Paychex: Fails to Impress Investors

On Wednesday morning, Paychex (NASDAQ: PAYX) has announced first quarter earnings failing to impress investors. The company reported EPS of $0.60 on revenues of $785.5 million, compared to consensus estimates EPS of $0.57 on revenues of $782.8 million. The company is a provider of integrated human capital management solutions for payroll, human resource, retirement and insurance services for small- to medium-sized businesses in the United States.

“We are off to a solid start in fiscal 2017, and we experienced growth across all of our major human capital management (“HCM”) product lines. The number of client worksite employees served by our human resource outsourcing services grew by double digits on a year-over-year basis. Our cloud-based HCM services, including time and attendance and human resource management, continue to gain strong market acceptance. Last December, we acquired Advance Partners, which provides a portfolio of services to the temporary staffing industry, and we are encouraged with its contribution to our results,” said President and CEO of Paychex, Martin Mucci.

Human Resource Services revenue was $322.6 million for the first quarter, an increase of 15% compared to the same period last year. HRS revenue growth was primarily driven by increases in the client base across all major HCM services, including: comprehensive human resource outsourcing services; retirement services; time and attendance; and human resource administration.

Guidance for next quarter:

In terms of the outlook for the fiscal year ending in May 2017, the company expects net income to increase by 7%, Payroll service revenue to increase 3% to 4%, HRS revenue to increase 12% and 14% and total service revenue to increase 7% and 8%. The consensus estimates call for $2.21 in EPS on $3.18 billion in revenue for the 2017 fiscal year.

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