Earnings Preview: Paychex, Inc.

| About: Paychex, Inc. (PAYX)

Paychex, Inc. (NASDAQ:PAYX) provides payroll, human resource, and benefits outsourcing solutions for small- to medium-sized businesses. It offers a portfolio of services and products that allow its clients to meet their payroll and human resource needs.

Paychex is scheduled to report its fourth quarter earnings results on June 28, 2012, before market open.

Technical Overview

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Paychex has a market cap of $11.79 billion and it is currently trading around $32.53 with a 52 week range of $24.34 to $32.73. The stock has risen 9.79% year to date. The following table provides the key financial ratios for Paychex:

Key Ratio Value
Current Ratio 1.11
PEG 2.09
P/E 21.69
Forward P/E 19.96
Profit Margin 24.70%
Return On Assets (ROA) 9.02%
Return On Equity (ROE) 35.49%

Recent News

  • On June 20, 2012, Paychex was named to IDG Computerworld's annual list of Best Places to Work in IT. The honor is given to organizations that challenge their IT staffs, while providing great benefits and compensation. Paychex ranked number 81 on the 2012 list of Top 100 companies, the company's eighth consecutive year on the list.
  • On June 13, 2012, Paychex released an infographic on the use of mobile technology by small businesses. The infographic focuses on how this technology helps small business owners by allowing them to save time and boost productivity.
  • On June 12, 2012, Paychex announced the launch of its Paychex Mobile smartphone application for iPhone®, Android™, and BlackBerry®.
  • On April 26, 2012, The Board of Directors of Paychex declared a regular quarterly dividend of $0.32 per share payable May 15, 2012 to shareholders of record May 8, 2012.

Analyst Guidance and Earnings History

The fourth quarter revenues are expected to be $557.67 million when compared to $522.70 million for the same quarter last year. Earnings per share for the fourth quarter are expected to be 34 cents a share, up from a 33 cents a share in the year-ago period.

The average price target from analyst for Paychex is $32.06 with average rating is HOLD.

Out of the last 4 quarters, Paychex has met or exceeded the EPS estimates all the 4 times. The following chart shows the Analyst estimates history and the actual EPS results:

The following chart shows the annual summary of Sales and Net income for Paychex:


Automatic Data Processing Inc (NASDAQ:ADP), Insperity Inc (NYSE:NSP), Barrett Business Services Inc (NASDAQ:BBSI), and Equifax Inc (NYSE:EFX) are considered as major competitors for Paychex and the table below provides the key metrics for these companies:

Name Paychex Inc. Automatic Data Processing Inc. Insperity Inc. Barrett Business Services Inc Equifax Inc.
Price $32.53 $55.31 $26.01 $20.19 $46.83
52 Week Price 9.79% 5.33% -13.86% 35.49% 35.89%
Market Capitalization $11.79B $27.15B $672.57M $140.39M $5.62B
Earnings per Share 1.5 2.77 1.37 0.65 2
Total Revenue $2.2B $10.5B $2.0B $328.53M $2.0B
Employees (Full-Time) 12400 51000 3200 49355 6500

Sources: Some of the data is taken from Google Finance, Nasdaq, Yahoo Finance, Finviz and investor sites.

Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in PAYX over the next 72 hours.

Additional Disclosure: I change my positions very frequently and may initiate either long or short positions in the above mentioned stocks at any time.

Disclaimer: I am not a registered investment advisor and do not provide specific investment advice. The information contained herein is for informational purposes only. Nothing in this article should be taken as a solicitation to purchase or sell securities. Before buying or selling any stock you should do your own research and reach your own conclusion. It is up to investors to make the correct decision after necessary research.

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Tagged: , Staffing & Outsourcing Services, Earnings
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