Paychex Earnings Preview: EPS Anticipated at $1.48

Paychex is set to announce Q3 earnings, expected at $1.48 per share, up 7.3%. Analysts show a cautious 'Hold' rating, with stock price currently at a premium.

Date: 30-01-2025

AI Rating: 7

Paychex, Inc. is preparing to announce its Q3 earnings, with analysts estimating an earnings per share (EPS) of $1.48, which represents a healthy increase of 7.3% compared to the previous year’s EPS of $1.38. This anticipated growth in EPS is a positive signal for investors as it indicates the company’s ability to enhance profitability. Furthermore, Paychex has demonstrated strong performance by surpassing EPS estimates in its last four quarterly reports.

For the full fiscal year 2025, the expected EPS is projected at $4.99, reflecting an improvement of 5.7% from the fiscal year 2024's estimated EPS of $4.72. This outlook suggests continued financial strength and stable growth, appealing to investors seeking solid earnings prospects.

Revenue and Operating Income
In the most recent Q2 earnings report, Paychex revealed a total revenue of $1.3 billion, marking a 5% increase year-over-year. The operating income also rose by 6% to $538.1 million, showcasing effective cost management and operational efficiency. The operating margin achieved was 40.9%, slightly increasing from 40.2% in the prior year, further solidifying the company’s financial performance.

However, the report noted that the expiration of the Employee Retention Tax Credit (ERTC) program negatively impacted the company’s results, indicating external factors that could introduce some level of risk for future earnings.

Despite the positive indicators in earnings and revenue growth, the overall analyst consensus on Paychex stock remains cautious, with a predominant “Hold” rating from 13 out of 16 analysts. This cautious outlook may reflect concerns regarding market conditions or valuation pressures, as the stock is currently trading at a premium, with an average price target set at $139.08.

Stocks: PAYX