Should You Book Profits In Paychex Stock Now Or Wait?

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Trefis
PAYX: Paychex logo
PAYX
Paychex

The shares of Paychex (NASDAQ: PAYX) surged after posting strong Q2 FY2022 numbers last month. However, the stock observed a correction in recent weeks fairly in-line with other stocks including ADP, Paycom, and Workday. Investors had been optimistic on the stock in 2021 as the company’s management continuously raised revenue guidance for fiscal 2022 due to growth in the client base and improving market conditions. The company expects 10-11% total revenue growth in FY2022 – higher than the 7-9% observed historically. However, Paychex’s revenues increased by just 1% in FY2021 due to a high unemployment rate. Given a strong likelihood of Paychex’s revenues to grow at the historical pace in the coming years, Trefis believes that the stock is overvalued. Interestingly, our machine learning engine expects the stock to observe a near-term rebound – indicating a strategy of selling after a short holding period. See our analysis Paychex Stock Chance of Rise for more details.

Five Days: PAYX -3.2%, vs. S&P 500 -0.7%; Underperformed market (8% event probability)

  • Paychex stock declined -3.2% over a five-day trading period ending 01/13/2022, compared to the broader market (S&P500) which declined -0.7% over the same period.
  • Returns of -3.2% or lower over 5-day period in 202 times out of 2517 (8%); Stock rose in the next five days in 120 of these 202 instances (59%)
Relevant Articles
  1. What To Expect From Paychex Q1 Results
  2. What’s Happening With Paychex Stock?
  3. Forecast Of The Day: Paychex Management Solutions Revenue
  4. Company Of The Day: Paychex
  5. Why Are Investors Bullish On Paychex Stock?
  6. Time To Book Profits In Paychex Stock?

Ten Days: PAYX -7.2%, vs. S&P 500 -2.4%; Underperformed market (3% event probability)

  • Paychex stock declined 7.2% over the last ten trading days (two weeks), compared to the broader market (S&P500) which declined 2.4%.
  • Returns of -7.2% or lower over 10-day period in 68 times out of 2516 (3%); Stock rose in the next 10 days in 41 of these 68 instances (60%)

Twenty-One Days: PAYX 3.4%, vs. S&P 500 0.3%; Outperformed market (37% event probability)

  • Paychex stock gained 3.4% over the last twenty-one trading days (about one month), compared to the broader market (S&P500) which increased by 0.3%.
  • Returns of 3.4% or higher over 21-day period in 942 times out of 2515 (37%); Stock rose in the next 21 days in 610 of these 942 instances (65%)

What if you’re looking for a more balanced portfolio instead? Here’s a high-quality portfolio that’s beaten the market consistently since the end of 2016.

 Returns Jan 2022
MTD [1]
2022
YTD [1]
2017-22
Total [2]
 PAYX Return -6% -6% 112%
 S&P 500 Return -2% -2% 109%
 Trefis MS Portfolio Return -6% -6% 271%

[1] Month-to-date and year-to-date as of 1/10/2022
[2] Cumulative total returns since the end of 2016

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