Here's Why Investors Should Buy Paychex (PAYX) Stock Now
Paychex, Inc. PAYX performed well in the past three-month period and has the potential to sustain the momentum. If you haven’t taken advantage of its share price appreciation yet, it’s time you add the stock to your portfolio.
Let’s take a look at the factors that make the stock an attractive pick.
An Outperformer: A glimpse at the company’s price trend reveals that its shares have surged 5.2% in the past three-month period compared with the 3% rise of the industry it belongs to.
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Solid Rank: Paychex currently carries a Zacks Rank #2 (Buy). Our research shows that stocks with a Zacks Rank #1 (Strong Buy) or #2 offer attractive investment opportunities. You can see the complete list of today’s Zacks #1 Rank stocks here.
Northward Estimate Revisions: Ten estimates for fiscal 2023 moved north in the past 60 days versus no southward revision, reflecting analysts’ confidence in the company. The Zacks Consensus Estimate for fiscal 2023 earnings has moved up 1.2% in the past 60 days.
Positive Earnings Surprise History: Paychex has an impressive earnings surprise history. The company outpaced the Zacks Consensus Estimate in all of the trailing four quarters, delivering an earnings surprise of 5.9% on average.
Strong Growth Prospects: The Zacks Consensus Estimate for fiscal 2023 earnings is pegged at $4.26, which reflects year-over-year growth of 13%. Moreover, earnings are expected to register 7.8% growth in fiscal 2024. The company’s long-term expected earnings per share (EPS) growth rate is 7.5%.
Driving Factors: Paychex makes 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 initiatives not only instill investors’ confidence but also positively impact earnings per share.
Paychex’s current ratio (a measure of liquidity) was 1.30 at the end of second-quarter fiscal 2023, higher than the 1.29 recorded at the end of the prior quarter and 1.27 at the end of the prior year quarter. A decreasing current ratio does not bode well for Paychex.
Other Stocks to Consider
Other stocks worth considering in the broader Zacks Business Services sector are Sprinklr, Inc. CXM and DocuSign, Inc. DOCU.
Sprinklr carries a Zacks Rank #2 at present. CXM has a long-term earnings growth expectation of 30%.
Sprinklr delivered a trailing four-quarter earnings surprise of 102.8%, on average.
DocuSign currently sports a Zacks Rank #1. DOCU has a long-term earnings growth expectation of 13.7%.
DOCU delivered a trailing four-quarter earnings surprise of 6.6%, on average.
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Paychex, Inc. (PAYX) : Free Stock Analysis Report
DocuSign (DOCU) : Free Stock Analysis Report
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