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.
Can your portfolio provide you with enough income to last through retirement? You'll need more than Paychex. Learn how to maximize your investment income and "Secure Your Future With 9 Rock-Solid Dividend Stocks." Click here for instant access to this free report.
- Add Paychex to My Watchlist.
Seth Jayson owned shares of the following at the time of publication: Paychex. You can view his stock holdings here. He is co-advisor of Motley Fool Hidden Gems, which provides new small-cap ideas every month, backed by a real-money portfolio. The Motley Fool recommends Paychex. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.