This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Cramer's Action Alerts PLUS - See his portfolio and get alerts BEFORE every trade. Learn more NOW!

Grim Outlook Could Hold Back Payroll Firms

DES MOINES, Iowa (AP) â¿¿ Companies that process payroll for small business are feeling the pressure of a slumping economy and the diminishing confidence business owners have in short-term recovery.

The National Federation's Small Business Optimism Index slipped 0.9 percent in July, the fifth consecutive month-to-month decline. It fell to 89.9 in July from 90.8 in June.

Jefferies & Co. Inc. analyst Jason Kupferberg said this pessimism supports his cautious approach to small-business payroll providers.

Recent surveys have shown that just 2 percent of small-business owners plan to create jobs, down from 3 percent in June, indicating slow improvement in hiring. More owners in July said they expect business conditions to worsen over the next six months and more said loans are harder to obtain.

He maintained a "Hold" rating on Automatic Data Processing Inc. and Paychex Inc.

"The overall backdrop for the payroll processors remains challenging, as unemployment remains high and interest rates low," Kupferberg wrote in an investor note. "We continue to have concerns regarding the post-recession growth profile of both companies relative to historical levels, but these names could perform reasonably well in a more 'defensive' market, supported by ample dividend yields."

Shares of the major payroll providers advanced on Tuesday as the broader markets regained a portion of the losses witnessed on Monday. The Dow Jones industrial average lost more than 600 points Monday as the market responded to the Standard & Poor's downgrade of the U.S. long-term credit rating and debt problems in Europe.

ADP rose 80 cents, or 1.7 percent, to $46.47, and Paychex climbed 43 cents, or 1.7 percent, to $26.17.

CBIZ Inc. rose 14 cents, or 2 percent, and Insperity Inc. advanced 20 cents.

Copyright 2011 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Try it NOW
Only $9.95
Try it NOW
14-Days Free
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!


DOW 17,776.12 -200.19 -1.11%
S&P 500 2,067.89 -18.35 -0.88%
NASDAQ 4,900.8850 -46.5560 -0.94%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs