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Rochester, New York-based Paychex, Inc. (PAYX) is a provider of human capital management solutions for payroll, benefits, human resources, and insurance services for small to medium-sized businesses. With a market cap of $46 billion, Paychex’s operations span the United States, Europe, and India. It is expected to announce its Q1 earnings on Wednesday, Sept. 25.
Ahead of the event, analysts expect Paychex to report a profit of $1.14 per share, mirroring the year-ago quarter’s reported figure. The company has consistently surpassed Wall Street’s EPS estimates over the past four quarters. Its EPS for the last reported quarter grew by 15.5% annually 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. In fiscal 2026, its EPS is expected to grow 6.8% year over year to $5.33.
PAYX stock is up 8.1% on a YTD basis, underperforming the S&P 500 Index’s ($SPX) 15.9% gains and the S&P 500 Industrial Sector SPDR’s (XLI) 12.6% returns over the same time frame.
In fiscal 2024, Paychex surpassed Wall Street’s earnings and revenue estimates, reporting a 5.4% revenue growth and an 8.6% net income growth. However, its stock dipped 6.1% after the release of its earnings on June 26, due to a softer revenue growth guidance of 4% to 5.5% and an adjusted EPS growth guidance expected to range between 5% to 7%, which didn’t impress investors.
Nevertheless, Paychex has shown robust financial performance and repurchased shares worth $169.2 million and paid $1.3 billion in dividends in fiscal 2024, indicating its confidence in the company's valuations and commitment to shareholders.
The consensus opinion on Paychex stock is neutral, with an overall “Hold” rating. Out of the 18 analysts covering the stock, 15 recommend a “Hold,” one suggests a “Moderate Sell,” and two advise a “Strong Sell” rating.
Although Paychex is trading above its average price target of $120.93, the Street-high target of $130 indicates a potential upside of 1.6% 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.
