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Paychex, Inc. (PAYX) - free report >>
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Paychex, Inc. (PAYX) - free report >>
Automatic Data Processing, Inc. (ADP) - free report >>
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Here's Why Paychex (PAYX) Stock Gained 6.8% in the Past Year
Shares of Paychex, Inc. (PAYX - Free Report) have rallied 6.8% in the past year, primarily on rising opportunities in the professional employer organization (PEO) industry and investor-friendly steps.
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.
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 - Free Report) , Automatic Data Processing, Inc. (ADP - Free Report) and CRA International, Inc. (CRAI - Free Report) .
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.