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Here's Why Paychex (PAYX) is an Attractive Pick Right Now
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Paychex, Inc.’s (PAYX - Free Report) topline remains in good shape, driven by the company’s dominant stance in the outsourcing market. The company is actively leveraging the growing prospects in the professional employer organization sector. It has a long-term earnings per share (EPS) growth rate of 7.84%.
Let us delve deeper into the reasons that make PAYX an attractive pick.
Solid Zacks Rank: PAYX currently sports a Zacks Rank #1 (Strong Buy). Our research shows that stocks with a Zacks Rank #1 or 2 (Buy), offer attractive investment opportunities. Thus, the company appears to be a compelling investment proposition at the moment.
Upbeat Earnings Expectations: Earnings growth and stock price gains often indicate a company’s solid prospects. For the third quarter of fiscal 2024, the Zacks Consensus Estimate for earnings is pegged at $1.37 per share, suggesting a 6.2% rise from the year-ago reported figure. For fiscal 2024, the consensus mark for earnings is pinned at $4.72 per share, indicating a 10.5% increase from the year-ago reported figure.
Positive Earnings Surprise History: PAYX has an impressive earnings surprise history. The company outpaced the Zacks Consensus Estimate in three of the trailing four quarters and missing on one instance, delivering an earnings surprise of 1.4%, on average.
Bullish Industry Rank: The industry to which Paychex belongs currently has a Zacks Industry Rank of 68 (of 251 groups). Such a solid rank places the industry in the top 27% of the Zacks industries. Studies show that 50% of a stock price movement is directly tied to the performance of the industry group that it hails from.
A mediocre stock in a healthy group is likely to outperform a robust stock in a poor industry. Therefore, taking the industry’s performance into account becomes necessary.
Growth Factors:
Paychex consistently rewards shareholders through dividends and share repurchases, distributing $1.17 billion, $999.6 million and $908.7 million in dividends in fiscal years 2023, 2022 and 2021. Share buybacks amounted to $145.2 million, $155.7 million and $171.9 million in fiscal 2022, 2021 and 2020, thus bolstering investor confidence and positively impacting EPS.
In its service offerings, Paychex provides customizable solutions such as payroll processing, tax administration and HR services, offering flexibility with options like same-day ACH and pay-on-demand. The company's comprehensive portfolio includes management solutions, retirement administration, PEO and insurance services. Leveraging information from base payroll processing, Paychex offers extensive outsourcing services with PEO solutions involving co-employment and the insurance arm simplifying access to various coverage options. Overall, Paychex aims to meet clients' diverse HR and payroll needs through a flexible and all-encompassing service lineup.
Other Stocks to Consider
Here are some other top-ranked stocks from the broader Business Services sector that you can consider for your portfolio.
Broadridge Financial Solutions (BR - Free Report) :The Zacks Consensus Estimate of the company’s 2023 revenues indicates 7.7% growth from the year-ago reported figure, whereas the same for earnings suggests a 10.1% rise. BR has beaten the consensus estimate in three of the past four quarters and matched on one instance, the average surprise being 5.4%.
Booz Allen(BAH - Free Report) :The Zacks Consensus Estimate of BAH’s 2023 revenues indicates 13% growth from the year-ago reported figure, whereas the same for earnings suggests a rise of 10.3%. The company has beaten the consensus estimate in three of the four quarters and missed on one instance, the average surprise being 7.7%.
BAH carries a Zacks Rank of 2, at present.
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Here's Why Paychex (PAYX) is an Attractive Pick Right Now
Paychex, Inc.’s (PAYX - Free Report) topline remains in good shape, driven by the company’s dominant stance in the outsourcing market. The company is actively leveraging the growing prospects in the professional employer organization sector. It has a long-term earnings per share (EPS) growth rate of 7.84%.
Let us delve deeper into the reasons that make PAYX an attractive pick.
Solid Zacks Rank: PAYX currently sports a Zacks Rank #1 (Strong Buy). Our research shows that stocks with a Zacks Rank #1 or 2 (Buy), offer attractive investment opportunities. Thus, the company appears to be a compelling investment proposition at the moment.
Upbeat Earnings Expectations: Earnings growth and stock price gains often indicate a company’s solid prospects. For the third quarter of fiscal 2024, the Zacks Consensus Estimate for earnings is pegged at $1.37 per share, suggesting a 6.2% rise from the year-ago reported figure. For fiscal 2024, the consensus mark for earnings is pinned at $4.72 per share, indicating a 10.5% increase from the year-ago reported figure.
Positive Earnings Surprise History: PAYX has an impressive earnings surprise history. The company outpaced the Zacks Consensus Estimate in three of the trailing four quarters and missing on one instance, delivering an earnings surprise of 1.4%, on average.
Paychex, Inc. Price and EPS Surprise
Paychex, Inc. price-eps-surprise | Paychex, Inc. Quote
Bullish Industry Rank: The industry to which Paychex belongs currently has a Zacks Industry Rank of 68 (of 251 groups). Such a solid rank places the industry in the top 27% of the Zacks industries. Studies show that 50% of a stock price movement is directly tied to the performance of the industry group that it hails from.
A mediocre stock in a healthy group is likely to outperform a robust stock in a poor industry. Therefore, taking the industry’s performance into account becomes necessary.
Growth Factors:
Paychex consistently rewards shareholders through dividends and share repurchases, distributing $1.17 billion, $999.6 million and $908.7 million in dividends in fiscal years 2023, 2022 and 2021. Share buybacks amounted to $145.2 million, $155.7 million and $171.9 million in fiscal 2022, 2021 and 2020, thus bolstering investor confidence and positively impacting EPS.
In its service offerings, Paychex provides customizable solutions such as payroll processing, tax administration and HR services, offering flexibility with options like same-day ACH and pay-on-demand. The company's comprehensive portfolio includes management solutions, retirement administration, PEO and insurance services. Leveraging information from base payroll processing, Paychex offers extensive outsourcing services with PEO solutions involving co-employment and the insurance arm simplifying access to various coverage options. Overall, Paychex aims to meet clients' diverse HR and payroll needs through a flexible and all-encompassing service lineup.
Other Stocks to Consider
Here are some other top-ranked stocks from the broader Business Services sector that you can consider for your portfolio.
Broadridge Financial Solutions (BR - Free Report) :The Zacks Consensus Estimate of the company’s 2023 revenues indicates 7.7% growth from the year-ago reported figure, whereas the same for earnings suggests a 10.1% rise. BR has beaten the consensus estimate in three of the past four quarters and matched on one instance, the average surprise being 5.4%.
The company currently carries a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Booz Allen(BAH - Free Report) :The Zacks Consensus Estimate of BAH’s 2023 revenues indicates 13% growth from the year-ago reported figure, whereas the same for earnings suggests a rise of 10.3%. The company has beaten the consensus estimate in three of the four quarters and missed on one instance, the average surprise being 7.7%.
BAH carries a Zacks Rank of 2, at present.