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 down 1.3%. By the end of trading, Paychex fell 38 cents (-1.1%) to $32.97 on light volume. Throughout the day, 1.2 million shares of Paychex exchanged hands as compared to its average daily volume of 2.6 million shares. The stock ranged in price between $32.90-$33.40 after having opened the day at $33.39 as compared to the previous trading day's close of $33.35. Other companies within the Diversified Services industry that declined today were: General Employment ( JOB), down 14.4%, WidePoint Corporation ( WYY), down 13.6%, ENGlobal Corporation ( ENG), down 13.5%, and China HGS Real Estate ( HGSH), down 10.5%.
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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 $12.2 billion and is part of the services sector. The company has a P/E ratio of 22.1, 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 11.5% year to date as of the close of trading on Monday. Currently there are two analysts that rate Paychex a buy, five analysts rate it a sell, and 17 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, increase in stock price during the past year, 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, China Yida ( CNYD), up 16.2%, VirtualScopics ( VSCP), up 12%, CIBT Education Group ( MBA), up 10.5%, and Consolidated Graphics ( CGX), up 4.9%, were all gainers within the diversified services industry with Weight Watchers International ( WTW) 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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