Reasons Why You Should Retain Paychex Stock in Your Portfolio

Paychex’s PAYX collective growth is fueled by the rising adoption of SaaS solutions by business houses. Its new acquisitions and AI innovations aid the company in gaining access to diverse markets.

The company’s third-quarter fiscal 2026 earnings are expected to increase 12.8% year over year. The company’s fiscal 2026 and 2027 earnings are expected to rise 10.2% and 7.4%, respectively. Revenues are expected to grow 16.5% in fiscal 2026 and 5.5% in fiscal 2027.

Factors That Bode Well for PAYX

PAYX’s revenue growth is largely driven by rising client adoption of cloud-based solutions. The increased use of cloud-based solutions offers a strong growth opportunity for the company’s Software-as-a-Service (SaaS) products in both the management solutions category, an integrated Human Capital Management solution for payroll, human resource retirement and insurance services, and Professional Employer Organization (PEO) category, which provides a combined package of payroll, employer compliance, HR and employee benefits administration, risk management and outsourcing solutions, both virtual and on-site, at an affordable cost.

Paychex, Inc. Revenue (TTM)

Paychex, Inc. revenue-ttm | Paychex, Inc. Quote

The PEO solution, comprising the Paychex Flex platform, aids the company in retaining clients by empowering and supporting small businesses to offer competitive benefit packages on par with Fortune 500 companies and to retain talent in a tight labor market.

The company also strengthens client relationships through its Partner Plus program, a collection of diverse advisory service programs involving accounting professionals, brokers, consultants and financial advisors, enabling customers to gain expert advice.

PAYX’s acquisition of Paycor, a provider of HCM, payroll and talent software, in April 2025, has enabled the company to meet the growing needs of new and existing customers across all market segments. PAYX’s continuous investment in technology and innovation helps it gain a larger market share.

The company recently launched a GenAI-powered, real-time employment law and compliance platform to help clients and Paychex HR experts efficiently navigate thousands of constantly changing federal, state, and local laws and compliant documents.

Additionally, in December 2025, PAYX introduced a patent-pending AI-powered Knowledge Mesh system, which transforms unstructured data such as phone calls and emails into a connected, searchable network.

A Risk

PAYX collects, uses and retains a huge amount of personal information, including bank accounts, social security numbers and credit card details, of its employees, customers and clients. This makes the company highly sensitive to cyberattacks.  It suffered a breach in March 2024, resulting in unauthorized disclosure of personal data. Such incidents may affect investors’ decisions in the future.

Zacks Rank & Stocks to Consider

PAYX currently carries a Zacks Rank #3 (Hold).

A couple of better-ranked stocksin the industry are Freshworks Inc. FRSH and Five9, Inc. FIVN.

Freshworks currently sports a Zacks Rank #1 (Strong Buy). FRSH has a long-term earnings growth expectation of 27.2%. The company delivered an average trailing four-quarter earnings surprise of 37.9%. You can see the complete list of today’s Zacks #1 Rank stocks here.

Five9 also flaunts a Zacks Rank of 1 at present, with a long-term earnings growth expectation of 16.2%. FIVN delivered a trailing four-quarter earnings surprise of 16.1% on average.

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This article originally published on Zacks Investment Research (zacks.com).

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