Here's Why Investors Should Retain Paychex (PAYX) Stock Now
Paychex, Inc. PAYX has grown significantly over the years by providing industry-leading services and technology solutions to its clients and their employees. PAYX’s earnings are anticipated to grow 10.3% and 6.5% in fiscal 2024 and 2025, respectively. The company has a long-term earnings growth expectation of 7.8%.
Factors That Augur Well
Paychex aims to meet clients' HR and payroll needs through a comprehensive and flexible service portfolio. The company’s solid business model, diversified products and services and strategic acquisitions have boosted its top-line growth. Revenues witnessed a five-year (2018-2023) CAGR of 8.2%. Higher revenues are likely to expand margins and increase profitability in the long run.
Paychex, Inc. Price
Paychex, Inc. price | Paychex, Inc. Quote
Demand environment for the company’s Management Solutions and PEO and Insurance Solutions remains strong. Management Solutions revenues increased 4% year over year in the last reported quarter, driven by an increase in the number of clients served across HCM solutions, higher revenues per client from price realization and product penetration, and growth in ancillary services.
PEO and Insurance Solutions revenues increased 8%, driven by expansion in the average number of employees at PEO worksites, increased PEO insurance revenues and higher income from ancillary services.
Commitment to shareholder returns makes Paychex a reliable way for investors to compound wealth over the long term. The company paid dividends of $1.17 billion, $999.6 million and $908.7 million in fiscal 2023, 2022 and 2021, respectively.
A Risk
The outsourcing industry is labor-intensive and heavily dependent on foreign talent. Rising talent costs due to competition is a barrier to the industry’s growth. Paychex, being one of the companies in the industry, may be affected.
Zacks Rank and Stocks to Consider
Paychex currently carries a Zacks Rank #3 (Hold).
Here are some better-ranked stocks from the broader Business Service sector.
Rollins ROL currently carries a Zacks Rank #2 (Buy). For the fourth quarter of 2023, the Zacks Consensus Estimate for earnings is pegged at 20 cents, indicating year-over-year growth of 17.7%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
ROL has an impressive earnings surprise history, beating the consensus mark in three of the four trailing quarters and matching once, the average surprise being 7.2%.
FTI Consulting FCN also carries a Zacks Rank of 2 at present. The consensus mark for fourth-quarter 2023 earnings is pegged at $1.57 per share, indicating 3.3% year-over-year growth.
FCN has an impressive earnings surprise history, beating the consensus mark in three of the four trailing quarters and missing once, the average surprise being 8.5%.
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Paychex, Inc. (PAYX) : Free Stock Analysis Report
FTI Consulting, Inc. (FCN) : Free Stock Analysis Report
Rollins, Inc. (ROL) : Free Stock Analysis Report
