Earnings To Watch: Paychex (PAYX) Reports Q2 Results Tomorrow

Kayode Omotosho /
2023/12/20 2:00 am EST

Payroll and human resources software provider, Paychex (NASDAQ:PAYX) will be announcing earnings results tomorrow before the bell. Here's what to look for.

Last quarter Paychex reported revenues of $1.29 billion, up 6.6% year on year, in line with analyst expectations. It was a decent quarter for the company, with a meaningful improvement in its gross margin.

Is Paychex buy or sell heading into the earnings? Read our full analysis here, it's free.

This quarter analysts are expecting Paychex's revenue to grow 6.4% year on year to $1.27 billion, slowing down from the 7.4% year-over-year increase in revenue the company had recorded in the same quarter last year. Adjusted earnings are expected to come in at $1.07 per share.

Paychex Total Revenue

Majority of analysts covering the company have reconfirmed their estimates over the last thirty days, suggesting they are expecting the business to stay the course heading into the earnings. The company has a history of exceeding Wall St's expectations, beating revenue estimates every single time over the past two years on average by 2.7%.

Looking at Paychex's peers in the HR software segment, some of them have already reported earnings results, giving us a hint of what we can expect. Ceridian delivered top-line growth of 19.6% year on year, beating analyst estimates by 2.2% and Paylocity reported revenues up 25.4% year on year, exceeding estimates by 0.4%. Ceridian traded down 1.3% on the results, Paylocity was down 5.4%.

There has been positive sentiment among investors in the segment, with the stocks up on average 14.7% over the last month. Paychex is up 9.2% during the same time, and is heading into the earnings with analyst price target of $121.66, compared to share price of $129.24.

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The author has no position in any of the stocks mentioned.