Earnings Preview: Paychex (PAYX) (June 2007)

Trading volume in Paychex Inc. (PAYX-NASDAQ) is fairly light ahead of its earnings after the close.  First Call estimates are $0.36 EPS and $496.3 million in revenues.  Today also marks the year-end report for the Fiscal Year ended May-2007. 

Volume is barely past 1 million shares past the mid-point of the day and it usually trades more than 3.5 million shares in a day.  Options traders are not looking for more than a $1.00 move in either direction, and at $39.90 shares are closer to the higher-end of the $32.98 to $42.50 52-week trading range.  If it gives guidance for the quarter ahead, the current estimates are $0.40 EPS and $513 million in revenues.

If the Paychex (PAYX) meets estimates it will have a trailing P/E of 28.3 and its forward P/E ratio for 2008 will be 24.75; and its current market cap is $15.2 Billion.  Automatic Data (ADP-NYSE) is much larger but more diversified competitor at a $26 Billion market cap and it trades at 26-times expected Fiscal June-2006 earnings estimates and trades at 22.3-times 2008 estimates.

With an on again off again economic stance and with the stock closer to historic highs, it is probably not that surprising that volume is light ahead of its report.

Jon C. Ogg
June 27, 2007

Jon Ogg can be reached at [email protected]; he does not own securities in the companies he covers.