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Paychex Sees Growth Slowing

The payroll service giant nailed targets, but brought guidance down a bit.


(PAYX) - Get Free Report

hit its targets but guided slightly below expectations on weak payroll service growth.

The Rochester, N.Y. payroll outsourcer posted net earnings of $147 million or 40 cents a diluted share. Those numbers are up 14% over the profit of 35 a share in the year-ago period. Analysts were looking for earnings of 39 cents, according to Yahoo Finance.

Total sales were $507.8 million, up 12% over the $455 million level last year. Analysts had predicted revenue of $504.85 for the fiscal second quarter ended last month.

"Fiscal 2008 continues to meet our expectations," CEO Jon Judge said in a press release.

Looking ahead, Paychex says its payroll service sales growth will slow a bit.

"Our current outlook for the full fiscal year ending May 31, 2008 has been revised to reflect slightly lower payroll service revenue growth and the decreases in the Federal Funds rate of 100 basis points since June 1, 2007," the company said in a press release.

Paychex is calling for 12% total net income growth 2008 on revenue growth of about 10% over fiscal 2007. Analysts were looking for profits to increase 12% on 10.5% sales growth.

Paychex shares fell $1.49 to $37.20 in after-hours trading Wednesday.