Is Paychex, Inc. overvalued or undervalued?

As of 7 July 2025, the valuation grade for Paychex, Inc. has moved from expensive to fair, indicating a more favorable assessment of its market position. The company appears to be fairly valued based on its current metrics, with a P/E ratio of 33, a Price to Book Value of 13.98, and an EV to EBITDA of 23.20. In comparison, its peers show varying valuations, with Netflix, Inc. having a higher P/E of 52.90, while Automatic Data Processing, Inc. is considered attractive with a P/E of 45.48.
Despite the recent grade change, Paychex has underperformed against the S&P 500 over multiple periods, with a year-to-date return of -6.50% compared to the S&P 500's 12.22%. This trend is further reflected in the one-year return of -1.05% against the S&P 500's 17.14%. Overall, while the valuation metrics suggest fair value, the stock's performance relative to the benchmark raises some concerns about its growth prospects.