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Zacks Industry Outlook Highlights Paychex, FactSet Research Systems, and ManpowerGroup
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For Immediate Release
Chicago, IL – May 11, 2022 – Today, Zacks Equity Research discusses Paychex, Inc. (PAYX - Free Report) , FactSet Research Systems Inc. (FDS - Free Report) and ManpowerGroup Inc. (MAN - Free Report) .
The Business Services sector stands to benefit from the gradual resumption of business activities and reopening of the economy. Increased adoption and success of the work-from-home model, rise in demand for risk mitigation and consulting services, expertise in improving operational efficiency and reduction of expenses act as other tailwinds for the sector. Providers of essential and non-deferrable services, such as waste removal and building maintenance (though remained resilient to the pandemic-induced disruptions), are also witnessing a surge in demand with the opening of the economy.
Owing to its widely diversified nature, the sector has been gathering steam on the back of strength across manufacturing and service activities. Notably, the Institute for Supply Management measured that both Manufacturing PMI and Services PMI clocked the 23rd consecutive month of expansion in April. This gradually recovering U.S. economy, backed by upbeat manufacturing and service activities, has led to additional hiring and wage increases.
Despite a sudden rise in COVID-19 cases from the Omicron variant during the first quarter, several business services firms such as Paychex, Inc., FactSet Research Systems Inc., and ManpowerGroup Inc. have chosen to reward their shareholders with dividend hikes in view of the aforementioned favorable trends. We believe consistency in rewarding shareholders through dividend payments or share repurchases not only boosts investor confidence but also positively impacts a company's earnings per share.
3 Companies That Rewarded Shareholders
Paychex: This Zacks Rank #2 (Buy) New York-based provider of integrated human capital management solutions has declared a dividend hike of 20%, thereby raising its quarterly cash dividend from 66 cents per share to 79 cents. The dividend will be paid out on May 26 to shareholders of record May 12, 2022. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
Paychex looks strong on the back of solid top-line growth and a dominant position in the outsourcing market. Strength across Management Solutions and Professional Employer Organization and Insurance Solutions revenues are likely to aid the company's top-line performance. Buyouts expand the company's customer base and generate cost and revenue synergies.
Raised fiscal 2022 guidance is another notable tailwind. Total revenues are now expected to register 12-13% growth compared with the prior expectation of 10-11%. Adjusted earnings per share are now expected to register 22.5-23% growth compared with the prior expectation of 18-20%. The adjusted operating margin is expected to be almost 40% compared with the prior expectation of 39-40%. The adjusted EBITDA margin is now expected to be nearly 44-45% compared with the prior expectation of 44%.
The Zacks Consensus Estimate for Paychex's 2022 EPS has moved up 3% in the past 90 days. The company's expected earnings growth rate for the current year is 23.4%. Additionally, it has a long-term (three to five years) expected earnings growth rate of 7.5%. Paychex has a trailing four-quarter earnings surprise of 10.8%, on average.
Paychex stock has gained 21.5% over the past year.
FactSet Research Systems: This Zacks Rank #2 Connecticut-based financial data and analytics company has hiked its quarterly dividend by 8.5% from 82 cents per share to 89 cents per share, reflecting its 23rd consecutive year. The increased dividend will be paid out on Jun 16, 2022, to shareholders of record as of May 31, 2022.
FactSet continues to benefit from high client retention, solid revenue growth and a competitive pricing strategy. The company looks strong on the back of higher organic revenues, an increase in annual subscription value and a robust global network. Acquisitions help FactSet broaden its product suite, thereby delivering innovative products and helping it evolve as a global financial database company. Higher sales of analytics and research and advisory solutions boost the company's top-line growth.
Further, the company has raised its fiscal 2022 guidance. Revenues are now expected between $1.80 billion and $1.83 billion compared with the prior guidance of $1.705-$1.72. billion. Adjusted EPS is now expected between $12.75 and $13.15 compared with the prior guidance of $12.00-$12.30. The adjusted operating margin is now expected between 33% and 34% compared with the prior guidance of 32.5%-33.5%.
The Zacks Consensus Estimate for FactSet's 2022 EPS has moved up 4.9% in the past 90 days. The company's expected earnings growth rate for the current year is 16.1%. Additionally, it has a long-term (three to five years) expected earnings growth rate of 10%. FactSet has a trailing four-quarter earnings surprise of 6.1%, on average.
FactSet stock has gained 9.7% over the past year.
ManpowerGroup: This Zacks Rank #3 (Hold) Wisconsin-based workforce solutions provider has increased its semi-annual dividend rate by 7.9% from $1.26 per share to $1.36. The increased dividend will be paid out on Jun 15, 2022 to shareholders of record at the close of business on Jun 1.
ManpowerGroup's bottom line is benefiting from an improvement in business mix and robust demand for higher-margin offerings. The company's top-line growth has been aided by growth in higher-margin offerings and higher levels of permanent recruitment activity. Strength across Experis and Talent Solutions acts as another tailwind. Its solid cash position enables the company to pursue strategic acquisitions and invest in growth initiatives. Buyouts boost ManpowerGroup's diverse portfolio and support its top-line growth.
The Zacks Consensus Estimate for ManpowerGroup's 2022 EPS has moved up 2.9% in the past 90 days. The company's expected earnings growth rate for the current year is 25.4%. Additionally, it has a long-term (three to five years) expected earnings growth rate of 8.3%. ManpowerGroup has a trailing four-quarter earnings surprise of 18.5%, on average.
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Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.
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Zacks Industry Outlook Highlights Paychex, FactSet Research Systems, and ManpowerGroup
For Immediate Release
Chicago, IL – May 11, 2022 – Today, Zacks Equity Research discusses Paychex, Inc. (PAYX - Free Report) , FactSet Research Systems Inc. (FDS - Free Report) and ManpowerGroup Inc. (MAN - Free Report) .
