The 10-second takeaway
For the quarter ended Nov. 30 (Q2), Paychex met expectations on revenues and met expectations on earnings per share.
Compared to the prior-year quarter, revenue grew and GAAP earnings per share grew.
Margins grew across the board.
Paychex reported revenue of $569.4 million. The 17 analysts polled by S&P Capital IQ expected sales of $573.1 million on the same basis. GAAP reported sales were 4.3% higher than the prior-year quarter's $545.7 million.
Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions. Non-GAAP figures may vary to maintain comparability with estimates.
EPS came in at $0.41. The 21 earnings estimates compiled by S&P Capital IQ predicted $0.41 per share. GAAP EPS of $0.41 for Q2 were 5.1% higher than the prior-year quarter's $0.39 per share.
Source: S&P Capital IQ. Quarterly periods. Non-GAAP figures may vary to maintain comparability with estimates.
For the quarter, gross margin was 71.1%, 140 basis points better than the prior-year quarter. Operating margin was 40.4%, 50 basis points better than the prior-year quarter. Net margin was 26.0%, 30 basis points better than the prior-year quarter.
Next quarter's average estimate for revenue is $602.0 million. On the bottom line, the average EPS estimate is $0.40.
Next year's average estimate for revenue is $2.34 billion. The average EPS estimate is $1.60.
The stock has a four-star rating (out of five) at Motley Fool CAPS, with 1,475 members out of 1,547 rating the stock outperform, and 72 members rating it underperform. Among 548 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 534 give Paychex a green thumbs-up, and 14 give it a red thumbs-down.
Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on Paychex is hold, with an average price target of $33.06.
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