Shares of Paychex (PAYX -9.40%) fell as much as 9.9% on Wednesday morning, tripped up by an unimpressive earnings report. The payroll processing services expert's stock recovered slightly to a 7.6% drop as of 12:20 p.m. ET.
Paychex numbers land on target
In the fourth quarter of fiscal year 2025, Paychex saw revenues rise 10% year over year to $1.43 billion. Adjusted earnings ticked 6.3% higher, landing at $1.19 per diluted share.
The results were in line with the consensus analyst estimates, but management's guidance for the next fiscal year was a mixed bag. At the midpoint of each guidance range, Paychex projected full-year earnings 2% above the current analyst view, while the revenue target stopped 0.8% below Wall Street's consensus.
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Mild growing pains in the Paycor buyout
The surprisingly modest revenue target suggests that Paychex may see a smaller benefit than expected from the recently closed Paycor buyout.
So the Paycor integration may be off to a somewhat rocky start, but it still looks like a good move. This deal expanded Paychex's market reach from its traditional focus on small and medium-sized businesses, as Paycor brought in a robust roster of larger clients. If nothing else, Paychex should see synergies develop over time, as existing customers with growing payroll and HR service needs are more likely to stick with the provider they already know.
Paychex stock hovered in a reasonable valuation range both before and after Wednesday's price drop. Whether you liked the stock yesterday or not, this report shouldn't change your analysis a lot.
