Rochester, New York-based Paychex, Inc. (PAYX) provides integrated human capital management solutions (HCM) for payroll, benefits, human resources (HR), and insurance services for small to medium-sized businesses. With a market cap of $47.9 billion, Paychex's operations span the United States, Europe, and internationally. The tech giant is expected to release its Q1 earnings before the market opens on Tuesday, Oct. 1.
Ahead of the event, analysts expect Paychex to report a profit of $1.14 per share, matching year-ago quarters figures. The company has consistently surpassed Wall Street’s EPS estimates in each of the past four quarters. Its EPS for the last reported quarter grew by 15.5% year-over-year to $1.12, exceeding the consensus estimates by 1.8%.
Looking ahead to fiscal 2025, analysts expect Paychex to report an EPS of $4.99, up 5.7% from $4.72 in fiscal 2024. While in fiscal 2026, its EPS is estimated to grow 6.8% year-over-year to $5.33.
PAYX stock is up 11.7% on a YTD basis, trailing behind the S&P 500 Index’s ($SPX) 20.3% gains and the Technology Select Sector SPDR Fund’s (XLK) 17% returns in 2024.
Shares of Paychex dipped 6.1% after the release of its fiscal 2024 earnings on Jun. 26. Despite reporting a 5.3% annual increase in Q4 total revenues, reaching $1.3 billion, it fell short of Wall Street’s expectations. Additionally, its revenue growth guidance of 4% to 5.5% and adjusted EPS growth projection of 5% to 7% for fiscal 2025 likely left investors underwhelmed.
Nevertheless, demonstrating operational efficiency Paychex’s full-year net margin expanded by 92 basis points to 32%, leading to an 8.5% year-over-year growth in net income, totaling $1.7 billion, driven by enhanced product penetration, increased Professional Employer Organization (PEO) insurance revenues, and higher average interest rates.
The consensus opinion on PAYX stock is neutral, with an overall “Hold” rating. Among the 18 analysts covering the stock, 15 recommend “Hold,” one suggests “Moderate Sell,” and two give a “Strong Sell” rating.
Although PAYX is trading above its mean price target of $125.07, the Street-high target of $145 suggests a potential upside of 9% from current price levels.
On the date of publication, Aditya Sarawgi did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
