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Paychex (PAXY) to Report Q1 Earnings: What's in the Cards?

Zacks Equity Research

Paychex, Inc. PAYX is scheduled to report first-quarter fiscal 2020 results on Oct 2, before market open.

So far this year, shares of Paychex have gained 26.8% compared with 25% rise of the industry it belongs to and 17.8% increase of the Zacks S&P 500 composite.

 

 

Let's check out how things are shaping up for the announcement.

What to Expect

Paychex’s top line should benefit from strength across total service revenues and interest on funds held for clients. The Zacks Consensus Estimate for first-quarter fiscal 2020 revenues stands at $990.93 million, indicating an increase of 14.9% year over year. In fourth-quarter fiscal 2019, total revenues of $980.4 million increased 16% year over year.

Within total service, Management Solutions revenues are likely to be driven by increase in the company’s client base across many of its services and growth in revenue per check (on the back of price increases and net of discounts). Growth in clients and client worksite employees and rise in the number of health, benefit clients and applicants should boost its PEO and insurance services revenues.

Interest on funds held by clients is likely to benefit from higher average interest rates earned.

The Zacks Consensus Estimate for earnings per share in the to-be-reported quarter is pegged at 69 cents, indicating growth of 2.9% from the year-ago reported figure. In fourth-quarter fiscal 2019, adjusted earnings of 63 cents per share increased 9% year over year.

What Our Model Says

According to the Zacks model, a company with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) has a good chance of beating estimates if it also has a positive Earnings ESP. Zacks Rank #4 (Sell) or 5 (Strong Sell) stocks are best avoided, especially when the company is seeing negative estimate revisions. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter.

Paychex has an Earnings ESP of -0.88% and a Zacks Rank #3, a combination that makes surprise prediction difficult.

Paychex, Inc. Price and EPS Surprise

 

Paychex, Inc. Price and EPS Surprise

Paychex, Inc. price-eps-surprise | Paychex, Inc. Quote

Stocks to Consider

Here are a few stocks from the broader Zacks Business Services sector that investors may consider as our model shows that these have the right combination of elements to beat estimates.

S&P Global SPGI has an Earnings ESP of +0.17% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

FLEETCOR Technologies FLT has an Earnings ESP of +1.38% and a Zacks Rank #3.

FactSet FDS has an Earnings ESP of +0.57% and a Zacks Rank #3.

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