Paychex Rises on Solid Earnings

By Chris Lange Updated Jan 13, 6:11AM EST · Published Jun 30, 11:21AM EDT

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Paychex Rises on Solid Earnings — © Thinkstock

Paychex, Inc. (NASDAQ: PAYX) reported fiscal fourth-quarter financial results before the markets opened on Thursday. The company said that it had $0.49 in earnings per share (EPS) on $753.9 million in revenue. Thomson Reuters has consensus estimates that were calling for $0.49 in EPS on $751.52 million in revenue. The same period from last year had $0.44 in EPS on $692.20 million in revenue.

Revenue from services for the quarter totaled $741.6 million comprised of Payroll services and Human Resource services.

Payroll service revenue increased 5% to $430.4 million, compared to the respective period last year. These increases were driven by growth in client base and revenue per check. Revenue per check improved as a result of price increases, net of discounts.

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Human Resource Services (HRS) revenue increased 14% to $311.2 million. HRS revenue growth was primarily driven by increases in client base across all major HCM services, including: comprehensive outsourcing services; retirement services; time and attendance; and human resource administration.

In terms of the outlook for the coming fiscal year, the company expects to have total service revenues increasing between 7% and 8%, and for net income to increase roughly 8%. There are consensus estimates that are calling for $2.22 in EPS on $3.17 billion in revenue.

Martin Mucci, President and CEO of Paychex, commented:

We are pleased with our strong finish to fiscal 2016, closing the year with nearly $3 billion in total revenues, a new milestone for Paychex. We experienced solid sales execution and strong client satisfaction and retention results, bringing our payroll client base to approximately 605,000 as of May 31, 2016. Our comprehensive offering of human resource outsourcing services continues to benefit from strong demand as reflected in double-digit growth in client worksite employees served.

On the books, cash, cash equivalents, and corporate investments totaled $352.1 million at the end of the quarter, compared to $536.6 million in the same period from last year.

Shares of Paychex were last trading up 2.2% at $57.38, with a consensus analyst price target of $49.79 and a 52-week trading range of $41.59 to $57.44.

About the Author Chris Lange →

Chris Lange is a writer for 24/7 Wall St., based in Houston. He has covered financial markets over the past decade with an emphasis on healthcare, tech, and IPOs. During this time, he has published thousands of articles with insightful analysis across these complex fields. Currently, Lange's focus is on military and geopolitical topics.

Lange's work has been quoted or mentioned in Forbes, The New York Times, Business Insider, USA Today, MSN, Yahoo, The Verge, Vice, The Intelligencer, Quartz, Nasdaq, The Motley Fool, Fox Business, International Business Times, The Street, Seeking Alpha, Barron’s, Benzinga, and many other major publications.

A graduate of Southwestern University in Georgetown, Texas, Lange majored in business with a particular focus on investments. He has previous experience in the banking industry and startups.