Wednesday, February 8, 2023
HomeMarketPayChex Posts Earnings Beat, But the Stock Is Down. Here's Why.

PayChex Posts Earnings Beat, But the Stock Is Down. Here’s Why.

This year, shares of Paychex have fallen about 20%.

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Photograph by Warren Wong

Paychex
stock fell Thursday after the payroll services company reported better-than-expected earnings overall for its latest quarter, but posted a miss for a key segment.

Paychex
(ticker: PAYX) shares slid 4.1% Thursday. Moffett Nathanson analyst Eugene Simuni wrote that “the most likely cause” for the stock’s decline is weaker-than-expected results for the company’s Professional Employer Organization and Insurance Services segment, which he calls “a critical driver of the company’s long term growth trajectory.”

For Paychex’s fiscal second quarter, the segment’s revenue came in at $273.3 million, lower than the $283.3 million analysts had forecast, according to FactSet.

Overall, the payroll services company reported adjusted earnings of 99 cents a share for the period, outpacing analysts’ estimates for 95 cents.

Paychex also raised its earnings growth guidance for the full fiscal year ending in May 2023; it now expects adjusted earnings to grow between 12% and 14%, up from its previous guidance an 11% to 12% increase.

“As businesses struggle with both inflationary pressures and acquiring talent in a continuing tight labor market, we are well positioned to help companies find and retain employees, drive operational efficiency, and address complex Human Resource (“HR”) issues,” said President and CEO John Gibson in a statement.

This year, the stock has fallen about 19%, while the
S&P 500 index
has declined about 20%.

Write to Emily Dattilo at emily.dattilo@dowjones.com

Credit: marketwatch.com

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