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Paychex (PAYX) Dips More Than Broader Markets: What You Should Know

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In the latest trading session, Paychex (PAYX - Free Report) closed at $126.66, marking a -1.15% move from the previous day. This change lagged the S&P 500's daily loss of 0.04%. Meanwhile, the Dow lost 0.58%, and the Nasdaq, a tech-heavy index, lost 0.18%.

Coming into today, shares of the payroll processor and human-resources services provider had gained 10.61% in the past month. In that same time, the Business Services sector gained 1.48%, while the S&P 500 gained 2.67%.

Wall Street will be looking for positivity from Paychex as it approaches its next earnings report date. This is expected to be March 30, 2022. In that report, analysts expect Paychex to post earnings of $1.04 per share. This would mark year-over-year growth of 8.33%. Our most recent consensus estimate is calling for quarterly revenue of $1.22 billion, up 9.85% from the year-ago period.

PAYX's full-year Zacks Consensus Estimates are calling for earnings of $3.64 per share and revenue of $4.51 billion. These results would represent year-over-year changes of +19.74% and +11.16%, respectively.

Investors should also note any recent changes to analyst estimates for Paychex. These revisions typically reflect the latest short-term business trends, which can change frequently. As a result, we can interpret positive estimate revisions as a good sign for the company's business outlook.

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.

Ranging from #1 (Strong Buy) to #5 (Strong Sell), the Zacks Rank system has a proven, outside-audited track record of outperformance, with #1 stocks returning an average of +25% annually since 1988. Within the past 30 days, our consensus EPS projection remained stagnant. Paychex is holding a Zacks Rank of #2 (Buy) right now.

In terms of valuation, Paychex is currently trading at a Forward P/E ratio of 35.25. For comparison, its industry has an average Forward P/E of 16.04, which means Paychex is trading at a premium to the group.

Also, we should mention that PAYX has a PEG ratio of 4.7. 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. PAYX's industry had an average PEG ratio of 1.24 as of yesterday's close.

The Outsourcing industry is part of the Business Services sector. This industry currently has a Zacks Industry Rank of 80, which puts it in the top 32% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our individual industry groups by measuring the average Zacks Rank of the individual stocks within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

Make sure to utilize to follow all of these stock-moving metrics, and more, in the coming trading sessions.

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