Based on the provided data and current market context, I'll analyze if PAYX is overvalued through multiple valuation metrics and recent performance.
Valuation Analysis
PAYX currently trades at a P/E ratio of 30.78x, significantly higher than its recent quarterly average of 26.74x. The EV/EBITDA ratio stands at 21.52x, also showing premium valuation compared to previous quarters.
Financial Performance
Revenue growth has been modest, with Q2 2025 revenue at $1.32 billion, showing only marginal growth. Operating margin remains healthy at 40.9%, but the expiration of the ERTC program has impacted results.
Analyst Consensus
Out of 16 analysts covering PAYX, 13 maintain "Hold" ratings, with one "Moderate Sell" and two "Strong Sell" ratings. The average price target of $139.08 suggests the stock is trading at a premium to analyst expectations.
Market Performance
PAYX shares have gained 21.9% over the past year, underperforming the S&P 500's 24.1% return. This relative underperformance despite premium valuation multiples suggests overvaluation.
Based on elevated valuation metrics, modest growth, and analyst consensus, PAYX appears overvalued at current levels.