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Paychex (PAYX) to Report Q2 Earnings: What's in the Offing?

Zacks Equity Research

Paychex, Inc. PAYX is scheduled to report second-quarter fiscal 2020 results on Dec 18, before the bell.

So far this year, the company’s shares have gained 30.1% compared with 26.9% growth of the industry it belongs to.

Q2 Expectations

The Zacks Consensus Estimate for the to-be-reported quarter’s revenues stands at $986.4 million, indicating an increase of 14.9% year over year. The top line is expected to have benefited from strength across total service revenues and interest on funds held for clients.

Within total service, Management Solutions revenues are likely to have been driven by increase in the company’s client base and growth in revenue per check. Contribution from Oasis acquisition, growth in clients and client worksite employees and rise in the number of health, benefit clients and applicants are likely to have boosted the PEO and insurance services revenues. The consensus mark for total service revenues stands at $966 million, indicating 14.9% year-over-year growth.

Interest on funds held by clients is expected to have benefited from higher average interest rates earned. The consensus mark is pegged at $19.6 million, indicating 6.8% year-over-year growth.

In first-quarter fiscal 2020, total revenues of $992 million increased 15% year over year.

Paychex, Inc. Revenue (TTM)

Paychex, Inc. Revenue (TTM)
Paychex, Inc. Revenue (TTM)

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

The Zacks Consensus Estimate for earnings per share is pegged at 68 cents, indicating growth of 4.6% from the year-ago quarter reported figure. In first-quarter fiscal 2020, adjusted earnings of 71 cents per share increased 6% year over year.

What Our Model Says

Our proven Zacks model does not conclusively predict an earnings beat for Paychex this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here. 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 0.00% and a Zacks Rank #3.

You can see the complete list of today’s Zacks #1 Rank stocks here.

Stocks to Consider

Here are a few stocks that investors may consider as our model shows that these have the right combination of elements to beat on second-quarter fiscal 2020 earnings:

Worthington Industries, Inc. WOR has a Zacks Rank of 3 and an Earnings ESP of +5.78%. The company will report results on Dec 17.

Cintas Corporation CTAS has a Zacks Rank of 3 and an Earnings ESP of +2.02%. The company will report results on Dec 17.

General Mills, Inc. GIS has an Earnings ESP of +1.58% and a Zacks Rank #3. The company will report results on Dec 18.

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General Mills, Inc. (GIS) : Free Stock Analysis Report
 
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