Paychex Inc. (PAYX): Today's Featured Diversified Services Laggard

Editor's Note: TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model.

Paychex ( PAYX) pushed the Diversified Services industry lower today making it today's featured Diversified Services laggard. The industry as a whole closed the day up 0.4%. By the end of trading, Paychex fell 58 cents (-1.7%) to $32.71 on average volume. Throughout the day, 3.9 million shares of Paychex exchanged hands as compared to its average daily volume of 2.7 million shares. The stock ranged in price between $32.65-$33.36 after having opened the day at $33.06 as compared to the previous trading day's close of $33.29. Other companies within the Diversified Services industry that declined today were: Tyco International ( TYC), down 49.3%, CIBT Education Group ( MBA), down 12.8%, Daegis ( DAEG), down 11%, and General Employment ( JOB), down 7.7%.
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Paychex, Inc., together with its subsidiaries, provides payroll, human resource, and benefits outsourcing solutions for small to medium-sized businesses in the United States and Germany. Paychex has a market cap of $12.07 billion and is part of the services sector. The company has a P/E ratio of 21.8, equal to the average diversified services industry P/E ratio and above the S&P 500 P/E ratio of 17.7. Shares are up 10.3% year to date as of the close of trading on Friday. Currently there are two analysts that rate Paychex a buy, five analysts rate it a sell, and 16 rate it a hold.

TheStreet Ratings rates Paychex as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, solid stock price performance, expanding profit margins, good cash flow from operations and growth in earnings per share. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity.

On the positive front, Versar ( VSR), up 14.9%, Spar Group ( SGRP), up 14.5%, MoneyGram International ( MGI), up 13.9%, and American Learning ( ALRN), up 10.8%, were all gainers within the diversified services industry with MasterCard Incorporated ( MA) being today's featured diversified services industry leader.

For investors not wanting singular stock exposure, ETFs may be of interest. Investors who are bullish on the diversified services industry could consider iShares Dow Jones US Cons Services ( IYC) while those bearish on the diversified services industry could consider ProShares Ultra Short Consumer Sers ( SCC).

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