Industry: Business Services
Link: https://www.zacks.com/stock/news/1921987/3-dividend-paying-business-services-stocks-you-may-count-on
The Business Services sector stands to benefit from the gradual resumption of business activities and reopening of the economy. Increased adoption and success of the work-from-home model, rise in demand for risk mitigation and consulting services, expertise in improving operational efficiency and reduction of expenses act as other tailwinds for the sector. Providers of essential and non-deferrable services, such as waste removal and building maintenance (though remained resilient to the pandemic-induced disruptions), are also witnessing a surge in demand with the opening of the economy.
Owing to its widely diversified nature, the sector has been gathering steam on the back of strength across manufacturing and service activities. Notably, the Institute for Supply Management measured that both Manufacturing PMI and Services PMI clocked the 23rd consecutive month of expansion in April. This gradually recovering U.S. economy, backed by upbeat manufacturing and service activities, has led to additional hiring and wage increases.
Despite a sudden rise in COVID-19 cases from the Omicron variant during the first quarter, several business services firms such as Paychex, Inc., FactSet Research Systems Inc., and ManpowerGroup Inc. have chosen to reward their shareholders with dividend hikes in view of the aforementioned favorable trends. We believe consistency in rewarding shareholders through dividend payments or share repurchases not only boosts investor confidence but also positively impacts a company's earnings per share.
3 Companies That Rewarded Shareholders
Paychex: This Zacks Rank #2 (Buy) New York-based provider of integrated human capital management solutions has declared a dividend hike of 20%, thereby raising its quarterly cash dividend from 66 cents per share to 79 cents. The dividend will be paid out on May 26 to shareholders of record May 12, 2022. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
Paychex looks strong on the back of solid top-line growth and a dominant position in the outsourcing market. Strength across Management Solutions and Professional Employer Organization and Insurance Solutions revenues are likely to aid the company's top-line performance. Buyouts expand the company's customer base and generate cost and revenue synergies.
Raised fiscal 2022 guidance is another notable tailwind. Total revenues are now expected to register 12-13% growth compared with the prior expectation of 10-11%. Adjusted earnings per share are now expected to register 22.5-23% growth compared with the prior expectation of 18-20%. The adjusted operating margin is expected to be almost 40% compared with the prior expectation of 39-40%. The adjusted EBITDA margin is now expected to be nearly 44-45% compared with the prior expectation of 44%.
The Zacks Consensus Estimate for Paychex's 2022 EPS has moved up 3% in the past 90 days. The company's expected earnings growth rate for the current year is 23.4%. Additionally, it has a long-term (three to five years) expected earnings growth rate of 7.5%. Paychex has a trailing four-quarter earnings surprise of 10.8%, on average.
Paychex stock has gained 21.5% over the past year.
FactSet Research Systems: This Zacks Rank #2 Connecticut-based financial data and analytics company has hiked its quarterly dividend by 8.5% from 82 cents per share to 89 cents per share, reflecting its 23rd consecutive year. The increased dividend will be paid out on Jun 16, 2022, to shareholders of record as of May 31, 2022.
FactSet continues to benefit from high client retention, solid revenue growth and a competitive pricing strategy. The company looks strong on the back of higher organic revenues, an increase in annual subscription value and a robust global network. Acquisitions help FactSet broaden its product suite, thereby delivering innovative products and helping it evolve as a global financial database company. Higher sales of analytics and research and advisory solutions boost the company's top-line growth.
Further, the company has raised its fiscal 2022 guidance. Revenues are now expected between $1.80 billion and $1.83 billion compared with the prior guidance of $1.705-$1.72. billion. Adjusted EPS is now expected between $12.75 and $13.15 compared with the prior guidance of $12.00-$12.30. The adjusted operating margin is now expected between 33% and 34% compared with the prior guidance of 32.5%-33.5%.
The Zacks Consensus Estimate for FactSet's 2022 EPS has moved up 4.9% in the past 90 days. The company's expected earnings growth rate for the current year is 16.1%. Additionally, it has a long-term (three to five years) expected earnings growth rate of 10%. FactSet has a trailing four-quarter earnings surprise of 6.1%, on average.
FactSet stock has gained 9.7% over the past year.
ManpowerGroup: This Zacks Rank #3 (Hold) Wisconsin-based workforce solutions provider has increased its semi-annual dividend rate by 7.9% from $1.26 per share to $1.36. The increased dividend will be paid out on Jun 15, 2022 to shareholders of record at the close of business on Jun 1.
ManpowerGroup's bottom line is benefiting from an improvement in business mix and robust demand for higher-margin offerings. The company's top-line growth has been aided by growth in higher-margin offerings and higher levels of permanent recruitment activity. Strength across Experis and Talent Solutions acts as another tailwind. Its solid cash position enables the company to pursue strategic acquisitions and invest in growth initiatives. Buyouts boost ManpowerGroup's diverse portfolio and support its top-line growth.
The Zacks Consensus Estimate for ManpowerGroup's 2022 EPS has moved up 2.9% in the past 90 days. The company's expected earnings growth rate for the current year is 25.4%. Additionally, it has a long-term (three to five years) expected earnings growth rate of 8.3%. ManpowerGroup has a trailing four-quarter earnings surprise of 18.5%, on average.
Why Haven't You Looked at Zacks' Top Stocks?
Our 5 best-performing strategies have blown away the S&P's impressive +28.8% gain in 2021. Amazingly, they soared +40.3%, +48.2%, +67.6%, +94.4%, and +95.3%. Today you can access their live picks without cost or obligation.
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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.