Paychex Inc. witnessed an uptick in its stock price on Wednesday following the release of its fiscal first-quarter financial results, which exceeded expectations. The provider of human-resources outsourcing services also raised its full-year outlook.
John Gibson, Chief Executive of Paychex, emphasized the resilience of small and mid-sized businesses in navigating the broader macro-economic landscape. He noted that the Small Business Employment Watch continues to report that small businesses are hiring workers at a moderate rate, and wage inflation is gradually normalizing alongside overall inflation.
In premarket trading, the stock (ticker: PAYX) rose by 0.9%, rebounding from a 12-week low observed during the previous trading session.
For the quarter ending on August 31, net income surged to $419.2 million, equivalent to $1.16 per share, compared to $379.2 million, or $1.05 per share, in the corresponding period of the prior year. Adjusted earnings per share, excluding nonrecurring items, reached $1.14, surpassing the FactSet consensus estimate of $1.12. The company also reported a 6.6% increase in revenue, reaching $1.286 billion, slightly exceeding the FactSet consensus of $1.284 billion.
Looking ahead to fiscal 2024, Paychex now anticipates adjusted earnings per share to grow within the range of 9% to 11% from the previous year. This upward revision is an expansion from the previous guidance of 9% to 10% growth. The current consensus for earnings per share, at $4.68, implies growth of 9.6%.
Additionally, the company raised its full-year outlook for interest on funds held for clients to a range of $140 million to $150 million, up from the previously stated range of $135 million to $145 million.
Despite a year-to-date decline of 2.5% in Paychex's stock, as of Tuesday, the company's market capitalization stood at $40.7 billion. This contrasts with the S&P 500, which has shown an 11.3% gain during the same period.
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