Shares of Paychex Inc. (PAYX) dropped 2% in premarket trading on Thursday, despite the company surpassing profit expectations for the fiscal second quarter. While their net income increased to $392.7 million ($1.08 per share) compared to $360.3 million (99 cents per share) in the same period last year, the company’s revenue fell slightly short due to cost and labor market challenges. Paychex reported a 5.7% growth in revenue, reaching $1.258 billion, but it was below the expected $1.268 billion.
Paychex’s CEO, John Gibson, addressed the current economic climate and the difficulties faced by small and mid-sized businesses. He noted that while the macro-economic environment remains stable for these companies, they continue to struggle with the cost of and access to growth capital, as well as finding quality talent in the labor market.
Despite the revenue miss, Paychex remains optimistic for the future, revising their guidance range for adjusted earnings per share (EPS) growth for fiscal 2024. The company now expects a growth rate of 10% to 11%, up from the previous range of 9% to 11%.
Year to date, Paychex’s stock has seen a 10.6% increase, while the S&P 500 has rallied by 22.4%.
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