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Paychex (PAYX) up 4% on fiscal Q2 client base growth

By Joyanta Acharjee

14:49, 22 December 2021

A person putting together a puzzle with employee faces on it
Revenue at the company’s management solutions business rose 14% – Photo: Shutterstock

Paychex (PAYX) stock rose on Wednesday as the payroll processor and human resources provider reported earnings that beat estimates.

For the fiscal second-quarter ended 30 November, net income rose 22% to $332.1m (£249.2m) from the $272.4m reported in last year's second quarter. Revenue rose 13% to $1.11bn from $983.7m a year earlier.

Diluted earnings per share (EPS) for the second quarter was 91 cents, beating analyst estimates for earnings of 80 cents on revenue of $1.06bn, according to figures widely available on financial news sites.

Stock up 4%

As of 09:45 am EDT (UTC-5), the stock was up 4% at $130.81.

“We posted strong financial results for the second quarter of fiscal 2022, with growth of 13% in total revenue and 21% in diluted earnings per share. Results were driven by growth in employees within our client base and continued strong sales growth and client retention,” Paychex chair and CEO Martin Mucci said in a press release.

Revenue at the company’s management solutions business rose 14%, while professional employer organisation and insurance solutions revenue was up 11%.

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Pandemic trends continued

Paychex said trends that emerged during the pandemic have continued unabated, particularly the demand for human resource advice and the need for benefits packages that address talent needs.

The company said it assisted businesses in securing $6bn in employee retention and paid leave tax credits to date. It also recently introduced an automated tool that businesses can leverage to capture and store employee vaccination status.

Paychex is a provider of integrated human capital management services for human resources, payroll, benefits and insurance needs.

It serves more than 710,000 payroll clients as of 31 May 2021 across more than 100 locations in the US and Europe.

Read more: Forex: Dollar holds firm, Aussie slips amid dovish RBA tone

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The difference between trading assets and CFDs
The main difference between CFD trading and trading assets, such as commodities and stocks, is that you don’t own the underlying asset when you trade on a CFD.
You can still benefit if the market moves in your favour, or make a loss if it moves against you. However, with traditional trading you enter a contract to exchange the legal ownership of the individual shares or the commodities for money, and you own this until you sell it again.
CFDs are leveraged products, which means that you only need to deposit a percentage of the full value of the CFD trade in order to open a position. But with traditional trading, you buy the assets for the full amount. In the UK, there is no stamp duty on CFD trading, but there is when you buy stocks, for example.
CFDs attract overnight costs to hold the trades (unless you use 1-1 leverage), which makes them more suited to short-term trading opportunities. Stocks and commodities are more normally bought and held for longer. You might also pay a broker commission or fees when buying and selling assets direct and you’d need somewhere to store them safely.
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