Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.
Trade-Ideas LLC identified
) as a "water-logged and getting wetter" (weak stocks crossing below support with today's range greater than 200%) candidate. In addition to specific proprietary factors, Trade-Ideas identified Paychex as such a stock due to the following factors:
- PAYX has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $92.1 million.
- PAYX has traded 208,072 shares today.
- PAYX traded in a range 246% of the normal price range with a price range of $1.66.
- PAYX traded below its daily resistance level (quality: 12 days, meaning that the stock is crossing a resistance level set by the last 12 calendar days. The resistance price is defined by the Price - $0.01 at the time of the signal).
Stocks matching the 'Water-Logged and Getting Wetter' criteria are worthwhile stocks to watch for a variety of factors including historical back testing and volatility. Trade-Ideas targets these opportunities because the stock is exhibiting an unusual behavior while displaying negative price action. In this case, the stock crossed an important inflection point; namely, "support" while at the same time the range of the stock's movement in price is twice its normal size. This large range foreshadows a possible continuation as the stock moves lower.
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More details on PAYX:
Paychex, Inc., together with its subsidiaries, provides payroll, human resource, insurance, and benefits outsourcing solutions for small to medium-sized businesses in the United States and Germany. The stock currently has a dividend yield of 3.3%. PAYX has a PE ratio of 26.5. Currently there is 1 analyst that rates Paychex a buy, 4 analysts rate it a sell, and 13 rate it a hold.
The average volume for Paychex has been 2.5 million shares per day over the past 30 days. Paychex has a market cap of $15.4 billion and is part of the services sector and diversified services industry. The stock has a beta of 0.95 and a short float of 4.5% with 6.66 days to cover. Shares are down 6.7% year-to-date as of the close of trading on Tuesday.
rates Paychex as a
. The company's strengths can be seen in multiple areas, such as its revenue growth, expanding profit margins, good cash flow from operations, growth in earnings per share and increase in net income. We feel these strengths outweigh the fact that the company is trading at a premium valuation based on our review of its current price compared to such things as earnings and book value.
Highlights from the ratings report include:
- The revenue growth came in higher than the industry average of 20.8%. Since the same quarter one year prior, revenues slightly increased by 7.2%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- The gross profit margin for PAYCHEX INC is currently very high, coming in at 76.79%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 25.99% is above that of the industry average.
- Net operating cash flow has increased to $133.50 million or 23.26% when compared to the same quarter last year. In addition, PAYCHEX INC has also modestly surpassed the industry average cash flow growth rate of 20.57%.
- PAYCHEX INC's earnings per share improvement from the most recent quarter was slightly positive. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, PAYCHEX INC increased its bottom line by earning $1.57 versus $1.51 in the prior year. This year, the market expects an improvement in earnings ($1.70 versus $1.57).
- The net income growth from the same quarter one year ago has exceeded that of the IT Services industry average, but is less than that of the S&P 500. The net income increased by 7.3% when compared to the same quarter one year prior, going from $147.90 million to $158.70 million.
- You can view the full Paychex Ratings Report.