Is Paychex, Inc. overvalued or undervalued?

As of 21 November 2025, the valuation grade for Paychex, Inc. has moved from fair to expensive, indicating a shift towards overvaluation. The company appears overvalued, particularly when considering its P/E ratio of 33, which is significantly higher than the peer average of 27.39 for companies like Paychex, Inc. Additionally, the EV to EBITDA ratio stands at 24.93, compared to Automatic Data Processing, Inc.'s more attractive ratio of 31.13, further highlighting the premium at which Paychex is trading. The PEG ratio of 6.02 also suggests that the stock is priced high relative to its growth prospects.
In terms of recent performance, Paychex has underperformed against the S&P 500, with a year-to-date return of -21.62% compared to the index's positive return of 12.26%. This trend continues over one year, where Paychex's return of -23.92% starkly contrasts with the S&P 500's 11.00%. Overall, the combination of high valuation ratios and poor stock performance reinforces the conclusion that Paychex, Inc. is overvalued.