HR services firm Paychex Q1 profit beats on strong PEO, insurance growth
Overview
U.S. payroll and HR services firm's fiscal Q1 revenue grew 6%, meeting analyst expectations
Adjusted EPS for fiscal Q1 rose 10% and beat analyst expectations
Adjusted operating income for fiscal Q1 beat analyst expectations
Outlook
Paychex expects fiscal 2027 total revenue growth of 5% to 6%
Company raises fiscal 2027 PEO and Insurance Solutions revenue growth outlook to 7% to 8%
Paychex sees fiscal 2027 adjusted diluted EPS growth of 7% to 9%
Result Drivers
PEO AND INSURANCE SOLUTIONS - Co said 12% revenue growth in PEO and Insurance Solutions was driven by more average PEO worksite employees and increased insurance volumes
MANAGEMENT SOLUTIONS - Co said 4% Management Solutions revenue growth was driven by higher revenue per client from price realization and product penetration
AI AND TECHNOLOGY INITIATIVES - Co said continued momentum in AI and launch of WISE Hire recruiting solution enhanced productivity and client outcomes
Company press release:
Key Details
Metric | Beat/Miss | Actual | Consensus Estimate |
Q1 Revenue | Meet | $1.63 bln | $1.63 bln (15 Analysts) |
Q1 Adjusted EPS | Beat | $1.34 | $1.32 (16 Analysts) |
Q1 EPS | $1.21 | ||
Q1 Adjusted Operating Income | Beat | $684.70 mln | $663.51 mln (13 Analysts) |
Analyst Coverage
The current average analyst rating on the shares is "hold" and the breakdown of recommendations is 2 "strong buy" or "buy", 13 "hold" and 4 "sell" or "strong sell"
The average consensus recommendation for the employment services peer group is "buy."
Wall Street's median 12-month price target for Paychex, Inc. is $112.00, about 2.2% below its September 22 closing price of $114.53
The stock recently traded at 19 times the next 12-month earnings vs. a P/E of 16 three months ago
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(This story was created using Reuters automation and AI based on LSEG and company data. It was checked and edited by a Reuters journalist prior to publication.)