Paychex Inc. Earnings Cheat Sheet: Third Straight Quarter of Rising Profit

S&P 500 (NYSE:SPY) component Paychex Inc. (NASDAQ:PAYX) reported its results for the second quarter. Paychex is a provider of comprehensive payroll, human resource, and benefits outsourcing solutions for small and medium sized businesses.

Investing Insights: Here’s Why Chipotle’s Stock Keeps Winning.

Paychex Earnings Cheat Sheet for the Second Quarter

Results: Net income for Paychex Inc. rose to $140.4 million (39 cents per share) vs. $133.9 million (37 cents per share) in the same quarter a year earlier. This marks a rise of 4.9% from the year earlier quarter.

Revenue: Rose 7% to $535 million from the year earlier quarter.

Actual vs. Wall St. Expectations: PAYX beat the mean analyst estimate of 38 cents per share. It fell short of the average revenue estimate of $551.7 million.

Quoting Management: Martin Mucci, President and Chief Executive Officer, commented, “Paychex delivered solid results for the second quarter. We expanded our software-as-a-service (NASDAQ:SAAS) offerings with the introduction of our new single sign-on page for online users and an iPad application. Checks per client continued to improve for the second quarter, but, as anticipated, the 1.5% growth rate for the quarter was lower than the 2.0% experienced for the first quarter. This moderation is expected to continue through the remainder of the fiscal year. We have reiterated our guidance for the fiscal year as we continue to see a slow recovery in the economy with respect to sales from new business formations.”

Key Stats:

The company has now seen net income rise in three straight quarters. In the first quarter, net income rose 12.9% and in the fourth quarter of the last fiscal year, the figure rose 2.9%.

Revenue has risen the past four quarters. Revenue increased 9% to $552 million in the first quarter. The figure rose 5.8% in the fourth quarter of the last fiscal year from the year earlier and climbed 5.2% in the third quarter of the last fiscal year from the year-ago quarter.

The company has now beaten estimates the last two quarters. In the first quarter, it topped expectations with net income of 41 cents versus a mean estimate of net income of 38 cents per share.

Looking Forward: The average estimate for the third quarter remains unchanged at 38 cents a share. For the fiscal year, the average estimate has moved up from $1.50 a share to $1.51 over the last ninety days.

Competitors to Watch: Automatic Data Processing (NASDAQ:ADP), CBIZ, Inc. (NYSE:CBZ), Equifax Inc. (NYSE:EFX), American Express (NYSE:AXP), McMillan Shakespeare Ltd. (NYSE:MMS), Blue Tax Group SA (NYSE:BTG), and Colliers SA Holdings Ltd. (NYSE:COL).

Stock Performance: Shares of PAYX were up 2.4% from the previous close.

Investing Insights: Here’s Why Chipotle’s Stock Keeps Winning.

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