Paychex's stock bounces after profit rises above expectations and outlook is raised

By Tomi Kilgore

Human-resources services company sees small businesses hiring employees at a moderate level

Shares of Paychex Inc. rose Wednesday after the provider of human-resources outsourcing services reported fiscal first-quarter profit that rose above expectations and nudged up its full-year outlook.

"Small and mid-sized businesses remain resilient in navigating the broader macro-economic environment, as our Small Business Employment Watch continues to report that small businesses are hiring workers at a moderate level and wage inflation continues to normalize along with overall inflation," Chief Executive John Gibson said.

The stock (PAYX) rose 0.9% in premarket trading, after closing Tuesday at a 12-week low.

Net income for the quarter to Aug. 31 rose to $419.2 million, or $1.16 a share, from $379.2 million, or $1.05 a share, in the same period a year ago.

Excluding nonrecurring items, adjusted earnings per share of $1.14 beat the FactSet consensus of $1.12.

Revenue grew 6.6% to $1.286 billion, a touch above the FactSet consensus of $1.284 billion.

For fiscal 2024, the company now expects adjusted EPS to increase in the range of 9% to 11% from the prior year, up from previous guidance for growth of 9% to 10%.

The current FactSet EPS consensus of $4.68 implies 9.6% growth.

The company, which had a market capitalization of $40.7 billion as of Tuesday's closing stock price, also raised its full-year outlook for interest on funds held for clients to a range of $140 million to $150 million, up from $135 million to $145 million.

Paychex's stock has slipped 2.5% year to date through Tuesday, while the S&P 500 SPX has gained 11.3%.

-Tomi Kilgore

This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

09-27-23 0914ET

Copyright (c) 2023 Dow Jones & Company, Inc.