Paychex (PAYX) Reports Earnings Tomorrow. What To Expect

Radek Strnad /
2022/06/28 5:43 am EDT
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Payroll and human resources software provider, Paychex (NASDAQ:PAYX) will be reporting earnings tomorrow before the bell. Here's what you need to know.

Last quarter Paychex reported revenues of $1.27 billion, up 14.7% year on year, beating analyst revenue expectations by 4.64%. It was a strong quarter for the company, with a significant improvement in gross margin and a decent beat of analyst estimates.

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 7.58% year on year to $1.1 billion, slowing down from the 12.4% year-over-year increase in revenue the company had recorded in the same quarter last year. Adjusted earnings are expected to come in at $0.79 per share.

Paychex Total Revenue

The analysts covering the company have been growing increasingly bullish about the business heading into the earnings, with revenue estimates seeing two upwards revisions over the last thirty days. 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 3.33%.

Looking at Paychex's peers in the finance and HR software segment, some of them have already reported Q1 earnings results, giving us a hint of what we can expect. Paycom Software delivered top-line growth of 29.8% year on year, beating analyst estimates by 3%. Paycom traded up 9.11% on the results. Read our full analysis of Paycom Software's results here.

The whole tech sector has been facing a sell-off since late last year and software stocks have been swept alongside with it, with share price down on average 3.23% over the last month. Paychex is down 0.02% during the same time, and is heading into the earnings with analyst price target of $139.2, compared to share price of $123.8.

One way to find opportunities in the market is to watch for generational shifts in the economy. Almost every company is slowly finding itself becoming a technology company and facing cybersecurity risks and as a result, the demand for cloud-native cybersecurity is skyrocketing. This company is leading a massive technological shift in the industry and with revenue growth of 70% year on year and best-in-class SaaS metrics it should definitely be on your radar.

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