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 Paychex ( PAYX) as a post-market laggard 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 $62.3 million.
- PAYX is down 2.7% today from today's close.
EXCLUSIVE OFFER: Get the inside scoop on opportunities in PAYX with the Ticky from Trade-Ideas. See the FREE profile for PAYX NOW at Trade-Ideas 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 3.4%. PAYX has a PE ratio of 26.1. Currently there is 1 analyst that rates Paychex a buy, 3 analysts rate it a sell, and 16 rate it a hold. The average volume for Paychex has been 1.9 million shares per day over the past 30 days. Paychex has a market cap of $14.9 billion and is part of the services sector and diversified services industry. The stock has a beta of 0.97 and a short float of 5.3% with 11.09 days to cover. Shares are up 30.9% year to date as of the close of trading on Friday. STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12-months. Learn more. TheStreetRatings.com Analysis: TheStreet Quant Ratings rates Paychex as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, expanding profit margins, increase in net income, largely solid financial position with reasonable debt levels by most measures and solid stock price performance. 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 15.3%. Since the same quarter one year prior, revenues slightly increased by 6.1%. This growth in revenue does not appear to have trickled down to the company's bottom line, displaying stagnant earnings per share.
- The gross profit margin for PAYCHEX INC is currently very high, coming in at 75.09%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 21.10% is above that of the industry average.
- PAYCHEX INC reported flat earnings per share in the most recent quarter. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. 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 ($1.69 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 0.2% when compared to the same quarter one year prior, going from $123.30 million to $123.50 million.
- PAYX has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Even though the company has a strong debt-to-equity ratio, the quick ratio of 0.16 is very weak and demonstrates a lack of ability to pay short-term obligations.
- You can view the full Paychex Ratings Report.
STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12-months. Learn more.