Is PAYX a high-quality business?

AlphaMadera's AlphaQuality grade scores Paychex, Inc. on six pillars — profitability, capital efficiency, balance-sheet strength, growth durability, cash generation, and shareholder yield. The composite letter grade reflects how PAYX compares to a Buffett-style quality bar.

What is Paychex, Inc.'s AlphaQuality grade?

AlphaQuality assigns a letter grade (A through F) to PAYX based on a six-pillar quantitative model. The live page shows the composite grade plus each pillar's individual score with the underlying metrics.

What makes PAYX a quality stock?

AlphaQuality looks at return on capital, free-cash-flow margins, debt-to-equity, revenue stability, dividend and buyback policy, and operating-margin trend. Stocks scoring well across all six pillars earn higher grades — the methodology favors compounders over cyclicals.

PAYX - Paychex, Inc.

Price: -- -- | CONSENSUS: Hold DETAILS | PRICE TARGET: $112.14 DETAILS

AlphaQuality

Quantitative six-pillar business-quality grade

Stable Earnings Power

AlphaQuality — archetype-weighted quantitative grade

A- 83.5 / 100 composite

Composite Grade

Composite of six pillars weighted for stable earnings power businesses. Purely quantitative — no stock price or analyst input.

Profitability

Weight: 20%

A- 82.6

5yr Avg ROIC 16.4% 83/100
Operating Margin Trend +0.85 pp/yr 81/100

Capital Efficiency

Weight: 15%

A 87.8

5yr Avg ROE 35.8% 100/100
5yr Share-Count CAGR -0.0% 65/100

Growth Quality

Weight: 15%

A- 81.6

5yr Revenue CAGR 8.3% 76/100
5yr EPS CAGR 10.9% 79/100
Revenue-Growth Years (5) 5/5 100/100

Cash Generation

Weight: 15%

A+ 99.8

5yr FCF Margin 30.7% 100/100
5yr FCF/NI Conversion 1.02x 100/100

Balance Sheet

Weight: 20%

A- 81.1

Net Debt / EBITDA 1.35x 80/100
Interest Coverage (EBIT/Int) 21.64x 100/100
Altman Z-Score 2.62 61/100

Stability

Weight: 15%

B 69.5

EPS Volatility (σ/μ) 0.32 54/100
Piotroski F-Score 6 67/100
Negative-Revenue Years (5) 0/5 100/100

2 of 2 gurus held; 1 added; 1 trimmed; 2 full exits.

Holders: 2
Avg Δ position: -3.4%
New buys: 0
Full exits: 2

Cooperman sold -100%
Dalio sold -100%
Greenblatt decreased -23%

How this is calculated

AlphaQuality grades six pillars from 0-100 and weights each by archetype:

Profitability (20%) — 5yr Avg ROIC, Operating Margin Trend
Capital Efficiency (15%) — 5yr Avg ROE, 5yr Share-Count CAGR
Growth Quality (15%) — 5yr Revenue CAGR, 5yr EPS CAGR, Revenue-Growth Years (5)
Cash Generation (15%) — 5yr FCF Margin, 5yr FCF/NI Conversion
Balance Sheet (20%) — Net Debt / EBITDA, Interest Coverage (EBIT/Int), Altman Z-Score
Stability (15%) — EPS Volatility (σ/μ), Piotroski F-Score, Negative-Revenue Years (5)

We deliberately ignore stock price, analyst targets, and consensus ratings so the grade is suitable for backtesting forward returns. A minimum of 5 fiscal years of audited statements is required; distressed and highly leveraged infrastructure businesses are declared ungradable rather than forced into a numeric score.