Paychex First Quarter Earnings Sneak Peek

S&P 500 (NYSE:SPY) component Paychex (NASDAQ:PAYX) will unveil its latest earnings on Monday, September 24, 2012. Paychex is a provider of comprehensive payroll, human resource, and benefits outsourcing solutions for small and medium sized businesses.

Paychex Earnings Preview Cheat Sheet

Wall St. Earnings Expectations: The average analyst estimate is for net income of 41 cents per share, no change from the company’s actual earnings for the year-ago quarter. During the past three months, the average estimate has moved down from 43 cents. Between one and three months ago, the average estimate moved down. It has been unchanged at 41 cents during the last month. Analysts are projecting profit to rise by 6.6% versus last year to $1.61.

Past Earnings Performance: The company met estimates last quarter after beating the forecasts in the prior two. In the fourth quarter of the last fiscal year, the company reported profit of 34 cents per share versus a mean estimate of net income of 34 cents per share. In the third quarter of the last fiscal year, the company beat estimates by 0 cents.

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Stock Price Performance: Between July 23, 2012 and September 18, 2012, the stock price had risen $2.13 (6.6%), from $32.17 to $34.30. The stock price saw one of its best stretches over the last year between November 23, 2011 and December 5, 2011, when shares rose for eight straight days, increasing 9.1% (+$2.47) over that span. It saw one of its worst periods between April 27, 2012 and May 7, 2012 when shares fell for seven straight days, dropping 4.3% (-$1.33) over that span.

Wall St. Revenue Expectations: On average, analysts predict $584 million in revenue this quarter, a rise of 3.7% from the year-ago quarter. Analysts are forecasting total revenue of $2.35 billion for the year, a rise of 5.4% from last year’s revenue of $2.23 billion.

A Look Back: In the fourth quarter of the last fiscal year, profit rose 3.7% to $123.3 million (34 cents a share) from $118.9 million (33 cents a share) the year earlier, meeting analyst expectations. Revenue rose 5.5% to $551.5 million from $522.7 million.

Key Stats:

This upcoming earnings announcement will be a chance to build on positive earnings momentum over the last three quarters. Net income rose 4.9% in the second quarter of the last fiscal year and 3.7% in the third quarter of the last fiscal year before increasing again in the fourth quarter of the last fiscal year.

On the top line, the company is looking to build on four-straight revenue increases heading into this earnings announcement. Revenue rose 8.6% in the first quarter of the last fiscal year, 6.6% in the second quarter of the last fiscal year and 7.2% in the third quarter of the last fiscal year before increasing again in the fourth quarter of the last fiscal year of the last fiscal year.

Balance Sheet Analysis: The company’s current ratio of assets to liabilities came in at 1.07 last quarter. The current ratio is an indication of a firm’s liquidity and ability to meet creditor demands and generally, for every dollar the company owes in the short term, it has that figure available in assets that can be converted to cash in the short term. The company regressed in this liquidity measure from 1.11 in the third quarter of the last fiscal year to the last quarter driven in part by an increase in liabilities. Current liabilities increased 8.5% to $4.75 billion while assets rose 4.2% to $5.08 billion.

Analyst Ratings: There are mostly holds on the stock with 13 of 22 analysts surveyed giving that rating.

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(Company fundamentals by Xignite Financials. Earnings estimates provided by Zacks)

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