The 10-second takeaway
For the quarter ended Feb. 28 (Q3), Paychex met expectations on revenues and beat expectations on earnings per share.
Compared to the prior-year quarter, revenue expanded. GAAP earnings per share grew.
Margins expanded across the board.
Paychex notched revenue of $593.3 million. The 20 analysts polled by S&P Capital IQ predicted a top line of $592.7 million on the same basis. GAAP reported sales were the same as the prior-year quarter's.
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 $0.40. The 22 earnings estimates compiled by S&P Capital IQ predicted $0.39 per share. GAAP EPS of $0.40 for Q3 were 8.1% higher than the prior-year quarter's $0.37 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 70.4%, 160 basis points better than the prior-year quarter. Operating margin was 36.8%, 110 basis points better than the prior-year quarter. Net margin was 24.8%, 60 basis points better than the prior-year quarter. (Margins calculated in GAAP terms.)
Next quarter's average estimate for revenue is $585.6 million. On the bottom line, the average EPS estimate is $0.37.
Next year's average estimate for revenue is $2.33 billion. The average EPS estimate is $1.60.
The stock has a four-star rating (out of five) at Motley Fool CAPS, with 1,468 members out of 1,539 rating the stock outperform, and 71 members rating it underperform. Among 564 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 553 give Paychex a green thumbs-up, and 11 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 $33.12.
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