Paychex: Here's Why You Should Retain Paychex Stock in Your Portfolio for Now

Paychex, Inc. PAYX has had an impressive run over the past year. The stock has gained 29%, significantly outperforming the industry's 10% rally. The company has an impressive Growth Score of B. This style score consolidates all the essential metrics from a company's financial statements to capture the true sense of its quality and sustainability of growth. PAYX's earnings are anticipated to grow 5.5% and 6.3% in fiscal 2025 and 2026, respectively. The company has a long-term earnings growth expectation of 8.5%. Paychex, Inc. price | Paychex, Inc. Quote Paychex aims to meet clients' HR and payroll needs through a comprehensive and flexible service portfolio. The company's solid business model, diversified products and services and strategic acquisitions have boosted its top-line growth. Revenues witnessed a five-year (2020-2024) CAGR of 5.5%. Higher revenues are likely to expand margins and increase profitability in the long run. The demand environment for the company's Management Solutions and PEO and Insurance Solutions remains in good shape. Management Solutions' revenues increased 5% year over year in the last reported quarter, driven by an increase in the number of clients served across HCM solutions and client worksite employees for HR Solutions. PEO and Insurance Solutions revenues increased 6%, driven by expansion in the average number of employees at PEO worksites and increased PEO insurance revenues. Commitment to shareholder returns makes Paychex a reliable way for investors to compound wealth over the long term. The company paid dividends of $999.6 million, $1.2 billion and $1.3 billion in fiscal 2022, 2023 and 2024, respectively. The outsourcing industry is labor-intensive and heavily dependent on foreign talent. Rising talent costs due to competition are a barrier to the industry's growth. Paychex, being one of the companies in the industry, may be affected. Paychex currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks are Qifu Technology, Inc. QFIN and UiPath PATH, each flaunting a Zacks Rank of 1 (Strong Buy) at present. You can see the complete list of today's Zacks #1 Rank stocks here. Qifu Technology has a long-term earnings growth expectation of 11.3%. QFIN delivered a trailing four-quarter earnings surprise of 14.5%, on average. UiPath has a long-term earnings growth expectation of 19%. PATH delivered a trailing four-quarter earnings surprise of 36.4%, on average. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report