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What are the Expectations From Paychex's (PAYX) Q3 Earnings?

Zacks Equity Research
·3-min read

Paychex, Inc. PAYX is scheduled to release its third-quarter fiscal 2023 results on Mar 29 before the market open.

The company has a decent earnings surprise history. It outperformed the Zacks Consensus Estimate in the four trailing quarters delivering an earnings surprise of 5.9% on average.

The Zacks Consensus Estimate for third-quarter 2023 earnings of $1.24 has been unaltered in the past 30 days.

Paychex, Inc. Price and EPS Surprise

 

Paychex, Inc. Price and EPS Surprise
Paychex, Inc. Price and EPS Surprise

Paychex, Inc. price-eps-surprise | Paychex, Inc. Quote

 

Q3 Expectations

The Zacks Consensus Estimate for the top line is currently pegged at $1.36 billion, 6.7% higher than the year-ago actual figure. This uptick in revenue can be associated with revenue growth from management solutions, Professional employer organization (PEO) and insurance solution revenue and an increase in interest on funds held for clients.

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Revenues from management solutions are expected to rise by 5.3% on a year-over-year basis, the Zacks Consensus Estimate of which currently stands at $1.01 billion. Such an increase can be correlated with increased revenue per client, additional worksite employees involved in HR solutions and persisting demand for Human Capital Management ancillary services.

The Zacks Consensus Estimate for PEO and insurance solution revenue is currently pegged at $321 million which indicates a 6.3% increase from the year-ago reported figure. This is due to the increase in the average number of worksite employees.

The interest on funds held for clients is expected to increase more than 100% year over year to $29.9 million.

The bottom line is expected to have been impacted by higher expenses. The Zacks Consensus Estimate of the bottom line is pegged at $1.24 cents which is a 7.8% increase from the year-ago figure.

What Our Model Says

Our proven model predicts earnings beat for PAYX this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. You can uncover the best stocks before they're reported with our Earnings ESP Filter.

Paychex has an Earnings ESP of +2.25% and a Zacks Rank of 3.

Recent Performances of Some Other Business Services Companies

The following stocks from the Business Service sector reported better-than-expected fourth-quarter results.

Gartner, Inc. IT, holding a Zacks Rank of 2, reported better-than-expected fourth-quarter 2022 results, wherein both earnings and revenues surpassed the respective Zacks Consensus Estimate. Adjusted earnings (excluding 49 cents from non-recurring items) per share of $3.70 beat the Zacks Consensus Estimate by 44% and increased 23.8% year over year. IT’s revenues of $1.5 billion beat the Zacks Consensus Estimate by 2.6% and improved 15.2% year over year on a reported basis and 20% on a foreign-currency-neutral basis.

Aptiv PLC (APTV),carrying a Zacks Rank of 3, reported better-than-expected fourth-quarter 2022 results. Adjusted earnings (excluding 41 cents from non-recurring items) of $1.27 per share beat the Zacks Consensus Estimate by 6.7% and increased more than 100% on a year-over-year basis. APTV’s revenues surpassed the Zacks Consensus Estimate by 6% and increased 12.2% year over year.

EquifaxEFX, currently holding a Zacks Rank of 3, reported stellar fourth-quarter 2022 results. The company’s earnings and revenues surpassed the Zacks Consensus Estimate. EFX’s adjusted earnings of $1.52 per share beat the Zacks Consensus Estimate by 2.7% but decreased 17.4% on a year-over-year basis. Revenues of $1.2 billion beat the Zacks Consensus Estimate by 1.5% but decreased 4.4% year over year.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.

 

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

Paychex, Inc. (PAYX) : Free Stock Analysis Report

Equifax, Inc. (EFX) : Free Stock Analysis Report

Gartner, Inc. (IT) : Free Stock Analysis Report

Aptiv PLC (APTV) : Free Stock Analysis Report

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Zacks Investment Research