out entirely.
Holder counts and values reflect the most recent SEC Form 13F filings, through the quarter ended 2026-03-31. Source: SEC EDGAR. A 13F shows only long US-listed positions and can lag the real portfolio by up to 45 days, so this is disclosed long ownership, not a complete picture.
SEC 13F · co-ownership
Also held by these investors
Investors holding Paychex Inc (PAYX) also commonly hold →
- Apple IncAAPL2 holders
- Berkshire Hathaway Inc-Cl ABRK.A1 holder
- Alphabet Inc-Cl CGOOG1 holder
- Berkshire Hathaway Inc-Cl BBRK.B1 holder
- Brookfield CorpBN1 holder
- Deere & CoDE1 holder
PAYX's price is not below its conservative value band. See current strike-zone stocks
Sources· SEC EDGAR 13F as of 2026-03-31 · filed 2026-05-15
Educational data only — not investment advice. 13F positions are self-reported and can lag up to 45 days.
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