Paychex Net Up 12%; Weak Guidance

Paychex Inc., a provider of human resource and payroll services, reported fiscal Q4 net income increased 12% to $137.2 million ($0.36/share), in-line with consensus estimates. Revenues rose 11% to $487.3m, missing analysts' average forecast of $496m. Shares fell 3% to $39.02 in AH trading on disappointing guidance. Paychex forecast fiscal year 2008 net income growth of 14% to 16% [$606m-$617m, $1.59-$1.62] and for sales to increase 11% to 13% [$2.11b-$2.15b]. Analysts on average had been forecasting $1.61/share on sales of $2.12b. Paychex projected fiscal 2008 revenue growth of 9% to 10% for Payroll services and 20% to 23% for Human Resource services. Shares have traded in a range of $32.98 to $42.50 over the past year.

Sources: Press release (.pdf), Associated Press, MarketWatch, RTTNews
Commentary: Paychex Earnings Conference Call Transcript (later today) • Unlucky Number Seven: Sideways Performers Since 2000 Who Stand To Gain • 32 Big Dividend Payers: Buy Now, Profit Later • S&P 500 Furthest Below 50-DMA, With Money Flows
Stocks/ETFs to watch: Paychex Inc. (PAYX). Competitors: Administaff Inc. (ASF), Ceridian Corporation (CEN), Automatic Data Processing, Inc. (ADP)

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