Paychex Earnings: Profit Rises, Yet Revenues SHORT of Estimate

S&P 500 (NYSE:SPY) component Paychex Inc. (NASDAQ:PAYX) reported its results for the fourth quarter. Paychex is a provider of comprehensive payroll, human resource, and benefits outsourcing solutions for small and medium sized businesses.

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Paychex Inc. Earnings Cheat Sheet

Results: Net income for Paychex Inc. rose to $123.3 million (34 cents per share) vs. $118.9 million (33 cents per share) in the same quarter a year earlier. This marks a rise of 3.7% from the year-earlier quarter.

Revenue: Rose 5.9% to $540.7 million from the year-earlier quarter.

Actual vs. Wall St. Expectations: Paychex Inc. fell in line with the mean analyst estimate of 34 cents per share. It fell short of the average revenue estimate of $557.7 million.

Quoting Management: Martin Mucci, President and Chief Executive Officer, commented, “We achieved solid results for fiscal 2012. Our organic client base, which had experienced declines for the last three years, ended fiscal 2012 flat compared to the prior year end. We reached a record level of service revenue, as checks per payroll improved for the ninth consecutive quarter, growing 2% for fiscal 2012, and payroll client retention reached near-record levels. Our operations execution excelled as we achieved our highest client satisfaction scores in our history, and our progress in technology innovation continued as we introduced our latest mobility offering to clients with our smartphone application.”

Key Stats:

The company has now seen its net income rise for three quarters in a row. In the third quarter, net income rose 3.7% and in the second quarter, the figure rose 4.9%.

Revenue has increased for four consecutive quarters. Revenue increased 7.5% to $558.5 million in the third quarter. The figure rose 7% in the second quarter from the year earlier and climbed 9% in the first quarter from the year-ago quarter.

The company has now fallen in line with estimates for the past two quarters. It reported net income of 37 cents in the third quarter.

Looking Forward: The average estimate for the first quarter of the next fiscal year is steady at 43 cents a share. For the fiscal year, the average estimate has moved up from $1.51 a share to $1.52 over the last sixty days.

(Company fundamentals provided by Xignite Financials. Earnings estimates provided by Zacks)

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