Paychex Drops After Earnings and Revenue Decline

Paychex traded lower Tuesday after the payroll-management-services company reported a decline in third-quarter earnings and revenue.
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Shares of Paychex  (PAYX) - Get Report fell on Tuesday after the payroll-management-services company reported a decline in fiscal-third-quarter earnings and revenue.

Paychex reported better-than-expected adjusted third-quarter earnings and met revenue estimates set by Wall Street analysts.

For the three months ended Feb. 28, net income eased 1.1% to $350.5 million from $354.5 million in the year-earlier period. Adjusted earnings were 96 cents a share compared with 97 cents a year earlier.

Revenue fell 2.6% to $1.11 billion from $1.14 billion.

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A survey of analysts by FactSet produced consensus estimates of adjusted earnings of 92 cents a share on revenue of $1.11 billion.

For fiscal 2021 ending May 31, Paychex expects both revenue and adjusted earnings per share to range flat with to down 2% from fiscal 2020.

Shares of the Rochester, N.Y., company at last check slipped 5.7% to $94.62. The stock on Monday touched a 52-week high $101.15. The 52-week low, $60, was set last May.

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"Client retention remains strong and at record levels, and our results for the third quarter show that our resilient business model has helped us navigate the uncertainties created by COVID-19," President and Chief Executive Martin Mucci said in a statement.

"We continue to see progress in our key indicators," Mucci added.

Paychex provides comprehensive payroll and integrated human resource and employee benefits outsourcing solutions for small to medium-sized businesses. 

The company's services range from calculating payroll and filing tax payments to administering retirement plans and workers' compensation.

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