Paychex misses Q2 revenue estimates, raises profit outlook

Overview

• HCM company reported fiscal Q2 revenue up 18%, slightly missing analyst expectations

• Adjusted EPS for fiscal Q2 beat analyst expectations, rising 11%

• Company raised full-year earnings outlook

Outlook

• Paychex raises full-year earnings outlook with adjusted EPS growth expected at 10%-11%

• Company maintains other fiscal 2026 guidance unchanged

Result Drivers

• PAYCOR ACQUISITION - Management Solutions revenue grew 21%, with Paycor contributing approximately 17% to this growth

• AI TECHNOLOGIES - Expansion of AI capabilities improved operational efficiency and client satisfaction

• INTEREST INCOME - Interest on funds held for clients increased 51% due to higher average investment balances

Key Details

*Applies to a deviation of less than 1%; not applicable for per-share numbers.

Analyst Coverage

• The current average analyst rating on the shares is "hold" and the breakdown of recommendations is 1 "strong buy" or "buy", 14 "hold" and 3 "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 $125.22, about 9.6% above its December 18 closing price of $114.24

• The stock recently traded at 20 times the next 12-month earnings vs. a P/E of 25 three months ago

Press Release: ID:nBw67T8C9a

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