Paychex, Inc. PAYX has had an impressive run in the past year, gaining 22%. The companyhas an impressive Growth Score of B. This style score condenses all the essential metrics from the company’s financial statements to get the true sense of the quality and sustainability of its growth.
PAYX’s earnings are anticipated to grow 5.5% and 6.6% in fiscal 2025 and 2026, respectively. The company has a long-term earnings growth expectation of 7.3%.
Paychex, Inc. Price
Paychex, Inc. price | Paychex, Inc. Quote
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 (2020-2024) CAGR of 5.5%. Higher revenues are likely to expand margins and increase profitability in the long run.
The demand environment for the company’s Management Solutions and PEO and Insurance Solutions remains in good shape. Management Solutions revenues increased 1% year over year in the last reported quarter, driven by an increase in the number of clients served across HCM solutions and client worksite employees for HR Solutions.
PEO and Insurance Solutions revenues increased 7%, driven by expansion in the average number of employees at PEO worksites and increased PEO insurance revenues.
Commitment to shareholder returns makes Paychex a reliable way for investors to compound wealth over the long term. The company paid dividends of $999.6 million, $1.2 billion and $1.3 billion in fiscal 2022, 2023 and 2024, respectively.
A Risk
The outsourcing industry is labor-intensive and heavily dependent on foreign talent. Rising talent costs due to competition are 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).
Some better-ranked stocks from the broader Zacks Business Services sector are RB Global, Inc. RBA & Deluxe DLX, each carrying a Zacks Rank of 2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
RB Global has a long-term earnings growth expectation of 10.6%. RBA delivered a trailing four-quarter earnings surprise of 16.3%, on average.
Deluxe has a long-term earnings growth expectation of 12%. DLX delivered a trailing four-quarter earnings surprise of 18.4%, on average.
5 Stocks Set to Double
Each was handpicked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2024. While not all picks can be winners, previous recommendations have soared +143.0%, +175.9%, +498.3% and +673.0%.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
Today, See These 5 Potential Home Runs >>Paychex, Inc. (PAYX) : Free Stock Analysis Report
RB Global, Inc. (RBA) : Free Stock Analysis Report
Deluxe Corporation (DLX) : Free Stock Analysis Report
To read this article on Zacks.com click here.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
