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

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In the latest trading session, Paychex (PAYX - Free Report) closed at $82.25, marking a -0.02% move from the previous day. This move lagged the S&P 500's daily gain of 0.08%. At the same time, the Dow lost 0.09%, and the tech-heavy Nasdaq gained 0.38%.

Prior to today's trading, shares of the payroll processor and human-resources services provider had lost 3.45% over the past month. This has lagged the Business Services sector's loss of 2.15% and was narrower than the S&P 500's loss of 3.57% in that time.

Wall Street will be looking for positivity from PAYX as it approaches its next earnings report date. In that report, analysts expect PAYX to post earnings of $0.69 per share. This would mark year-over-year growth of 2.99%. Meanwhile, our latest consensus estimate is calling for revenue of $990.93 million, up 14.85% from the prior-year quarter.

PAYX's full-year Zacks Consensus Estimates are calling for earnings of $3.09 per share and revenue of $4.16 billion. These results would represent year-over-year changes of +8.8% and +10.3%, respectively.

Investors should also note any recent changes to analyst estimates for PAYX. These recent revisions tend to reflect the evolving nature of short-term business trends. As such, positive estimate revisions reflect analyst optimism about the company's business and profitability.

Research indicates that these estimate revisions are directly correlated with near-term share price momentum. Investors can capitalize on this by using the Zacks Rank. This model considers these estimate changes and provides a simple, actionable rating system.

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. The Zacks Consensus EPS estimate remained stagnant within the past month. PAYX is currently a Zacks Rank #3 (Hold).

Looking at its valuation, PAYX is holding a Forward P/E ratio of 26.66. Its industry sports an average Forward P/E of 19.05, so we one might conclude that PAYX is trading at a premium comparatively.

It is also worth noting that PAYX currently has a PEG ratio of 2.96. 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 was holding an average PEG ratio of 1.79 at yesterday's closing price.

The Outsourcing industry is part of the Business Services sector. This industry currently has a Zacks Industry Rank of 98, which puts it in the top 39% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our 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.

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


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