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Paychex (PAYX) Gains As Market Dips: What You Should Know

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Paychex (PAYX - Free Report) closed the most recent trading day at $120.42, moving +0.03% from the previous trading session. This move outpaced the S&P 500's daily loss of 0.53%. Elsewhere, the Dow lost 0.29%, while the tech-heavy Nasdaq lost 0.1%.

Coming into today, shares of the payroll processor and human-resources services provider had gained 0.22% in the past month. In that same time, the Business Services sector lost 7.6%, while the S&P 500 lost 4.24%.

Wall Street will be looking for positivity from Paychex as it approaches its next earnings report date. The company is expected to report EPS of $1.04, up 8.33% from the prior-year quarter. Our most recent consensus estimate is calling for quarterly revenue of $1.22 billion, up 9.85% from the year-ago period.

For the full year, our Zacks Consensus Estimates are projecting earnings of $3.64 per share and revenue of $4.51 billion, which would represent changes of +19.74% and +11.16%, respectively, from the prior year.

It is also important to note the recent changes to analyst estimates for Paychex. Recent revisions tend to reflect the latest near-term business trends. As such, positive estimate revisions reflect analyst optimism about the company's business and profitability.

Our research shows that these estimate changes are directly correlated with near-term stock prices. We developed the Zacks Rank to capitalize on this phenomenon. Our system takes these estimate changes into account and delivers a clear, actionable rating model.

The Zacks Rank system ranges from #1 (Strong Buy) to #5 (Strong Sell). It has a remarkable, outside-audited track record of success, with #1 stocks delivering an average annual return of +25% since 1988. Within the past 30 days, our consensus EPS projection remained stagnant. Paychex currently has a Zacks Rank of #2 (Buy).

Valuation is also important, so investors should note that Paychex has a Forward P/E ratio of 33.12 right now. This valuation marks a premium compared to its industry's average Forward P/E of 15.14.

It is also worth noting that PAYX currently has a PEG ratio of 4.42. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. The Outsourcing industry currently had an average PEG ratio of 1.12 as of yesterday's close.

The Outsourcing industry is part of the Business Services sector. This group has a Zacks Industry Rank of 97, putting it in the top 39% of all 250+ industries.

The Zacks Industry Rank includes is listed in order from best to worst in terms of the average Zacks Rank of the individual companies within each of these sectors. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

You can find more information on all of these metrics, and much more, on Zacks.com.


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