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Here's Why Paychex (PAYX) Stock Gained 6.8% in the Past Year

Zacks Equity Research
·2-min read

Shares of Paychex, Inc. PAYX have rallied 6.8% in the past year, primarily on rising opportunities in the professional employer organization (PEO) industry and investor-friendly steps.

Zacks Investment Research
Zacks Investment Research


Image Source: Zacks Investment Research

Reasons for Upside

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, respectively, in fiscal 2021, 2020 and 2019. Such initiatives not only instill investors’ confidence in the stock but also boost the earnings per share.

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Paychex’s top line remains in good shape, driven by a solid business model and diversified products and services. Total revenues of $1.15 billion increased 11.2% year over year in the fourth quarter of fiscal 2022.

PAYX appears capitalize on the increasing opportunities in  the PEO  industry. A PEO is a firm or a company to which organizations can outsource their HR functions, including payroll and benefits. In the fourth quarter of fiscal 2022, PEO and Insurance Solutions revenues were $284.3 million, up 10% from the year-ago quarter’s figure.

Favorable Estimate Revision

Driven by the above tailwinds, the Zacks Consensus Estimate for current-year earnings has moved up 1.7% to $4.14 per share in the past 90 days.

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, Automatic Data Processing, Inc. ADP  and  CRA International, Inc. CRAI.

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.

ADP  carries a Zacks Rank #2 (Buy) at present. ADP has a long-term earnings growth expectation of 12%.

ADP delivered a trailing four-quarter earnings surprise of 5%, on average.

CRA International  carries a Zacks Rank of 2, currently. CRAI has a long-term earnings growth expectation of 14.3%.

CRAI delivered a trailing four-quarter earnings surprise of 26%, on average.


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Avis Budget Group, Inc. (CAR) : Free Stock Analysis Report
 
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Zacks Investment Research