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Here's Why Investors Should Hold on to Paychex (PAYX) Stock
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Paychex, Inc. (PAYX - Free Report) is benefiting from its investor-friendly steps and rising opportunities in the professional employer organization (PEO) industry.
PAYX’s earnings and revenues are anticipated to grow 9.8% and 7.7%, respectively, in fiscal 2023. Shares of PAYX have gained 6.4% in the past year compared with the 6.2% rise of the industry it belongs to.
Image Source: Zacks Investment Research
Factors That Augur Well
Paychex strives to capitalize on the rising opportunities in the PEO industry. PAYX’s subsidiary Paychex HR Outsourcing is established as a strong strategic fit as more and more companies are willing to use PEO services rather than creating their in-house HR. Paychex HR Outsourcing expanded PAYX’s services, thus helping it to add to its customer base.
Paychex makes consistent efforts to reward its shareholders through dividends and share repurchases. PAYX paid out dividends of $908.7 million, $889.4 million and $826.8 million each and repurchased shares worth $155.7 million, $171.9 million and $56.9 million in fiscal 2021, 2020 and 2019, respectively. Such initiatives not only instill investors’ confidence in the stock but also positively impact the earnings per share.
A Key Risk
Paychex’s current ratio (a measure of liquidity) stood at 1.25 at the end of fourth-quarter fiscal 2022, lower than 1.27 recorded at the end of the prior fiscal quarter. Decreasing current ratio does not bode well for Paychex.
Image: Bigstock
Here's Why Investors Should Hold on to Paychex (PAYX) Stock
Paychex, Inc. (PAYX - Free Report) is benefiting from its investor-friendly steps and rising opportunities in the professional employer organization (PEO) industry.
PAYX’s earnings and revenues are anticipated to grow 9.8% and 7.7%, respectively, in fiscal 2023. Shares of PAYX have gained 6.4% in the past year compared with the 6.2% rise of the industry it belongs to.
Image Source: Zacks Investment Research
Factors That Augur Well
Paychex strives to capitalize on the rising opportunities in the PEO industry. PAYX’s subsidiary Paychex HR Outsourcing is established as a strong strategic fit as more and more companies are willing to use PEO services rather than creating their in-house HR. Paychex HR Outsourcing expanded PAYX’s services, thus helping it to add to its customer base.
Paychex makes consistent efforts to reward its shareholders through dividends and share repurchases. PAYX paid out dividends of $908.7 million, $889.4 million and $826.8 million each and repurchased shares worth $155.7 million, $171.9 million and $56.9 million in fiscal 2021, 2020 and 2019, respectively. Such initiatives not only instill investors’ confidence in the stock but also positively impact the earnings per share.
A Key Risk
Paychex’s current ratio (a measure of liquidity) stood at 1.25 at the end of fourth-quarter fiscal 2022, lower than 1.27 recorded at the end of the prior fiscal quarter. Decreasing current ratio does not bode well for Paychex.
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 Zacks Business Services sector are Avis Budget Group, Inc. (CAR - Free Report) , Genpact Limited (G - Free Report) and CRA International, Inc. (CRAI - Free Report) .
Avis Budget sports a Zacks Rank #1 at present. CAR has an earnings growth rate of 108.4% for 2022.
Avis Budget delivered a trailing four-quarter earnings surprise of 69.5%, on average.
Genpact carries a Zacks Rank #2 (Buy) at present. G has a long-term earnings growth expectation of 12.3%.
Genpact delivered a trailing four-quarter earnings surprise of 10.1%, on average.
CRA International flaunts a Zacks Rank of 1, currently. CRAI has a long-term earnings growth expectation of 14.3%.
CRAI delivered a trailing four-quarter earnings surprise of 26%, on average.