Paychex (PAYX) closed the most recent trading day at $83.73, moving +1.12% from the previous trading session. This move lagged the S&P 500's daily gain of 1.5%. Meanwhile, the Dow gained 1.48%, and the Nasdaq, a tech-heavy index, added 1.95%.
Heading into today, shares of the payroll processor and human-resources services provider had lost 3.42% over the past month, lagging the Business Services sector's loss of 2.17% and outpacing the S&P 500's loss of 4.19% in that time.
Wall Street will be looking for positivity from PAYX as it approaches its next earnings report date. In that report, analysts expect PAYX to post earnings of $0.69 per share. This would mark year-over-year growth of 2.99%. Meanwhile, our latest consensus estimate is calling for revenue of $990.93 million, up 14.85% from the prior-year quarter.
PAYX's full-year Zacks Consensus Estimates are calling for earnings of $3.09 per share and revenue of $4.16 billion. These results would represent year-over-year changes of +8.8% and +10.3%, respectively.
It is also important to note the recent changes to analyst estimates for PAYX. These recent revisions tend to reflect the evolving nature of short-term business trends. As such, positive estimate revisions reflect analyst optimism about the company's business and profitability.
Our research shows that these estimate changes are directly correlated with near-term stock prices. We developed the Zacks Rank to capitalize on this phenomenon. Our system takes these estimate changes into account and delivers a clear, actionable rating model.
Ranging from #1 (Strong Buy) to #5 (Strong Sell), the Zacks Rank system has a proven, outside-audited track record of outperformance, with #1 stocks returning an average of +25% annually since 1988. Over the past month, the Zacks Consensus EPS estimate remained stagnant. PAYX currently has a Zacks Rank of #3 (Hold).
Digging into valuation, PAYX currently has a Forward P/E ratio of 26.84. This valuation marks a premium compared to its industry's average Forward P/E of 19.79.
We can also see that PAYX currently has a PEG ratio of 2.98. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. The Outsourcing was holding an average PEG ratio of 1.84 at yesterday's closing price.
The Outsourcing industry is part of the Business Services sector. This industry currently has a Zacks Industry Rank of 112, which puts it in the top 44% of all 250+ industries.
The Zacks Industry Rank gauges the strength of our industry groups by measuring the average Zacks Rank of the individual stocks within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.
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