Paychex Fourth Quarter Earnings Sneak Peek

S&P 500 (NYSE:SPY) component Paychex (NASDAQ:PAYX) will unveil its latest earnings on Wednesday, June 27, 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 estimate of analysts is for net income of 34 cents per share, a rise of 3% from the company’s actual earnings for the same quarter a year ago. The average estimate is the same as three months ago. Between one and three months ago, the average estimate was unchanged. It also has not changed during the last month. Analysts are projecting profit to rise by 7% versus last year to $1.52.

Past Earnings Performance: Last quarter, the company saw profit of 37 cents per share versus a mean estimate of net income of 37 cents per share. This comes after two consecutive quarters of exceeding expectations.

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Balance Sheet Analysis: The company’s current ratio of assets to liabilities came in at 1.11 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 1.15 in the second quarter to the last quarter driven in part by an increase in liabilities. Current liabilities increased 34.6% to $4.37 billion while assets rose 30.3% to $4.87 billion.

Wall St. Revenue Expectations: Analysts predict a rise of 6.7% in revenue from the year-earlier quarter to $557.7 million.

Stock Price Performance: From May 23, 2012 to June 21, 2012, the stock price rose $1.91 (6.3%), from $30.19 to $32.10. 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 July 22, 2011 and August 2, 2011 when shares fell for eight straight days, dropping 10.5% (-$3.14) over that span.

Key Stats:

After experiencing income increases the last three quarters, the company is hoping to keep the good news coming with this earnings announcement. Net income rose 12.9% in the first quarter and 4.9% in the second quarter before increasing again in the third quarter.

On the top line, the company is looking to build on four-straight revenue increases heading into this earnings announcement. Revenue rose 5.3% in the fourth quarter of the last fiscal year, 8.6% in the first quarter and 6.6% in the second quarter before increasing again in the third quarter.

A Look Back: In the third quarter, profit rose 3.7% to $135.4 million (37 cents a share) from $130.6 million (36 cents a share) the year earlier, meeting analyst expectations. Revenue rose 7.2% to $569.5 million from $531.3 million.

Analyst Ratings: There are mostly holds on the stock with 15 of 22 analysts surveyed giving that rating.

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

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