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Here's Why Investors Should Retain Paychex (PAYX) Stock
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Paychex, Inc. (PAYX - Free Report) currently benefits from a solid business model, as well as investor-friendly steps.
PAYX’s earnings are anticipated to grow 12.7% and 7.7% in fiscal 2023 and 2024, respectively. PAYX has a long-term earnings growth expectation of 7.5%.
Factors That Augur Well
Paychexhas grown significantly over the years by providing industry-leading services and technology solutions to its clients and their employees. Its solid business model, diversified products and services, and strategic acquisitions have boosted its top-line growth. Revenues witnessed a five-year (2018-2022) CAGR of 6.4%. Higher revenues are likely to expand margins and increase profitability in the long run.
Paychex puts consistent efforts to reward its shareholders through dividends and share repurchases. The company paid dividends of $999.6 million, $908.7 million and $889.4 million, and repurchased shares worth $145.2 million, $155.7 million and $171.9 million, respectively, in fiscal 2022, 2021 and 2020. Such initiatives not only instill investors’ confidence but also positively impact earnings per share.
A Key Risk
Paychex is seeing an increase in expenses as it continues to invest in sales, marketing, product development and supporting technology. Total expenses of $2.7 billion increased 7% year over year in fiscal 2022. These expenses increased 1% year over year in fiscal 2021, 7% in fiscal 2020 and 15% in fiscal 2019. Hence, the company's bottom line is likely to remain under pressure going forward.
Zacks Rank and Stocks to Consider
Paychex currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader Zacks Business Services sector are Trane Technologies (TT - Free Report) and The Interpublic Group of Companies, Inc. (IPG - Free Report) .
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Here's Why Investors Should Retain Paychex (PAYX) Stock
Paychex, Inc. (PAYX - Free Report) currently benefits from a solid business model, as well as investor-friendly steps.
PAYX’s earnings are anticipated to grow 12.7% and 7.7% in fiscal 2023 and 2024, respectively. PAYX has a long-term earnings growth expectation of 7.5%.
Factors That Augur Well
Paychexhas grown significantly over the years by providing industry-leading services and technology solutions to its clients and their employees. Its solid business model, diversified products and services, and strategic acquisitions have boosted its top-line growth. Revenues witnessed a five-year (2018-2022) CAGR of 6.4%. Higher revenues are likely to expand margins and increase profitability in the long run.
Paychex, Inc. Revenue (TTM)
Paychex, Inc. revenue-ttm | Paychex, Inc. Quote
Paychex puts consistent efforts to reward its shareholders through dividends and share repurchases. The company paid dividends of $999.6 million, $908.7 million and $889.4 million, and repurchased shares worth $145.2 million, $155.7 million and $171.9 million, respectively, in fiscal 2022, 2021 and 2020. Such initiatives not only instill investors’ confidence but also positively impact earnings per share.
A Key Risk
Paychex is seeing an increase in expenses as it continues to invest in sales, marketing, product development and supporting technology. Total expenses of $2.7 billion increased 7% year over year in fiscal 2022. These expenses increased 1% year over year in fiscal 2021, 7% in fiscal 2020 and 15% in fiscal 2019. Hence, the company's bottom line is likely to remain under pressure going forward.
Zacks Rank and Stocks to Consider
Paychex currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader Zacks Business Services sector are Trane Technologies (TT - Free Report) and The Interpublic Group of Companies, Inc. (IPG - Free Report) .
Trane Technologies carries a Zacks Rank #2 (Buy) at present. TT has a long-term earnings growth expectation of 9.8%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Trane delivered a trailing four-quarter earnings surprise of 8.2% on average.
Interpublic currently sports a Zacks Rank #1. IPG has a long-term earnings growth expectation of 4.6%.
IPG delivered a trailing four-quarter earnings surprise of 8.2% on average.