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Paychex (PAYX) Q4 Earnings Coming Up: What Lies in Store?

Zacks Equity Research

Paychex, Inc. PAYX is slated to report fourth-quarter fiscal 2019 results on Jun 26, before the bell.

The company has an impressive earnings surprise history, having surpassed the Zacks Consensus Estimate in all of the trailing four quarters with an average positive earnings surprise of 1.6%.

The stock has gained 25.6% over the past year, significantly outperforming the 14.5% rally of the industry it belongs to.

How Things Are Shaping Up?

The Zacks Consensus Estimate for revenues is pegged at $980 million, indicating 12.5% growth from the year-ago quarter’s actual figure. The top line is expected to benefit from strength across total service and interest on funds held by clients.

The consensus mark for total service revenues is pegged at $956 million, indicating year-over-year growth of 12.1%. Within total service, Management Solutions revenue improvement is likely to be driven by growth in client bases across HCM Services, and in revenue per check. Benefits from Oasis acquisition and growth in clients and client worksite employees are expected to drive PEO and Insurance Services revenue growth.

The consensus mark for interest on funds held by clients stands at $21.3 million, indicating year-over-year increase of 20.2%. The expected increase is likely to result from higher average interest rates earned.

Paychex, Inc. Revenue (TTM)


Paychex, Inc. Revenue (TTM)

Paychex, Inc. revenue-ttm | Paychex, Inc. Quote


The consensus estimate for adjusted EPS is pegged at 65 cents, indicating year-over-year growth of 6.6%.

In third-quarter fiscal 2019, total revenues increased 14% and adjusted earnings were up 3% 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 if they have a negative Earnings ESP. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Paychexhas an Earnings ESP of 0.00% and a Zacks Rank #4.

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.

FLEETCOR Technologies FLT, with an Earnings ESP of +0.31% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Franklin Covey Co. FC, with an Earnings ESP of +8.16% and a Zacks Rank #3.

Booz Allen Hamilton BAH, with an Earnings ESP of +0.66% and a Zacks Rank #3.

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