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The Stock of Paychex Rises After Profits Exceeded Expectations

September 27, 2023
minute read

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.

Cathy Hills
Associate Editor
Eric Ng
John Liu
Editorial Board
Bryan Curtis
Adan Harris
Managing Editor
Cathy Hills
Associate Editor

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