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Paychex (PAYX) Stock Up 12.3% in a Year: What's Behind It?
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Shares of Paychex, Inc. (PAYX - Free Report) have gained 12.3% over the past year, outperforming 0.6% growth of the industry it belongs to. The Zacks S&P 500 composite declined 12.5% in the same time frame.
Image Source: Zacks Investment Research
Let’s delve deeper into factors that have contributed to the company’s price performance.
Consecutive Earnings & Revenue Beat
Paychex reported better-than-expected earnings and revenue performance in the last four quarters. Strength across Management Solutions’, and Professional employer organization and Insurance Solutions’ revenues should have aided the company’s top-line performance.
Raised 2022 Guidance
For fiscal 2022, 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%.
Management Solutions’ revenues are now expected to grow 12-13% compared with the prior expectation of 10-11%. PEO and Insurance Solutions’ revenues are now expected to grow 13-14% compared with the prior expectation of 10-12%.
Adjusted operating margin is expected to be almost 40% compared with the prior expectation of 39-40%. Adjusted EBITDA margin is now expected to be nearly 44-45% compared with the prior expectation of 44%.
Dividend Hike
Paychex’s board of directors has recently declared a dividend hike of 20%, thereby raising the quarterly cash dividend from 66 cents per share to 79 cents. The dividend will be paid on May 26, 2022, to shareholders of record on May 12, 2022.
Notably, Paychex puts consistent efforts to reward its shareholders through dividends and share repurchases. The company paid 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 moves indicate the company’s commitment to create value for shareholders and underline its confidence in its business. These initiatives not only instill investor confidence, but also positively impact the company’s earnings per share.
Some better-ranked stocks in the broader Business Services sector that investors can consider are Cross Country Healthcare (CCRN - Free Report) , Gartner (IT - Free Report) and Avis Budget (CAR - Free Report) , each sporting a Zacks Rank #1 at present.
Cross Country Healthcare has an expected earnings growth rate of 54.2% for the current year. CCRN has a trailing four-quarter earnings surprise of 29.2%, on average.
Cross Country Healthcare has a long-term earnings growth rate of 6.9%.
Gartner’s shares have gained 10.6% in the past year. IT delivered a trailing four-quarter earnings surprise of 24.2%, on average.
The Zacks Consensus Estimate for Gartner's current-year earnings has moved up 13.6% in the past 90 days.
Avis Budget has an expected earnings growth rate of 59.8% for the current year. CAR delivered a trailing four-quarter earnings surprise of 102.1%, on average.
Avis Budget has a long-term earnings growth rate of 19.4%.
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Paychex (PAYX) Stock Up 12.3% in a Year: What's Behind It?
Shares of Paychex, Inc. (PAYX - Free Report) have gained 12.3% over the past year, outperforming 0.6% growth of the industry it belongs to. The Zacks S&P 500 composite declined 12.5% in the same time frame.
Image Source: Zacks Investment Research
Let’s delve deeper into factors that have contributed to the company’s price performance.
Consecutive Earnings & Revenue Beat
Paychex reported better-than-expected earnings and revenue performance in the last four quarters. Strength across Management Solutions’, and Professional employer organization and Insurance Solutions’ revenues should have aided the company’s top-line performance.
Raised 2022 Guidance
For fiscal 2022, 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%.
Management Solutions’ revenues are now expected to grow 12-13% compared with the prior expectation of 10-11%. PEO and Insurance Solutions’ revenues are now expected to grow 13-14% compared with the prior expectation of 10-12%.
Adjusted operating margin is expected to be almost 40% compared with the prior expectation of 39-40%. Adjusted EBITDA margin is now expected to be nearly 44-45% compared with the prior expectation of 44%.
Dividend Hike
Paychex’s board of directors has recently declared a dividend hike of 20%, thereby raising the quarterly cash dividend from 66 cents per share to 79 cents. The dividend will be paid on May 26, 2022, to shareholders of record on May 12, 2022.
Notably, Paychex puts consistent efforts to reward its shareholders through dividends and share repurchases. The company paid 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 moves indicate the company’s commitment to create value for shareholders and underline its confidence in its business. These initiatives not only instill investor confidence, but also positively impact the company’s earnings per share.
Zacks Rank and Stocks to Consider
Paychex currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Some better-ranked stocks in the broader Business Services sector that investors can consider are Cross Country Healthcare (CCRN - Free Report) , Gartner (IT - Free Report) and Avis Budget (CAR - Free Report) , each sporting a Zacks Rank #1 at present.
Cross Country Healthcare has an expected earnings growth rate of 54.2% for the current year. CCRN has a trailing four-quarter earnings surprise of 29.2%, on average.
Cross Country Healthcare has a long-term earnings growth rate of 6.9%.
Gartner’s shares have gained 10.6% in the past year. IT delivered a trailing four-quarter earnings surprise of 24.2%, on average.
The Zacks Consensus Estimate for Gartner's current-year earnings has moved up 13.6% in the past 90 days.
Avis Budget has an expected earnings growth rate of 59.8% for the current year. CAR delivered a trailing four-quarter earnings surprise of 102.1%, on average.
Avis Budget has a long-term earnings growth rate of 19.4%.