Paychex Inc. (NASDAQ: PAYX) will release its earnings results for fiscal Q1 2022 for the quarter ended August 31 on Thursday, September 30, 2021, at 9:30 a.am ET.
What to look for
The pandemic accelerated most workplace trends, and the company had the right solution to aid clients in adapting to unexpected conditions. The company's 5-star rated Mobile app offers clients and employees access to solutions on any device from anywhere. Paychex solutions were critical to customers in adapting to remote working, and they are also key to businesses as normalcy returns and businesses begin to reopen. The company is accelerating strategies to capitalize on a distributed workforce, and getting into Q1 2022, it is optimistic.
Earnings: Stockearning’s estimated EPS for Q1 2022 is expected to grow from $0.72 in Q4 2021 as the impact of the pandemic was. Over the past 12 quarters, the company has topped EPS nine times (75%) and missed once (8%). In the past quarter, the company topped earnings estimates of $0.67 and posted EPS of $0.72.
Revenue: In Q4 2021, the company reported a 7% decline in revenue to $915 million attributed to the decline in volume affecting the company's revenue across the HCM solutions. Total service revenue was down 7% to $890 million in Q4, with management solutions revenue within the service revenue declining 6% to 662 million and insurance and PEO solutions dropping 11% to $228 million. Surprisingly, interest in funds held for customers was up 14% to $25 million. The company posted revenue of $4 billion for the full year, a 7% increase despite the COVID-19 pandemic affecting growth. Paychex expects a total revenue drop of between 2% and 5% for fiscal 2021.
Stock movement: Since the last earnings release, the company's stock has gained 5.5% from $104.28 to the previous close price of $109.98. Paychex's share price has been DOWN 28 times in the past 36 quarters following the earnings release. So, the historical price reaction suggests a 60% chance for the share price to drop following Q1 2022 earnings release.
What analysts are saying
JPMorgan analyst Tien-Tsin Huang has raised the target price on Paychex stock from $105 to $11 and maintained a "Sell" rating on the stock. In addition, Huang established a December 2022 target prices for the Payments and Processors industry. According to the analyst, modern players have performed exceptionally, and he expects considerable performance reversion as legacy providers resume pre-pandemic growth in 2H 2021.
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