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

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.

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 2.7%. By the end of trading, Paychex fell $1.42 (-3.4%) to $40.40 on heavy volume. Throughout the day, 3,813,599 shares of Paychex exchanged hands as compared to its average daily volume of 2,490,000 shares. The stock ranged in price between $40.35-$41.98 after having opened the day at $41.87 as compared to the previous trading day's close of $41.82. Other companies within the Diversified Services industry that declined today were: General Employment ( JOB), down 20.7%, InterCloud Systems ( ICLD), down 9.7%, Command Security Corporation ( MOC), down 9.5% and HMS Holdings Corporation ( HMSY), down 9.3%.

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. Paychex has a market cap of $15.4 billion and is part of the services sector. The company has a P/E ratio of 26.3, above the S&P 500 P/E ratio of 17.7. Shares are down 8.2% year to date as of the close of trading on Friday. Currently there is 1 analyst that rates Paychex a buy, 4 analysts rate it a sell, and 13 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, expanding profit margins, growth in earnings per share, increase in net income and largely solid financial position with reasonable debt levels by most measures. 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.

On the positive front, DLH Holdings ( DLHC), up 8.2%, Kratos Defense & Security Solutions ( KTOS), up 7.0%, Cinedigm ( CIDM), up 4.5% and Bioanalytical Systems ( BASI), up 3.9%.

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).

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12-months. Learn more.

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