The 10-second takeaway
For the quarter ended Aug. 31 (Q1), Paychex met expectations on revenues and beat slightly on earnings per share.
Compared to the prior-year quarter, revenue expanded slightly and GAAP earnings per share grew.
Margins grew across the board.
Paychex reported revenue of $578.2 million. The 15 analysts polled by S&P Capital IQ wanted to see a top line of $583.7 million on the same basis. GAAP reported sales were 2.7% higher than the prior-year quarter's $563.1 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 $0.42. The 19 earnings estimates compiled by S&P Capital IQ predicted $0.41 per share. GAAP EPS of $0.42 for Q1 were 2.4% higher than the prior-year quarter's $0.41 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 71.6%, 130 basis points better than the prior-year quarter. Operating margin was 41.2%, 40 basis points better than the prior-year quarter. Net margin was 26.5%, 10 basis points better than the prior-year quarter.
Next quarter's average estimate for revenue is $574.9 million. On the bottom line, the average EPS estimate is $0.41.
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 1,480 members out of 1,552 rating the stock outperform, and 72 members rating it underperform. Among 531 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 519 give Paychex a green thumbs-up, and 12 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 $32.42.
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