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Paychex (PAYX) Gains on Cash Strength & Investor-Friendly Steps

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Paychex, Inc. (PAYX - Free Report) currently banks on its strong balance sheet and measures to boost shareholders’ value. The stock surged 49.4% in the past year compared with a 40.1% rise of the industry it belongs to.

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PAYX recently reported better-than-expected second-quarter fiscal 2022 results. Adjusted earnings of 91 cents per share beat the Zacks Consensus Estimate by 15.2% and increased 25% on a year-over-year basis. Total revenues of $1.11 billion beat the consensus mark by 4.6% and increased 13% year over year.

Paychex's cash and cash equivalent balance of $1.07 billion at the end of second-quarter fiscal 2022 was above the total debt level $807 million, underscoring that the company has enough cash to meet its debt burden.

PAYX puts consistent efforts to reward shareholders through dividends and share repurchases. The company paid out dividends of $908.7 million, $889.4 million and $826.8 million and repurchased shares worth $155.7 million, $171.9 million and $56.9 million, respectively, in fiscal 2021, 2020 and 2019. Such initiatives instill investors’ confidence and boost earnings per share.

Paychex is encountering higher expenses as it continues to invest in sales, marketing, product development and supporting technology. PEO insurance costs, which include workers’ compensation and minimum premium health insurance benefit plans, also add to the company’s expenses.

Zacks Rank and Other Stocks to Consider

Paychex currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Investor interested in the broader Zacks Business Services sector can also consider stocks like Avis Budget (CAR - Free Report) , Cross Country Healthcare, Inc. (CCRN - Free Report) and CRA International, Inc. (CRAI - Free Report) .

Avis Budget has an expected revenue growth rate of around 69.8% for the current year. CAR has a trailing four-quarter earnings surprise of 76.9%, on average.

Avis Budget’s shares have surged 460.9% in the past year. It has a long-term earnings growth of 18.8%. CAR sports a Zacks #1 Rank.

Cross Country Healthcare has an expected revenue growth rate of around 94% for the current fiscal year. CCRN has a trailing four-quarter earnings surprise of 75%, on average.

Cross Country Healthcare’s shares have surged 206.8% in the past year. It has a long-term earnings growth of 21.5%. CCRN sports a Zacks #1 Rank.

CRA International has an expected revenue growth rate of around 12% for the current year. It has a trailing four-quarter earnings surprise of 51%, on average.

CRA International’s shares have surged 87.7% in the past year. It has a long-term earnings growth of 15.5%. CRAI carries a Zacks #2 Rank.