Episode Details

Paychex, Inc. (PAYX) Q1 FY2027 — The saved September 23 intraday quote was $105.81, down 7.61% from the prior close; the session had not yet closed. Paychex paid more in dividends than quarterly free cash flow, even as margins improved. Three cash-flow lines explain most of the decline, and trailing cash still covers the payout. The question is what recovers after integration costs and debt service. THE CALL: HOLD (3/5, MODERATE) — base-case value ~$114.00 vs ~$105.81 at the September 23 intraday snapshot. KEY METRICS: - Revenue $1,630.5M, up 5.9% year over year - GAAP diluted EPS $1.21; adjusted diluted EPS $1.34 - Quarter operating cash $413.5M less $56.1M property/equipment capex = $357.4M FCF - Cash dividends $424.1M; trailing dividend/FCF payout 80.6% - Borrowings $4,558.0M; corporate net debt $3,623.8M excluding restricted and client funds - FY2027 adjusted EPS growth guidance 7%–9%, unchanged What to watch: Management Solutions growth at least 5%, PEO growth at least 8%, trailing dividend payout below 85% of FCF and corporate net debt declining; reassess at the next quarterly release, expected December 2026. Full research packet: https://chargedalpha.com/research/payx-q1-fy2027 Also on YouTube: @ChargedAlpha DISCLAIMER: For informational and educational purposes only. Not financial advice. Do your own research before any investment decision.